California Governor Gavin Newsom released draft legislation to streamline the permitting process for drilling new oil wells in existing fields until 2036. The proposed bill includes an approval system in which an operator would have to plug and abandon two wells before drilling a new one. It also includes provisions to expedite permitting in Kern County. Lastly, it includes additional provisions aimed at Sable Offshore Corp.’s attempt to restart the Santa Ynez Unit.
Newsom’s proposal is one of the recommendations in the recent California Energy Commission report on policy change to help stabilize California’s gasoline and petroleum markets. The legislation is in draft form and is likely to change during negotiations.
Streamlined Approval
Under the proposal, operators would not need approval of their permit, known as a notice of intention, from the California Geologic Energy Management Division (CalGEM) if:
Approval of the notice of intention is not part of a project for which there is already a certified, complete, and valid environmental impact report or an adopted, complete, and valid negative declaration or mitigated negative declaration;
The wellhead for the new well is located within a CalGEM established oil and gas field;
The wellhead for the new well is not located within the 3,200-foot buffer zone known as a health protection zone;
The activities will not require an individual take permit for species protected under the federal Endangered Species Act of 1973 or the California Endangered Species Act;
The activities will not require a streambed alteration permit under the Fish and Game Code;
The wellhead location has no cultural or historic resources present, as determined by a qualified archeologist.
Plugging and Abandonment Requirement
The proposal would also require the operator to plug and abandon two wells—with specific requirements—before drilling a new well. Operators must identify the wells in the notice of intention for the replacement well and must complete plugging and abandonment of both wells after January 1, 2026 and before drilling on the new well begins.
Of the two wells, one must be located in the same oil and gas field as the new well and the other must be located in a health protection zone, which is a 3,200-foot buffer zone between oil wells and schools, homes, and playgrounds. California implemented the buffer zone requirement in 2022 with the passage of SB 1137.
The plugging and abandonment requirement excludes a well that has already been identified in an idle well elimination plan. A well plugged and abandoned under this requirements also does not count for compliance with an idle well elimination plan. California has recently increased the state’s idle well fees and increased the amount of wells that must be eliminated under an idle well management plan.
Approval of Kern County Permitting Plan
The draft legislation would also deem Kern County’s recently revised environmental impact report for its oil and gas rezoning ordinance as in compliance with the California Environmental Quality Act. This would be in effect until January 1, 2036.
Enhanced Safety Provisions
This bill would also require the administrator for oil spill response to solicit public input every 10 years on reasonable worst case spill volumes for facilities. The administrator would also revise the criteria and formulas for calculating these volumes if needed.
The bill would prohibit the restarting of an existing oil pipeline that is 6 inches or larger that has been idle, inactive, or out of service for 5 years or more without passing a spike hydrostatic testing program that meets the requirements established by the State Fire Marshal. A violation would be a crime.
This bill would also prohibit the granting of well stimulation treatment permit applications except if a court finds that denial of a permit application would amount to a taking of property. This would be retroactive to March 1, 2021.
Provisions Targeting Sable
The bill includes several provisions that target Sable’s efforts to restart offshore drilling in the Santa Ynez Unit.
This bill would require the onshore transportation of oil to processing and refining facilities to be with a pipeline using the best available technology. It would repeal authorization for the use of alternative modes of transportation.
The bill would revise the definition of “expanded oil extraction” to include reactivation of a facility that has been idled, inactive, or out of service for more than three years. It would also include in the definition of “expanded oil extraction” an increase in oil extraction from the use of hydraulic fracturing, extended reach drilling, acidization, or other unconventional technologies.
This bill would also authorize the reactivation of an existing oil and gas facility to also be permitted as a “coastal-dependent industrial facility.” The bill would require an operator to obtain a new coastal development permit for the repair, reactivation, and maintenance of an oil and gas facility that has been idled, inactive, or out of service for three years or longer.