California State Senate to Hold Joint Committee Hearing on "Fracking" Regulations

On February 13, 2013, the California State Senate Natural Resources Committee and the Water and Environmental Quality Committee will hold a joint hearing to discuss the potential regulation of a hydrocarbon extraction technique known as "hydraulic fracturing." Hydraulic fracturing, commonly known as "fracking," is the process of injecting a high pressure stream of water, sand and chemicals into rock formations, known as shale, to extract natural gas and oil. Fracking allows oil and gas producers to extract reserves not otherwise accessible through traditional extraction processes. Oil and gas producers have been utilizing fracking and other tertiary recovery techniques in California for over thirty years.

On December 18, 2012, the California Department of Conservation, Division of Oil, Gas and Geothermal Resources ("DOGGR") released a "discussion draft" of proposed new fracking regulations. DOGGR has characterized the discussion draft regulations as a "starting point for discussion by key stakeholders." A copy of the discussion draft regulations can be found here.

The discussion draft regulations include provisions for pre-fracking well testing and disclosure requirements, monitoring requirements during the fracking process, requirements for storing and handling fracking fluids, post-fracking well monitoring requirements, public disclosure requirements, and trade secret requirements. Some of the significant provisions are summarized as follows:

• Operators will be required to evaluate and test the casing and cement lining of the well borehole to ensure that the well's construction is more than adequate to withstand fracking operations;

• Where "protected water" is present, operators will be required to analyze the faults, natural fracture zones, and other wells in the area to ensure that fracking fluid will not migrate into the protected water zone. "Protected water" is defined as water that either (1) contains no more than 3,000 mg/l total dissolved solids or (2) contains no more than 10,000 mg/l total dissolved solids and is suitable for irrigation or domestic purpose;

• If there is a possibility that hydraulically-induced fractures would extend beyond the targeted hydrocarbon zone, an evaluation of the intervening geological formations will be required to ensure that there is a confining barrier between the hydrocarbon strata and any strata containing protected water, to prevent groundwater contamination;

• Operators will be required to monitor and test the well during and after hydraulic fracturing operations to verify that well failure has not occurred.

Some critics suggest that, due to the potential environmental harm caused by fracking, the technique should be prohibited with no exception. On the other hand, some supporters suggest that the practice has been ongoing for decades, and accordingly should be able to continue as an unregulated practice.

The conversation regarding fracking in California will continue to take shape in the coming months. In the meantime, we will be sure to provide regular updates on the discussion draft regulations, as well as any legislative developments that may result from the joint hearing on February 13.

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