CA oilfield dispute may be costly for producers

August 24th, 2016 by Dakota Software Staff Industry News

A recent legal action brought by an environmentalist group highlights how prior approval from the Environmental Protection Agency may not provide the blanket security that many businesses expect. According to the Courthouse News Service, the Center for Biological Diversity filed a lawsuit against two California state organizations: the Department of Conservation, Division of Oil, Gas and Geothermal Resources and the California State Water Resources Control Board. The environmentalist group said the two state agencies did not properly analyze the approval for new well drilling in San Luis Obispo County, leaving out important considerations of impacts on the local area even though the proposal was eventually submitted to the EPA for approval.

A question of proper analysis
The CBD's lawsuit alleged the proper processes and workflows weren't followed to provide permits for oil producers in the San Luis Obispo County area. The California Environmental Quality Act requires certain actions on the part of state agencies when assessing issues that could have an environmental impact. The CBD believes the two state departments allowed an aquifer exemption for the field, already the site of approximately 400 oil wells, and passed it along to the EPA for the final approval in the process without properly assessing the situation.

"The department did not conduct environmental review under the California Environmental Quality Act prior to determining that the aquifer could be polluted by oil and gas wastewater and other fluids, and submitting the aquifer exemption to EPA for final approval," the CBD said in the complaint, according to the Courthouse News Service.

The oil business plans to add as many as 450 new wells in the area and will use water injection to remove the oil from the ground. The CBD's legal action alleged such practices could cause issues with potable water supplied to surrounding communities.

While it remains to be seen if the action will result in a revocation of the exemption because it violates environmental regulations, California as a whole has experienced plenty of recent controversy over the contamination of groundwater. The Associated Press reported a U.S. Government Accountability Office review of EPA actions said the agency failed to fulfill its duties in terms of protecting potable water sources from the negative effects of oil wells. The federal environmental regulator said it would improve its processes related to permitting and inspection in response.