2000 ANNUAL REPORT
PRODUCTION

Battles, Vigilance Required To Keep Production Sector Vital

California’s oil and gas producers contribute mightily to the state’s economy, but you wouldn’t know it from the seemingly never-ending legislative and regulatory battles required of WSPA and its member companies to keep the sector vital and productive. In 2000, WSPA logged significant progress on some; held its own on others and geared up to resume the fight in the year to come.

On the plus side of the ledger, WSPA was successful in gaining retraction of initial notices of rulemaking that indicated Kern County was not in compliance with the California Environmental Quality Act (CEQA) in issuing oil and gas well permits. Also on the plus side were the successful efforts to fashion reasonable Offshore NPDES permit requirements and to obtain authority to use an alternative work week of up to 12 hours a day for offshore workers and workers in onshore facilities serving the platforms.

Review of Kern O&G Well Permitting
A revised Notice of Rulemaking by the Resources Agency includes a process to review oil and gas well permitting in Kern County to identify any discrepancies with the California Environmental Quality Act (CEQA). The original notice said Kern was not in compliance with CEQA, but was revised when WSPA filed a legal brief with the Agency and a delegation of legislators asked the Agency to conduct a constructive review process. Under the revised rule, any discrepancies found in the permitting process will lead to the exploration of new options.

A Hit and a Near Miss on Overtime Initiative
WSPA was successful this year in arguing for an alternative workweek of up to 12 hours a day for offshore occupations. Less successful was the attempt to persuade the Industrial Welfare Commission (IWC) to allow the same arrangement for oil and gas production operations onshore. A coalition succeeded, however, in obtaining sensible rules for employees in onshore processing facilities associated with offshore platforms. Until this year, the existing eight-hour workday mandate did not apply to oil and gas drilling operations based on the nature of the work.

"Clean Airship I" Monitoring Central Valley Air
With the US Environmental Protection Agency’s reclassification of the Central Valley’s air from "serious" to "severe,’ WSPA initiated a coalition of industries and government agencies to find answers to the riddle. The effort, which includes the use of a remote-controlled blimp called Clean Airship I, will measure and monitor the Valley’s air quality. It is the largest air pollution study ever undertaken in the country and will help determine why the area failed to meet Federal standards for ozone and particulates even though its air has improved significantly in the past decade.

Off-Spec Natural Gas Issue Being Addressed
WSPA and its member companies are engaged in a wide-ranging effort to find solutions to a problem that arose when the Southern California Gas Company said it could no longer buy off-specification gas from California producers after 2001. The California Air Resources Board (CARB), the Engine Manufacturers Association, So Cal Gas and WSPA member companies are involved. The problem is serious since California producers provide 10 per cent of So Cal's gas supply and producer retrofit costs are estimated to range from one million dollars for small producers to $100 million for larger firms. WSPA and its partners have succeeded in convincing So Cal Gas to join in a $500,000 test of new membrane technology that could remove off-spec components of concern at the refueling site. WSPA has organized the first meeting and is working with CARB and the Energy Commission to explore funding possibilities.

Acceptable Offshore NPDES Permit Realized
After nearly five years of effort and with the leadership of a WSPA working group, a new NPDES permit covering Pacific outer continental shelf operations has been approved by the U.S. Environmental Protection Agency (EPA). The new permit was developed through consultation with various stakeholders including the EPA, the Mineral Management Service and environmental representatives. It provides additional protection of the environment while establishing acceptable, workable standards for industry operations. The new permit now goes to the California Coastal Commission for its certification of coastal consistency.

Federal Coastal Initiatives Closely Monitored
WSPA’s Coastal Producers Committee has expressed concerns regarding two federal agencies proposing expansion of coastal control areas that may make them out of bounds for oil and gas production and processing. In one initiative, the National Parks Service would designate coastal areas from Coal Oil Point to Point Sal as part of the Gaviota Coast National Seashore. A feasibility study is currently being conducted. In the other, the National Oceanic and Atmospheric Administration is evaluating options for expansion of the boundaries of the Channel Islands National Marine Sanctuary. WSPA will closely monitor the progress of these initiatives.

Test Developed To Gauge Heavy Crude Tank Pressure
Engineers at The Lawrence Berkeley National Laboratory, working with a coalition of organizations, have developed a successful sampling procedure and a laboratory test to determine vapor pressure of heavy crude oil in storage tanks. The breakthrough came after several years of effort by the Heavy Oil Storage Tank (HOST) working group. The US EPA has given preliminary approval to the methodology. WSPA initiated the HOST group, which included Federal and state agencies as well as the San Joaquin Valley Air Pollution Control District (SJVAPCD). This method could save petroleum producers up to $11 million that would have been required to put controls on non-existent heavy oil tank emissions.

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