NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.



Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Suite 101 of the State Capitol Building North.





F I S C A L I M P A C T R E P O R T





SPONSOR: Leavell DATE TYPED: 02/08/00 HB
SHORT TITLE: Produced Water from Oil and Gas Wells SB 192
ANALYST: Valenzuela


APPROPRIATION



Appropriation Contained
Estimated Additional Impact
Recurring

or Non-Rec

Fund

Affected

FY00 FY01 FY00 FY01
NFI NFI



(Parenthesis ( ) Indicate Expenditure Decreases)



Duplicates House Bill 24 and Relates to House Bill 25



SOURCES OF INFORMATION



LFC Files

Energy, Minerals and Natural Resources Department (EMNRD)



SUMMARY



Synopsis of Bill



Senate Bill 192 exempts water produced from oil and gas well operations from depths of 3,000 feet or more from the definition of public waters, and designates ownership to the oil and gas producer. The bill also amends law for the Oil Conservation Division to regulate this water.



Significant Issues



Produced water is a waste byproduct in the production of oil and gas. Generally, it contains hydrocarbons and heavy metals, in addition to a significant salt content, making it unusable. Consequently, oil and gas operators are required, through regulation, to dispose of this water, usually by reinjection back into the subsurface salt zone.



OCD regulates the disposal of produced water, regardless of the depth at which it is derived. Consequently, the specific language in subsection 22 of "water produced from underground sources three thousand fee or more in depth" conflicts with the existing law in subsection 15 which states the OCD has the authority "to regulate the disposition of water produced or used in connection with the drilling for or producing of oil or gas".



FISCAL IMPLICATIONS



Senate Bill 192 does not contain an appropriation and should not have an impact on the EMNRD.



ADMINISTRATIVE IMPLICATIONS



Senate Bill 192 will have a minor impact on the EMNRD, as it attempts to promulgate rules to clarify this potentially conflicting amendment.



DUPLICATION



Senate Bill 192 duplicates House Bill 24 and relates to House Bill 25, which appropriates funding to study technology capable of remediating produced water.



MFV/njw