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Like Oil and Water: The Arroyo Grande oil field and nearby domestic drinking wells

Greta Mart/KCBX
Pumpjacks at the Arroyo Grande Oil Field.

Voters in six California counties have passed measures banning fracking and placing limits on other types of oil extraction. This November, a citizen’s initiative in San Luis Obispo County sought to do the same. Oil companies funded an $8 million dollar campaign to defeat the measure, and a majority of voters rejected Measure G—54 to 46 percent.

The defeat removes one roadblock to a planned expansion of operations at the Arroyo Grande oil field near San Luis Obispo.

That planned expansion also hinges on a decision currently before the U.S. Environmental Protection Agency.

But neighbors of the oil field are concerned about the safety of their drinking water wells, should new drilling and waste disposal edge closer to their properties in the coming years.

In response to worries over local water contamination, KCBX News initiated an exploration into how groundwater science is conducted, to understand the basis of how state and federal regulators decide whether or not to allow oil field owner Sentinel Peak Resources to drill more wells in San Luis Obispo County. We also are looking into the factors state and federal regulators use to balance oil industry production with protecting public health.


Laura Bjorklund was washing dishes when something caught her eye out the window above the kitchen sink. In a pasture where the family’s horses grazed, a fountain of roiling black oil was shooting into the air.

“There was a geyser of oil coming out of the ground, it was like Beverly Hillbillies, ten times over. They sent all these trucks, and it was a huge fiasco,” Bjorklund said.

The year was 1981, and the oil was coming from a nearby oil field called Arroyo Grande, located in a canyon that straddles San Luis Obispo and Pismo Beach.

As the San Luis Obispo Telegram-Tribunereported at the time, a pool of oil 30 feet across formed in the pasture. The article says a company engineer traced the problem to a nearby oil pump. Three weeks before the leak, the company had started injecting steam at the pump to ease the oil extraction process. It was the early days of enhanced oil recovery techniques at Arroyo Grande. To fix the problem, the engineer said workers planned to “cover up the pool with topsoil and reseed the land so it could revert to pasture.”

“But when they tell me that the layers are impermeable, I don’t believe them,” Bjorklund said. “Because this could happen in my pasture.”

When Borklund says she doesn’t believe them, she’s referring to the current owner of the Arroyo Grande oil field, Colorado-based Sentinel Peak Resources. Continuing a plan started by a prior oil field owner, Sentinel Peak is working towards drilling hundreds of new and replacement wells in Price Canyon. That’s so it can keep the hundred-year-old-plus oil field producing.

Those new wells are partnered with a proposed expansion of the area — known as the Arroyo Grande aquifer — where the oil company can pump wastewater underground, tripling its current size. In order to move forward on the project, Sentinel Peak needs what’s termed an aquifer exemptionfrom the United State Environmental Protection Agency(EPA); to excuse that underground area from the national Safe Drinking Water Act.

The company’s application is currently before the EPA.

Oil companies have been allowed to pump their wastewater into porous rock formations deep underground as a disposal method since the 1930s. What precisely is in the wastewateris not known, as petroleum companies are not required to discloseexact ingredients.

The wastewater is called “produced water,” referred to by the industry as brine or saltwater.

Matt Keeling is the assistant executive officer of the Central Coast Regional Water Quality Control Board. He says oil field formations coincide with deep salty marine sediments.

“Produced water...the most common constituents you see in it are associated with high levels of salinity,” Keeling said. “So things like sodium chloride, sulfate and then other minerals that you can have in there as well, and metals. And then, depending on the produced water source, and what level of treatment it may have undergone, it can have trace levels of other petroleum-type hydrocarbons, because it was at one time in contact with oil….a lot of petroleum hydrocarbon-derived contaminants have a tendency to be carcinogenic.”

Oil companies, and the state and federal agencies in charge of regulating the oil and gas industry, consider deep underground storage of produced water to be safe, working on the premise that the potentially toxic liquids stay where they are “injected” and don’t move underground to other areas or aquifers.

Neighbors of the Arroyo Grande oil field worry the wastewater from the injection wells are going to migrate underground to their drinking water wells. A 2015 report found there are about 105 domestic drinking water supply wells within a one-mile radius of the oil field.


The oil company and state regulators say it’s safe to inject wastewater underground at the Arroyo Grande oil field in Price Canyon, because the geology underneath the oil field is like a bowl, with the sides of bowl comprised of rocky boundaries that are impermeable.

Injection wells are several hundred to thousands of feet deep, while drinking water wells are usually a few hundred feet. And oil companies and state regulators maintain that the underground vertical space, separated by layers of silt and rock, keeps the two apart.

Preston Jordanis a research geologist with the energy and geoscience division at Lawrence Berkeley National Lab in Berkeley California. He describes one of his specialties as deep subsurface fluid engineering projects.

“Now obviously if one wants to go drill a water well right next to where they were doing the disposal, you probably would find contamination. So it’s a matter of separation and space,” Jordan said.

In his studies, Jordan said hasn’t found any documented instances in California of injected produced water directly contaminating public drinking water supplies. But:

“There are events where water has seeped out of the ground surface in relation to water disposal wells, and so one would presume there's the opportunity in that case for some kind of contamination of quote unquote groundwater, or usable groundwater, along the migration pathway that that took,” Jordan said.

Jordan said in one research project, he compared instances of well failures, blow-outs, spills—essentially any uncontrolled fluid from a well—recorded in state databases and those reported in the Bakersfield Californian newspaper. He found the data did not match up.

“And interestingly there was at least one blowout that I can remember that did have a public impact, if I recall correctly it necessitated evacuation of a school for a period, and that was only reported in the newspaper, it wasn't in the state data,” Jordan said. “And the newspaper [had information about] every blowout that was in any data set that had a substantial public consequence, whereas the data did not.”

So when state and federal regulators say there’s no evidence of drinking water contamination from underground injection associated with oil production, it’s hard to know if that’s actually true. And particularly in the case of private domestic wells, said Jordan.

“Public supply wells do at least have testing requirements that domestic wells don't,” Jordan said.

Other organizations, like the Natural Resources Defense Council, say there have been numerous cases of known or suspected drinking water contamination linked to oil and gas production across the country. But again, there’s no centralized, independent database to consult, and no independent agency or organization keeping tabs on the

But perhaps that will change in the coming years. Jordan is the chair of an independent panel mandated by the California legislature in 2014, when state officials passed laws establishing a regulator framework for fracking. The panel is also focused on reviewing the state’s regulations for and implementation of the underground injection control program. That’s the program by which oil companies are allowed to do underground injection of wastewater.

The state regulator, the Division of Oil, Gas, and Geothermal Resources—called DOGGR for short—is currently in the process of creating new regulations for that underground injection. It’s just in the past decade that the state’s underground injection program is getting any kind of widespread scrutiny—scientific or otherwise.

In 2011, the US EPA censured DOGGR for its lack of regulation over where oil companies were injecting wastewater underground. Many news outlets, including the Nation Magazine, have published accounts of how this lack of regulation came to light.

In 2014, the U.S. Government Accountability Office criticized the EPA’s oversight of state regulators, saying the EPA’s nationwide program to protect underground drinking water sources from injected oil extraction fluids and wastewater wasn’t effective.

Since 2009, DOGGR has acknowledged around 2,500 injection wells were improperly permitted to inject into non-exempt aquifers. Those that were injecting wastewater into what’s considered “freshwater” aquifers were ordered to be closed. But for most of the wells, the agency has worked to bring them “into compliance,” while allowing daily operations to continue.

The Arroyo Grande aquifer exemption application currently before the EPA expands the area allowed by the state for wastewater injection since 1983, when the state took over regulation. This was long before it was revealed that state regulation had been inadequate and shoddy from the outset.

DOGGR officials say the agency has turned over a new leaf, and in recent interviews, they repeatedly pointed to the proposed new regulations.

David Bunn directs the state’s Department of Conservation, which in turn oversees DOGGR.

“In the last five years we've completely overhauled the Department of Conservation's division that oversees oil and gas and we have overhauled our data management system,” Bunn said. “We've increased our science and so are on our side. I think we're frankly our regulatory role as a much more sophisticated and thorough.”

Adam Peltz is a senior attorney at the Environmental Defense Fund. In mid-September, he submitted comments on DOGGR’s new underground injection regulations.

“The current proposal is already a major improvement on what the state has now, but we're calling for, in particular better ways of analyzing the integrity of wells on an ongoing basis, because some of them some of them operate for decades and decades,” Peltz said. “And even if you build it right, if you don't watch to make sure that it's not leaking … everything that you build eventually will break.”

And just in the past two months, much has been gutted from the latest iteration of the new proposed rulesgoverning underground injection in California. For example, a section mandating monitoring for seismic activity near disposal wells has been eliminated entirely.

Meanwhile, in 2016, U.S. Geological Survey researchers published the first conclusive study finding chemicals hazardous to human health in surface water near a wastewater injection well in West Virginia.

The study’s authors say there are crucial gaps in understanding the potential impact of underground injection on surface water quality and environmental health.

Those warnings are repeated by many others, including DOGGR itself. The agency has pointed out, quote “The increased use of injection, such as cyclic steaming, also presents new public health and safety risks, especially in fields with older wells. These risks include groundwater contamination, reservoir fluids leaking to the surface, and fires and blowouts caused by the migration of oil and gas. Urban encroachment on or around older oil and gas wells raises additional issues and concerns.”

In the next segment, we’ll take a closer look at some of those risks.


One potential threat to domestic water wells surrounding the Arroyo Grande oil field is from idle wells. Even if the wastewater injection wells are working properly, if there are idle wells in close proximity, they can serve as conduits for the injected wastewater to move underground to other areas.

Matt Landonis a supervisory hydrologist with the U.S. Geological Survey’s California Water Science Center. His specialty is studying groundwater quality overlying and near oil fields in California. The Center is a program of the California State Water Resources Control Board.

“One of the primary potential risk factors that's been identified is movement of fluids from oil and gas zones to groundwater along old wellbore leaky well bores or boreholes that were improperly sealed,” Landon said.

Landon works to determine the connections between deep oil and gas activities and deep freshwater aquifer responses. At this point, he stressed, his group really only has preliminary data.

“We certainly anticipate that these injection activities, particularly when you combine them with areas where there's a high density of oil and gas wells, some of them which may have been drilled a very long time ago and which were not installed or abandoned according to modern construction practices — they could serve as potential areas where fluids could leak up into groundwater resources zones,” Landon said.

As DOGGR says on its web page devoted to idle wells, “Wells that are not in use long-term can deteriorate if not maintained and potentially become a public safety or environmental problem.”

There are currently 30,000 idle wells across the state.

There are at least 126 idle wells currently puncturing the Arroyo Grande oil field. And those wells are in the same area as the field’s current and future disposal wells.

Landon says it’s very difficult to know if there’s contamination moving — via idle wells — from where injection wells are pumping and nearby water wells.

All but one reference to idle wells have been removed from the proposed new regulations.


Another risk is failure of the injection wells themselves.

Robert Gailey has been a practicing hydrologist since the mid-1980s and is a researcher with the UC Davis Center for Watershed Sciences. He described how oil and disposal wells are supposed to work….it’s a vertical pipe drilled hundreds of feet into the ground, and there’s no communication between the inside of the pipe and outside of the pipe until far down into the subsurface.

“That is the intended function. When the potential for well failure is considered, perhaps the most likely scenario is migration through the well seal,” Gailey said, explaining how an injection well could fail. “The borehole drilled into the subsurface has a larger diameter than the well casing that is inserted into the ground, so there is a donut-shaped void, called the annular space, around the well casing that extends to depth along the length of the well. A concrete seal is placed in the annular space above the perforations to prevent vertical migration of fluids along the outside of well. If the seal is not competent, pressure that builds up in the subsurface as a result of the fluid injection can cause leakage back up the borehole to a shallower depth.”

The nonprofit, independent news organization ProPublica launched an investigation in 2012 into injection wellsand found that structural failures are common. According to the report, from 2007 to 2010, over 17,000 violations were issued for leaking wells. And those are just the ones regulators caught.


One of the big messages of Measure G proponents was that oil production uses a lot of water resources. The Yes on G campaign made the need for water conservation a platform pillar.

Peter Fiske is a geologist and director of the Water Resilience Research Institute at the Lawrence Berkeley National Laboratory. Fiske is one of 500 scientists and researchers working at the Lab’s Earth and Environmental Sciences section, and focuses on how treat and dispose of water.

“I think the process of injecting wastewater back in the ground is likely to go away in the United States, partly because water is becoming more and more precious and as the cost of water treatment goes down and the value of water goes up,” Fiske said. “It may be the case that oil and gas companies actually treat the water right there and end up producing either drinkable water or water that's safe for agricultural use rather than drilling a hole and pushing it back down.”

Going into the future, Sentinel Peak will need to use more intensive recovery methods to get the remaining oil out of the Arroyo Grande oil field. And a lot more water.

While the EPA decides whether to grant Sentinel Peaks its aquifer expansion exemption, Central Coast congressman Salud Carbajal set up a town hall meeting in San Luis Obispo. In August he invited EPA officials to answer the public’s questions about the exemption process. KCBX News asked Carbajal why he felt it was important to have a public meeting.

“I heard the veracity of the concerns that people have,” Carbajal said. “Environmental concerns, potential implications for the water supply. The fact that this is such a precious resource water...that needs to be taken very serious and very carefully when making that determination.”

About a third of the audience wore shirts or held signs supporting the oil company. But the majority of the over 200 people who turned out for the meeting expressed their opposition to the Arroyo Grande aquifer exemption expansion.

After the town hall, Carbajal said he still had concerns.

“Both about the process and the criteria being used for making this exemption decision by the U.S. EPA.,” Carbajal said.

Those criteria are surprisingly simple. According to Title 40 of the Code of Federal Regulations, an aquifer can be exempted from the Safe Water Drinking Actif it does not currently serve as a source of drinking water; and cannot now and will not in the future serve as a source of drinking water.

David Bunn, the head of California’s Department of Conservation, said state regulators are effectively protecting underground drinking water sources.

“The aquifer exemption standard is not are we protecting the water today...when the [state] water board looks at it, and we look at it too, they're basically saying is there any possible time ever in the future that this would be a source of drinking water,” Bunn said. “And they have to..conclude that the answer is no. And so that's that's a very, very high standard before we ever allow injecting.”

Sentinel Peak Resources already cleans a large portion of its produced water.

In May, KCBX News took a tour of the Arroyo Grande Oil Field given by Sentinel Peaks Resources staff. Christine Halley, the company’s director of environmental health and safety and regulatory affairs, has worked for Sentinel Peak Resources for under two years. Pismo Creek is the last stop on the tour, and pointing to water gushing from a pipeline into the creek.

“Now this is kind of cool,” Halley said. “So the water plant we looked at at the top of the hill? This is where this is introduced into Pismo Creek. 560 acre feet a year, right now, is benefitting into the Pismo Creek watershed.”

KCBX News asked where the water originated. Paul Delorenzo, Sentinel Peak operations superintendent, who has worked in this oil field since 1979, answered.

“It’s produced water mixed with oil that we pull out of the ground, clean up through a high-tech system and then it comes here,” Delorenzo said.

Oil field staff say 1.3 million gallons of water is being “produced” or pumped up in the AG oil field each day. Of that, about half a million gallons is being re-injected into the field as water waste or steam, and over three-quarters of a million gallons are released into Pismo Creek.

If Sentinel is able to pump up water from the hydrocarbon-filled aquifer as part of their daily operations, and clean that water well enough with its water reclamation facility to go into the creek — some say that debunks the claim that water could not someday be used as a source of drinking water.


In addition to the above risks to domestic drinking water wells from oil field operations, there’s climate change.

Erica Woodburnis a hydrogeologist at Lawrence Berkeley National Laboratory. She says we need to treat the environment as a holistic system and consider how one change affects all.

“You can't really look at a single component within the environment without thinking about how it may have impacts on other processes or other things that are omnipresent within the Earth's systems,” Woodburn said.

Woodburn said current research is pointing to climate change as disrupting prior notions of a static, unchanging subsurface.

“Connections across groundwater and surface water in the atmosphere are quite dynamic and they vary on the daily timescale, but also on monthly or yearly timescales, and it really depends on the climate too,” Woodburn said.

Woodburn said her particular group works on numerical simulation on supercomputers, trying to understand how underground aquifer systems’ connection to land surface is going to change through time.

“We’re in particular focus, and really interested in, things related to climate change,” Woodburn said. “But certainly a lot of these perturbations, like bringing in a new well field, or oil producers, or thinking about how the water is managed and pumped in different ways is certainly one of the main, grand challenges in hydrogeology right now.”


At the August town hall in San Luis Obispo, EPA officials said they expect a decision on the Arroyo Grande aquifer expansion exemption this fall, and as of publication, that decision is yet to be announced.

Sentinel Peak staff say they expect the Arroyo Grande oil field to produce for at least the next 25 years at the current level of production. Should the company be allowed to drill hundreds of new wells, that time frame could shrink.

Meanwhile, the creators of 2018’s defeated Measure G say they may try again to bring an anti-fracking measure before the voters, one that will aim at curbing expanded oil production in San Luis Obispo County as the state moves away from fossil fuels, towards renewable energy. Californians have 46 years to reach the 100 percent clean energy requirement set by 2018 legislation.

This is part of an ongoing KCBX News reporting project, supported by a USC Annenberg Center for Health Journalism grant.


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