SB567 - Gravity-Based Energy Storage Well Pilot Program.

Senate Bill No. 567 CHAPTER 419 An act to add and repeal Section 3403.6 of, and to add and repeal Article 3.6 (commencing with Section 3190) of Chapter 1 of Division 3 of, the Public Resources Code, relating to oil and gas wells. [ Approved by Governor October 06, 2025. Filed with Secretary of State October 06, 2025. ] LEGISLATIVE COUNSEL'S DIGEST SB 567, Limón. Gravity-Based Energy Storage Well Pilot Program. Existing law requires the State Oil and Gas Supervisor to supervise the drilling, operation, maintenance, and abandonment of wells so as to prevent damage to life, health, property, and natural resources, damage to underground oil and gas deposits from infiltrating water and other causes, loss of oil, gas, or reservoir of energy, and damage to underground and surface waters suitable for irrigation or domestic purposes by the infiltration of, or the addition of, detrimental substances. Existing law defines “wells” to mean oil or gas wells or other wells related to oil or gas production. Under existing law, a person who fails to comply with the requirements relating to the regulation of wells is guilty of a misdemeanor. This bill would, until January 1, 2035, establish the Gravity-Based Energy Storage Well Pilot Program and would authorize the supervisor to authorize the conversion of not more than 250 wells for use as gravity-based energy storage wells, as defined, to evaluate their use, including the establishment of appropriate operating conditions and physical parameters to safely generate energy, as provided. The bill would authorize the supervisor, the State Water Resources Control Board, or an appropriate regional water quality control board, before authorizing the use of a well as a gravity-based energy storage well, to require the operator to provide certain information demonstrating the suitability of the well for use as a gravity-based energy storage well. The bill would require idle wells that are authorized for use as gravity-based energy storage wells to be identified as gravity-based energy storage wells in a plan for the management and elimination of idle wells or updates to the plan required to be filed with the supervisor. The bill would require the Geologic Energy Management Division to require mechanical integrity testing of wells before conversion to gravity-based energy storage wells and not less than annually thereafter. The bill would require an operator of a gravity-based energy storage well, in the event of a loss of mechanical integrity of the well or a leak to the environment, to notify the division, the State Air Resources Board, the appropriate regional water quality control board, and schools and community members within 3,200 feet of the well and to cease operation until the mechanical integrity is restored or to plug and abandon the well, as provided. The bill would require gravity-based energy storage wells to be continuously monitored for leaks. The bill would require operators of gravity-based energy storage wells to annually report to the division certain information regarding their operation of the gravity-based energy storage wells. The bill would specify that the authorization for wells to be used as gravity-based energy storage wells ends at the termination of the pilot program. The bill would, by January 1, 2033, require the division, in consultation with certain entities, to evaluate the pilot program and make recommendations to the Legislature for a framework to implement an ongoing Gravity-Based Energy Storage Well Program to regulate the operation of gravity-based energy storage wells, as provided. The bill would, until January 1, 2035, impose an annual charge on operators of gravity-based energy storage wells, as provided, to defray the regulatory costs incurred by the state in maintaining surveillance of those wells, ensuring that testing is conducted properly, and ensuring no damage occurs to the environment by reason of the conversion. Because a violation of the requirements of the Gravity-Based Energy Storage Well Pilot Program would be a crime, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. Article 3.6 (commencing with Section 3190) is added to Chapter 1 of Division 3 of the Public Resources Code, to read: Article 3.6. Gravity-Based Energy Storage Well Pilot Program 3190. For purposes of this article, the following definitions apply: (a) “Federal agency” means the United States Environmental Protection Agency, including Region 9 of that agency. (b) (1) “Gravity-based energy storage well” means a well that meets all of the following: (A) The well is plugged with all perforations sealed, including by the use of permanent bridge plug. (B) The well is isolated from a hydrocarbon reservoir. (C) The well has mechanical integrity. (D) The well is not a conduit for fluid migration into a beneficial use aquifer. (E) The well is exclusively used to store or generate energy by raising or lowering a weight within the well casing. (2) A well that has been fully plugged and abandoned pursuant to Section 3208 is not eligible to be a gravity-based energy storage well. (3) A well listed as an orphan well pursuant to subparagraph (C) of paragraph (1) of subdivision (a) of Section 3206.3 or an idle-deserted well, as defined in Section 3251, is eligible to be converted for use as a gravity-based energy storage well if all applicable and necessary rights to do so have been obtained. 3190.1. (a) The supervisor, after consulting with the State Water Resources Control Board and an appropriate regional water quality control board, may authorize the conversion of not more than 250 wells for use as gravity-based energy storage wells pursuant to this article to evaluate their use, including the establishment of appropriate operating conditions and physical parameters to safely store and generate energy. (b) Before authorizing the use of a well as a gravity-based energy storage well, the supervisor, the State Water Resources Control Board, or an appropriate regional water quality control board may require the operator to provide additional information demonstrating the suitability of the well for use as a gravity-based energy storage well, including, but not limited to, providing an analysis of the chemical composition of the fluid in the wellbore, and may require testing for, among other indicators of suitability, total dissolved solids, total petroleum hydrocarbon as crude oil, major cations, including, but not limited to, calcium, magnesium, sodium, potassium, iron, manganese, strontium, and boron, major anions, including, but not limited to, chloride, sulfate, bicarbonate, carbonate, bromide, and iodide, total alkalinity and hydroxide, electrical conductance, potential of hydrogen or pH, and temperature. Liquid analysis required pursuant to this section shall be performed by a laboratory that is certified by the State Water Resources Control Board’s Environmental Laboratory Accreditation Program. The performing laboratory shall submit the data and analysis directly to the supervisor or the appropriate regional water quality control board, as appropriate, using a digital format, and also to the State Water Resources Control Board, in an electronic format uploaded to their online GeoTracker information system following the applicable regulations adopted pursuant to Section 13197.5 of the Water Code. (c) The operator, before conversion of a well to a gravity-based energy storage well, shall file with the supervisor a written notice of intention to convert the well to a gravity-based energy storage well. The notice shall contain the pertinent data the supervisor requires in a format acceptable to the supervisor. The supervisor may require other pertinent information to supplement the notice. If conversion has not commenced within 24 months from the approval of the notice, the notice shall be deemed canceled. The notice shall not be extended and the cancellation shall be noted in the division’s records. (d) The conversion of a well for use as a gravity-based energy storage well does not relieve the operator of its obligation to plug and abandon the well, decommission attendant facilities, and remediate the site, consistent with the requirements of this division. (e) (1) Before authorizing the conversion of a well for use as a gravity-based energy storage well, the supervisor shall obtain an enforceable commitment from the operator that all contractors and subcontractors, at every tier, performing the conversion will pay at least prevailing wages and will use a skilled and trained workforce to perform all work that falls within an apprenticeable occupation in the building and construction trades. (2) Paragraph (1) shall not apply if all work to perform the conversion is subject to a project labor agreement that requires the payment of prevailing wages and the use of a skilled and trained workforce. (3) For purposes of this subdivision, the following definitions apply: (A) “Prevailing wages” means at the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate. (B) “Project labor agreement” means a prehire collective bargaining agreement that establishes terms and conditions of employment for a specific construction project or projects and is an agreement described in Section 158(f) of Title 29 of the United States Code. (C) “Skilled and trained workforce” has the same meaning as set forth in Section 2601 of the Public Contract Code. (f) Submittal of a written notice of intention or supplemental notice pursuant to this section is separate from, and in addition to, any requirement to submit a written notice of intention or supplemental notice pursuant to Section 3203. 3190.2. A well that has been permitted or operated as a Class II well, as defined in Section 3130, shall not be authorized for use as a gravity-based energy storage well without the written acknowledgment and authorization of the federal agency. The written acknowledgment and authorization shall be part of the well record. 3190.3. (a) For purposes of this section, “plan” means the plan required pursuant to paragraph (2) of subdivision (a) of Section 3206. (b) An idle well that is authorized for use as a gravity-based energy storage well shall be identified in any plan or update to a plan. Identification of the idle well as a gravity-based energy storage well within the plan or update to the plan shall constitute the elimination of an idle well for purposes of compliance with plan requirements. (c) A gravity-based energy storage well that ceases to be operated as a gravity-based energy storage well may be incorporated as an idle well in any plan or update to a plan and subject to the plan elimination requirements. (d) An idle well that is authorized for use as a gravity-based energy storage well remains subject to the requirements of Section 3205.3. 3190.4. (a) The division shall require mechanical integrity testing before the conversion of a well to a gravity-based energy storage well, and not less than annually thereafter, that shall include, at a minimum, pressure testing. Test results and testing requirements shall be part of the well record. A gravity-based energy storage well that has lost mechanical integrity shall cease operation as a gravity-based energy storage well until mechanical integrity is restored. In the event of a loss of mechanical integrity or leak to the environment, the operator of a gravity-based energy storage well shall notify the division, the State Air Resources Board, the appropriate regional water quality control board, and any schools or community members living within 3,200 feet of the well of the loss of mechanical integrity or leak. (b) A well, after being converted for use as a gravity-based energy storage well, shall be continuously monitored for leaks, including, but not limited to, methane leaks. The supervisor, in consultation with the State Air Resources Board and the State Water Resources Control Board, shall establish criteria for leak monitoring and reporting. (c) The operator of a gravity-based energy storage well shall annually report data, including, but not limited to, the number of wells converted to gravity-based energy storage wells, the number of converted gravity-based energy storage wells that were previously leaking methane or other fluid, the average number of cycles to store and produce energy per day by gravity-based energy storage wells, and energy production from gravity-based energy storage wells, to the division. (d) This section does not alter or affect the obligation of the operator to comply with Section 8589.7 of the Government Code, as applicable. 3190.5. A gravity-based energy storage well that has lost its mechanical integrity shall be plugged and abandoned within one year or scheduled for plugging and abandonment in an approved idle well management plan or related plan approved by the supervisor unless the mechanical integrity of the well is restored. 3190.6. Except as otherwise provided in this article, a gravity-based energy storage well shall meet all requirements applicable to a well specified in this division. 3190.7. The division shall identify all wells converted to or being operated as gravity-based energy storage wells on its internet website. 3190.8. (a) On or by January 1, 2033, the division, in consultation with entities operating gravity-based energy storage wells, the Secretary for Environmental Protection, the State Water Resources Control Board and regional water quality boards, the State Air Resources Board, the State Energy Resources Conservation and Development Commission, relevant local jurisdictions, environmental and environmental justice organizations, tribes, and other stakeholders, shall evaluate the Gravity-Based Energy Storage Well Pilot Program and make recommendations to the Legislature for a framework to implement an ongoing Gravity-Based Energy Storage Well Program to provide for regulation of the operation of gravity-based energy storage wells as a result of the benefits determined for renewable energy sources and the storage of the energy in gravity-based energy storage wells. The recommendations shall be informed by the Gravity-Based Energy Storage W [Text truncated for display. 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