For the second time in a year, a tiny oil field near the Altamont Pass has become a flash point in California’s heated politics of oil and water.

State regulators will hold a hearing Wednesday in Livermore on a proposal to let the company that operates the field pump its drilling wastewater back into a broader swath of the same underground formation that produces the oil.

The company, E&B Natural Resources, runs six active production wells on the site, just east of Livermore and south of Interstate 580. The operation also contains one well that already disposes of wastewater underground, a common practice in the oil industry.

The proposal to be discussed at a hearing of the state’s Division of Oil, Gas and Geothermal Resources would expand the subsurface area where the company could inject water. Those injections would also help squeeze more petroleum from the Livermore Oil Field, which has been in production for more than 50 years.

E&B, based in Bakersfield, sees the proposal as essentially extending a practice that it already performs on the site, a company spokeswoman said.

Environmentalists, however, consider the step a potential threat to groundwater. Last year, they successfully pushed for a ban on hydraulic fracturing in Alameda County, even though the Livermore Oil Field is the only active field in the county and does not use fracking.

“There’s this overall concern that we are sacrificing usable groundwater to the oil industry to let them expand oil and gas operations when we should be heading in the other direction,” said Hollin Kretzmann, staff attorney with the Center for Biological Diversity.

His group plans a demonstration before the 5 p.m. start of the state hearing, which will be held in the Livermore City Council chambers. The division will not make a decision on the proposal at the hearing, instead using it to collect public comments. The proposal needs the approval of both the division and the federal Environmental Protection Agency to take effect.

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All California oil fields contain large amounts of briny water mixed with the petroleum. Once brought to the surface, the water is separated from the oil and can sometimes be treated for use in irrigation. More often, oil companies put it back underground, often using it to maintain pressure within their oil fields.

That practice, however, has come under increased scrutiny in recent years after revelations that the state had, for decades, allowed companies to inject their wastewater into underground aquifers that were supposed to be protected by federal law.

The Livermore Oil Field already has a small zone where the federal government allows underground injections. The current proposal would expand that zone to cover more of the field.

E&B maintains that water currently sitting in the underground formation contains oil and high levels of boron and could not realistically be used for drinking or irrigation. According to the company’s application, the zone where wastewater injections would occur lies 1,500 feet below the deepest nearby wells used for drinking water, making contamination unlikely.

Kretzmann argues that contaminants could migrate from one underground zone to another along the wells themselves. The water, he said, could also move along the Greenville Fault — which runs along the oil field’s eastern border — should the fault rupture in an earthquake. A 5.8 magnitude quake occurred on the fault in 1980.

David R. Baker is a San Francisco Chronicle staff writer. Email: dbaker@sfchronicle.com