BILL NUMBER: SB 380 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 30, 2016
AMENDED IN ASSEMBLY MARCH 7, 2016
AMENDED IN ASSEMBLY FEBRUARY 16, 2016
AMENDED IN SENATE JANUARY 27, 2016
INTRODUCED BY Senator Pavley
(Principal coauthors: Senators De León and Huff)
(Coauthors: Senators Allen, Hertzberg, and Runner)
(Coauthor: Assembly Member Wilk)
FEBRUARY 24, 2015
An act to add and repeal Section 3217 of the Public Resources
Code, and to add Section 713 to and repeal
Sections 714 and 715 of the Public Utilities Code, relating to
natural gas, and declaring the urgency thereof, to take effect
immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 380, as amended, Pavley. Natural gas storage: moratorium.
(1) Under existing law, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation regulates the drilling,
operation, maintenance, and abandonment of oil and gas wells in the
state. Existing law requires the State Oil and Gas Supervisor to
supervise the drilling, operation, maintenance, and abandonment of
wells and the operation, maintenance, and removal or abandonment of
tanks and facilities related to oil and gas production within an oil
and gas field, so as to prevent damage to life, health, property, and
natural resources, as provided; to permit owners and operators of
wells to utilize all known methods and practices to increase the
ultimate recovery of hydrocarbons; and to perform the supervisor's
duties in a manner that encourages the wise development of oil and
gas resources to best meet oil and gas needs in this state. Under
existing law, a person who fails to comply with certain requirements
relating to the regulation of oil or gas operations is guilty of a
misdemeanor.
This bill would require the supervisor to immediately
institute a moratorium on injections of natural gas into any gas
storage wells located within and serving continue the
prohibition against Southern California Gas Company injecting any
natural gas into the Aliso Canyon natural gas storage facility
located in the County of Los Angeles until specified
conditions are met, including that the integrity of each gas storage
well has been quantitatively and objectively evaluated using
state-of-the-art technology, as determined by the supervisor with
input from independent experts, and the risks posed by gas storage
well failure have been evaluated. a comprehensive
review of the safety of the gas storage wells at the facility is
completed, as specified, the supervisor determines that well
integrity has been ensured by the review, the risks of failures
identified in the review have b een addressed, the
supervisor's duty to prevent damage to life, health, property, and
natural resources, and other requirements is satisfied, and the
Executive Director of the Public Utilities Commission has concurred
via letter with the supervisor regarding his or her determination of
safety. The bill would require the supervisor to determine criteria
for the gas storage well comprehensive safety review with input from
independent experts and would require the criteria to include, but
not be limited to, specified tests and inspections. The bill
would require the division to hold at least one public meeting
concerning the technical methods and equipment to be used to
evaluate gas storage well integrity and the risks posed by gas
storage well failure, request the independent experts to also develop
objective criteria to assess the overall risk of the Aliso Canyon
natural gas storage facility, and make that objective criteria
available to the public. to provide the public an
opportunity to comment on the criteria. The bill would require the
supervisor to direct the contracted independent experts to provide a
methodology to be used in assessing the tests and inspections
specified in the criteria. The bill would require the division to
post the methodology on a public portion of its Internet Web site.
The bill would require the operator of the facility to provide the
division with the proposed maximum reservoir pressure and to include
data and calculations supporting the basis for the pressure limit.
The bill would authorize the supervisor to allow injections of
natural gas into the facility once the gas storage well comprehensive
safety review is complete and the supervisor has approved the
maximum and minimum reservoir pressure at the facility. The
bill would also require the supervisor to prohibit
that, before the completion of the gas storage well
comprehensive safety review, the production of natural gas
by any gas storage well originally drilled earlier than 1954
from gas storage wells at the Aliso
Canyon natural gas storage facility located in the
County of Los Angeles until specified conditions are met, except as
specified. be limited to gas storage wells that have
satisfactorily completed the testing and remediation required under
the review, except as specified. The bill would require the
supervisor to direct the operator of the facility to provide a plan
to ensure, at the earliest possible time, the availability of
sufficient gas production capacity using gas storage wells that have
satisfactorily completed the testing and remediation required under
the review. The bill would require all gas storage wells
returning to service under these provisions to inject or produce gas
only through the interior metal tubing, and would require the
operator to conduct ongoing pressure monitoring and comply with any
other requirements specified by the supervisor. The bill would
require the gas storage wells at the facility that are plugged and
abandoned pursuant to these provisions to be periodically inspected
by the operator for leaks using effective gas leak detection
techniques. The bill would require the division, with respect to the
review and in a timely manner, to po st all testing,
inspection and monitoring results, and other safety review-related
materials to a public portion of the division's Internet Web site.
Because a violation of certain of these requirements
would be a crime, the bill would impose a state-mandated local
program. The bill would repeal these provisions on January 1, 2021.
(2) Under existing law, the Public Utilities Commission is
authorized to supervise and regulate every public utility in the
state. Under existing law, a violation of the Public Utilities
Act or any order, decision, rule, direction, demand, or requirement
of the commission is a crime.
This bill would require the commission, no later than July 1,
2017, to determine the feasibility of minimizing or eliminating use
of the Aliso Canyon natural gas storage facility located in the
County of Los Angeles while still maintaining energy and
electric reliability for the region, and to consult with
specified entities in making its determination. The bill would
require the commission, in consultation with specified entities, to
determine the range of working gas necessary to ensure safety and
reliability for the region and just and reasonable rates in
California, and to direct the operator of the facility to provide all
information the commission deems necessary to make that
determination. The bill would require the commission, within 30 days
of the effective date of this act, to publish a report, including
specified information regarding gas production at the facility. The
bill would require the commission to make the report ava
ilable on its Internet Web site, and to seek public comments on the
report, as specified. The bill would require the executive director
of the commission, in consultation with the supervisor, to direct the
operator of the facility to maintain the specified range
of working gas after certain conditions have occurred. Certain
provisions of this bill would be part of the act and an order or
other action of the commission would be required to implement certain
of the provisions. Because a violation of the bill's provisions or
of an order or decision of the commission would be a crime, this bill
would impose a state-mandated local program by creating new crimes.
The bill would repeal these provisions on January 1, 2021.
(3) 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.
(4) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 3217 is added to the Public
Resources Code, to read:
3217. (a) The supervisor shall immediately institute a moratorium
on injections of natural gas into any gas storage wells located
within and serving the Aliso Canyon natural gas storage facility
located in the County of Los Angeles until all of the following
conditions are met:
(1) The integrity of each gas storage well has been quantitatively
and objectively evaluated using state-of-the-art technology, as
determined by the supervisor with input from independent experts, and
the risks posed by gas storage well failure have been evaluated.
(A) The age, history, and condition of each gas storage well shall
be specifically addressed, with particular emphasis on gas storage
wells drilled prior to 2006.
(B) The technical methods and equipment used to evaluate gas
storage well integrity and the risks posed by gas storage well
failure shall be determined by the supervisor with input from
independent experts and the public.
(C) The division shall hold at least one public meeting concerning
the technical methods and equipment. The division shall request the
independent experts to also develop objective criteria to assess the
overall risk of the Aliso Canyon natural gas storage facility. The
division shall make the objective criteria available to the public.
(2) Any gas storage well posing an enhanced risk of failure has
been repaired to mitigate the enhanced risk or plugged and abandoned.
(3) The supervisor determines that the overall risk from gas
storage well failure satisfies the supervisor's duty pursuant to
Section 3106 to prevent damage to life, health, property, and natural
resources, and other requirements, as specified in Section 3106.
(4) The Public Utilities Commission and the State Energy Resources
Conservation and Development Commission concur with the supervisor's
determination in paragraph (3).
(b) The supervisor shall prohibit the production of natural gas by
any gas storage well originally drilled earlier than 1954 at the
Aliso Canyon natural gas storage facility located in the County of
Los Angeles until after the integrity of and the risks associated
with any of these gas storage wells have been evaluated and
determinations by the supervisor, with the concurrence of the
commissions, have been made pursuant to the process described in
subdivision (a), except when necessary to do either of the following:
(1) Respond to the uncontrolled leak of natural gas from the
"Standard Sesnon 25" well (American Petroleum Institute
identification number 03700776).
(2) Maintain regional energy reliability, at the written direction
of the commissions.
(c) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
SECTION 1. Section 3217 is added to the
Public Resources Code , to read:
3217. (a) (1) The supervisor shall continue the prohibition
against Southern California Gas Company injecting any natural gas
into the Aliso Canyon natural gas storage facility located in the
County of Los Angeles until a comprehensive review of the safety of
the gas storage wells at the facility is completed and the supervisor
determines that well integrity has been ensured by the review, the
risks of failures identified in the review have been addressed, and
the supervisor's duty to prevent damage to life, health, property,
and natural resources, and other requirements, as specified in
Section 3106, is satisfied. The supervisor may not lift the
prohibition on injection until the Executive Director of the Public
Utilities Commission has concurred via letter with the supervisor
regarding his or her determination of safety.
(2) For purposes of this section, "facility" means the Aliso
Canyon natural gas storage facility located in the County of Los
Angeles operated by Southern California Gas Company.
(b) (1) The criteria for the gas storage well comprehensive safety
review shall be determined by the supervisor with input from
contracted independent experts and shall include the steps in
subdivision (c). The division shall hold at least one public meeting
to provide the public an opportunity to comment on the criteria.
(2) The supervisor shall direct the contracted independent experts
to provide a methodology to be used in assessing the tests and
inspections specified in the criteria. This requirement may be
satisfied by the independent experts reviewing and, if necessary,
revising the division's written methodology for assessing the tests
and inspections specified in the criteria. The methodology shall
include all tests and inspections required by the criteria. The
division shall post the methodology online on a public portion of its
Internet Web site.
(c) The gas storage well comprehensive safety review shall include
the following steps to ensure external and internal well mechanical
integrity:
(1) All gas storage wells shall be tested and inspected from the
surface to the packer or to any wellbore restriction near the top of
the geologic formation being used for gas storage, whichever is
higher in elevation, to detect existing leaks using temperature and
noise logs.
(2) Any leaks shall be stopped and remediated to the satisfaction
of the supervisor.
(3) Following remediation, leak detection tests shall be repeated
and results reviewed by the supervisor.
(4) (A) Unless a well has been fully plugged and abandoned to the
supervisor's satisfaction and in accordance with Section 3208, the
well shall be evaluated and remediated in accordance with
subparagraph (B) or plugged in accordance with subparagraph (C).
(B) If a gas storage well is intended to return to service for the
purposes of resuming injections to the facility, it shall be tested
and inspected from the surface to the packer or to any wellbore
restriction near the top of the geologic formation being used for gas
storage, whichever is higher in elevation, to ensure mechanical
integrity. As identified in the division's criteria, these tests and
inspections shall include the measurement of casing thickness and
integrity, an evaluation of the cement bond on the casing, the
determination as to whether any deformities in the well casing exist,
and an evaluation of the well's ability to withstand pressures that
exceed maximum allowable injection and production pressures, with a
reasonable margin for safety, at the facility in accordance with the
criteria determined by the supervisor with input from independent
experts pursuant to subdivision (b). If the tests reveal that a well
poses a risk of failure, the supervisor shall require remediation and
repeat tests as necessary to demonstrate to the satisfaction of the
supervisor that remediation has mitigated any potential identified
risks. If the operator cannot remediate the well to mitigate the
identified risks to the satisfaction of the supervisor, the well
shall be plugged and abandoned in accordance with Section 3208.
(C) (i) If a well is to be taken out of service before resumption
of gas injections at the facility, it shall be removed from operation
and isolated from the gas storage reservoir through plugging
according to the division's criteria, including, but not limited to,
the demonstration of sufficient cement to prevent migrations between
the reservoir and other zones, placement of a mechanical plug at the
bottom of the well, and subsequent filling of the well with fluid,
and to specifications approved by the supervisor. All gas storage
wells that are taken out of service under this subparagraph shall be
subjected to ongoing testing and monitoring requirements identified
in the criteria determined by the supervisor with input from
independent experts. The monitoring shall include, but not be limited
to, real-time and daily pressure monitoring, as applicable. A gas
storage well shall not be returned to service unless the testing and
remediation required under subparagraph (B) has been completed.
(ii) A gas storage well, within one year of being plugged and
isolated from the gas storage reservoir pursuant to clause (i), shall
either be returned to service by satisfactorily completing the
testing and remediation required under subparagraph (B) or be
permanently plugged and abandoned to the supervisor's satisfaction in
accordance with Section 3208.
(D) The supervisor shall make a written finding for each gas
storage well that has satisfactorily completed the testing and
remediation required under subparagraph (B).
(5) The gas storage well comprehensive safety review is not
complete until every gas storage well at the facility has completed
the testing and remediation required under subparagraph (B) of
paragraph (4), been temporarily abandoned and isolated from the
reservoir as required under clause (i) of subparagraph (C) of
paragraph (4), or been fully plugged and abandoned to the supervisor'
s satisfaction in accordance with Section 3208.
(d) (1) Before commencing injections at the facility, the operator
of the facility shall provide the division with the proposed maximum
reservoir pressure and include data and calculations supporting the
basis for the pressure limit. The pressure limit shall account for
the pressure required to inject intended gas volumes at all proposed
inventory levels and the pressure limit shall not exceed the design
pressure limits of the reservoir, wells, wellheads, piping, or
associated facilities with an appropriate margin for safety.
(2) The operator's proposed maximum reservoir pressure shall be
subject to review and approval by the supervisor, and the supervisor
shall consult with independent experts regarding the appropriate
maximum and minimum reservoir pressure at the facility.
(e) Once the gas storage well comprehensive safety review is
complete pursuant to paragraph (5) of subdivision (c) and the
supervisor has approved the maximum and minimum reservoir pressure
pursuant to paragraph (2) of subdivision (d), the supervisor may
allow injections of natural gas at the facility.
(f) All gas storage wells returning to service pursuant to
subdivision (e) shall only inject or produce gas through the interior
metal tubing and not through the annulus between the tubing and the
well casing. The operator shall also conduct ongoing pressure
monitoring and comply with any other requirements specified by the
supervisor.
(g) The gas storage wells at the facility that are plugged and
abandoned in accordance with Section 3208 pursuant to this section
shall be periodically inspected by the operator for leaks using
effective gas leak detection techniques such as optical gas imaging.
(h) (1) Before the completion of the gas storage well
comprehensive safety review, production of natural gas from gas
storage wells at the facility shall be limited to gas storage wells
that have satisfactorily completed the testing and remediation
required under subparagraph (B) of paragraph (4) of subdivision (c)
unless insufficient production capacity is available. Only if
production capacity supplied by the tested and remediated wells is
demonstrably insufficient may the supervisor allow other gas storage
wells to be used.
(2) The supervisor shall direct the operator of the facility to
provide a plan to ensure, at the earliest possible time, the
availability of sufficient gas production capacity using gas storage
wells that have satisfactorily completed the testing and remediation
required under subparagraph (B) of paragraph (4) of subdivision (c).
(i) With respect to the gas storage well comprehensive safety
review at the facility, all testing, inspection and monitoring
results reported to the division, gas storage well compliance status,
any required remediation steps, and other safety review-related
materials shall be posted in a timely manner by the division online
on a public portion of its Internet Web site.
(j) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
SEC. 2. Section 713 714 is added to
the Public Utilities Code, to read:
713. 714. (a)
The commission, no later than July 1, 2017, shall determine the
feasibility of minimizing or eliminating use of the Aliso Canyon
natural gas storage facility located in the County of Los Angeles
while still maintaining energy and electric reliability
for the region. This determination shall be
consistent with the Clean Energy and Pollution Reduction Act of 2015
(Chapter 547 of the Statutes of 2015) and Executive Order B-30-2015.
The commission shall consult with the State Energy Resources
Conservation and Development Commission, the Independent System
Operator, the local publicly owned utilities that rely on natural gas
for electricity generation, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation, affected balancing
authorities, and other relevant government entities, in making
its determination.
(b) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
SEC. 3. Section 715 is added to the
Public Utilities Code , to read:
715. (a) The commission shall direct the operator of the Aliso
Canyon natural gas storage facility located in the County of Los
Angeles to provide all information the commission deems necessary for
the commission to determine, in consultation with the State Energy
Resources Conservation and Development Commission, the Independent
System Operator, and affected publicly owned utilities, the range of
working gas necessary to ensure safety and reliability for the region
and just and reasonable rates in California. The determination shall
be based on best available data, and shall incorporate data from
recent and on-going studies being conducted to determine energy and
gas use in the region by the commission, the State Energy Resources
Conservation and Development Commission, the Independent System
Operator, and affected publicly owned utilities.
(b) Within 30 days of the effective date of the act adding this
section, the commission shall publish a report that includes, but is
not limited to, all of the following:
(1) The range of working gas necessary at the facility to ensure
safety and reliability and just and reasonable rates in California
determined pursuant to subdivision (a).
(2) The amount of natural gas production at the facility needed to
meet safety and reliability requirements.
(3) The number of wells and associated injection and production
capacity required.
(4) The availability of sufficient natural gas production using
gas storage wells that have satisfactorily completed testing and
remediation required under subparagraph (B) of paragraph (4) of
subdivision (c) of Section 3217 of the Public Resources Code.
(c) The commission shall make the report required under
subdivision (b) available on its Internet Web site and seek, either
through written comments or a workshop, public comments on the
report.
(d) The executive director of the commission, in consultation with
the State Oil and Gas Supervisor, shall direct the operator to
maintain the specified range of working gas, determined pursuant to
subdivision (a), at the facility to ensure reliability and just and
reasonable rates in California, after all of the following occur:
(1) The gas storage well comprehensive safety review is complete
pursuant to paragraph (5) of subdivision (c) of Section 3217 of the
Public Resources Code.
(2) The State Oil and Gas Supervisor has approved the maximum and
minimum reservoir pressure pursuant to subdivision (d) of Section
3217 of the Public Resources Code.
(3) The State Oil and Gas Supervisor has allowed injections of
natural gas at the facility, pursuant to subdivision (e) of Section
3217 of the Public Resources Code.
(4) The commission has allowed, and received, public comment on
the report pursuant to subdivision (c).
(e) In no case may the volume of working gas set by the executive
director of the commission result in reservoir pressures that fall
out of the range established pursuant to subdivision (d) of Section
3217 of the Public Resources Code.
(f) This section shall remain in effect only until January 1,
2021, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2021, deletes or extends
that date.
SEC. 3. SEC. 4. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.
SEC. 4. SEC. 5. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to mitigate, at the earliest possible time, ongoing harm
from the gas leak at the Aliso Canyon natural gas storage facility,
and to evaluate the integrity of and the risks associated with
older gas storage wells at that facility, it is
necessary that this act take effect immediately.