Amended in Assembly April 19, 2016

Amended in Assembly March 30, 2016

Amended in Assembly March 7, 2016

Amended in Assembly February 16, 2016

Amended in Senate January 27, 2016

Senate Bill No. 380

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 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 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, as specified, the supervisor determines that well integrity has been ensured by the review, the risks of failures identified in the review have been 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. begin delete The bill would require the division to hold at least one public meeting to provide the public an opportunity to comment on the criteria. end delete 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 begin delete complete end delete begin insert complete, the division holds a duly noticed public hearing in the affected community to provide the public an opportunity to comment on the safety review findings and the proposed pressure limit, end insert and the supervisor has approved the maximum and minimum reservoir pressure at the facility. The bill would also require that, before the completion of the gas storage well comprehensive safety review, the production of natural gas from gas storage wells at the facility 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 post 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 begin insert open a proceeding to end insert 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 available 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) (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). begin delete The division shall hold at least one public
meeting to provide the public an opportunity to comment on the
criteria. end delete

(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.

begin insert

(d) Upon completion of the gas storage well comprehensive
safety review but before authorizing the commencement of
injections at the facility, the division shall hold at least one duly
noticed public meeting in the affected community to provide the
public an opportunity to comment on the safety review findings
and on the proposed pressure limit as provided in subdivision (e).

end insert begin delete

(d)

end delete

begin insert (e) end insert  (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.

begin delete

(e)

end delete

begin insert (f) end insert  Once the gas storage well comprehensive safety review is
complete pursuant to paragraph (5) of subdivision begin delete (c) and end delete begin insert (c), end insert the
supervisor has approved the maximum and minimum reservoir
pressure pursuant to paragraph (2) of subdivision begin delete (d), end delete begin insert (e), and the
public hearing is held pursuant to subdivision (d), end insert the supervisor
may allow injections of natural gas at the facility.

begin delete

(f)

end delete

begin insert (g) end insert  All gas storage wells returning to service pursuant to
subdivision begin delete (e) end delete begin insert (f) end insert 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.

begin delete

(g)

end delete

begin insert (h) end insert  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.

begin delete

(h)

end delete

begin insert (i) end insert  (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).

begin delete

(i)

end delete

begin insert (j) end insert  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.

begin delete

(j)

end delete

begin insert (k) end insert  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 714 is added to the Public Utilities Code, to
read:

714.  

(a) The commission, no later than July 1, 2017, shall begin insert open
a proceeding to end insert 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 ongoing
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 begin delete (d) end delete begin insert (e) end insert 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 begin delete (e) end delete begin insert (f) end insert 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 begin delete (d) end delete
begin insert (e) end insert 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. 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. 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 gas
storage wells at that facility, it is necessary that this act take effect
immediately.