BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 380|
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THIRD READING
Bill No: SB 380
Author: Pavley (D), et al.
Amended: 1/27/16
Vote: 27 - Urgency
SENATE NATURAL RES. & WATER COMMITTEE: 9-0, 1/28/16
AYES: Pavley, Stone, Allen, Hertzberg, Hueso, Jackson, Monning,
Vidak, Wolk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 1/28/16
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Natural gas storage: moratorium
SOURCE: Author
DIGEST: This bill imposes an immediate moratorium on natural
gas injection and a restriction on natural gas production at the
Aliso Canyon storage facility until certain conditions are met.
ANALYSIS:
Existing law:
1)Establishes the Division of Oil, Gas and Geothermal Resources
(DOGGR) in the Department of Conservation.
2)Requires that DOGGR regulate the drilling, operation,
maintenance and abandonment of oil and gas wells in the state.
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3)Requires DOGGR's leader, the state oil and gas supervisor, to
supervise the drilling, operation, maintenance, and
abandonment of oil and gas wells and facilities related to oil
and gas production within an oil and gas field, among other
activities, so as to prevent damage to life, health, property,
and natural resources, as provided.
4)Authorizes the California Public Utilities Commission (CPUC)
to supervise and regulate every public utility in the state.
This bill:
1)Imposes an immediate moratorium on natural gas injection at
the Aliso Canyon natural gas storage facility.
2)Imposes a restriction on natural gas production at the same
facility for wells originally drilled earlier than 1954 except
where needed to respond to the ongoing significant
uncontrolled natural gas leak from a well in the facility or
to ensure regional energy reliability, as specified.
3)Requires, that the integrity of each well is quantitatively
and objectively evaluated using state-of-the-art technology
and the risks posed by well failure evaluated. The following
conditions must be met in order to lift the moratorium and
production restriction:
a) Well age, history and condition shall be considered in
the evaluation with an emphasis on wells older than 10
years of age.
b) The supervisor shall determine the technical methods
used to do the evaluation and the risks posed by well
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failure with input from independent experts and the public
through a public process.
c) Wells posing an enhanced risk of failure must be
repaired or plugged and abandoned.
d) The supervisor shall determine that the overall risk
from well failure satisfies the supervisor's requirement to
prevent damage to life, health, property and natural
resources, as specified, and
e) The CPUC and the State Energy Resources Conservation and
Development Commission concur with the supervisor's
assessment of the overall risk.
4)Requires the CPUC, in consultation with other state
regulators, to determine the feasibility of minimizing or
eliminating the use of the Aliso Canyon natural gas storage
facility while maintaining regional energy reliability.
5)Includes an urgency section due to ongoing harm to the
community.
Background
On October 23, 2015, a significant uncontrolled natural gas leak
from a gas storage well ("SS-25") was discovered. The well is
located in the Southern California Gas Company's (SoCal Gas')
Aliso Canyon natural gas storage facility located in
northeastern Los Angeles County. This well is located uphill
from and approximately 1-1/4 miles away from homes in the Porter
Ranch community. The leak has received local, national and
international news coverage.
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The natural gas storage facility at Aliso Canyon includes
(approximately) 115 wells of which 108 are gas storage wells.
In the early 1970s, a depleted existing oil reservoir was
converted to use as a gas storage reservoir. It is the largest
gas storage reservoir in the western United States at 86 billion
cubic feet working capacity. Many existing oil wells serving
the depleted reservoir were converted to gas storage service at
the time of the conversion. Forty-eight of the gas storage
wells at Aliso Canyon were originally drilled in 1954 or earlier
(almost half of those in gas storage service now). An
additional 47 wells were all originally drilled at least 15
years ago. DOGGR's existing regulations are not proactive with
respect to identifying the locations of incipient leaks. Aliso
Canyon may not be unusual, however. Over half of the
approximately 420 gas storage wells in service in the state are
over at least 40 years old.
DOGGR was apparently notified the day of the leak's discovery by
SoCal Gas. The local air quality regulator, the South Coast Air
Quality Management District began receiving calls reporting the
smell of leaking gas from the community on the next day, October
24. It was several more days before SoCal Gas acknowledged the
leak to the community and the public. To date, South Coast Air
Quality Management District has received thousands on complaints
regarding the odor.
In mid-November, the Los Angeles County Department of Public
Health, citing public health concerns associated with the use of
odorants in the natural gas, ordered SoCal Gas to provide
temporary housing relocation assistance to affected residents.
The well continues to leak natural gas. As of three months, the
amount of natural gas leaked is estimated to be approximately
equivalent to the annual greenhouse gas emissions of 450,000
cars. Seven well "kill" attempts by SoCal Gas and its
contractors have failed to control or stop the leak. DOGGR
ordered a relief well to be drilled for use in killing the well.
Recent reports indicate that the relief well will be completed
in February and efforts to kill the leaking well using the
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relief well will commence in mid-to-late February.
While the gas storage facility itself is under the primary
jurisdiction of the CPUC, the storage wells are under DOGGR's
jurisdiction. Seven state entities in total are involved in the
response to the leak in some capacity. In addition to DOGGR and
the CPUC, these include the Governor's Office of Emergency
Services, the Office of Environmental Health Hazard Assessment,
the Air Resources Board (ARB), the Division of Occupational
Safety and Health and the California Energy Commission. In
addition Governor Brown has been directly involved in leak
response, issuing a State of Emergency on January 6, and the
Governor's Office has coordinated state response.
Of particular note:
The DOGGR supervisor has issued two orders to SoCal Gas
regarding the leak. The first, on November 18, 2015, required
immediate sharing of monitoring data and ordered preparations
for drilling a relief well to start. The second, on December
10, 2015, required numerous actions by SoCal Gas including,
among other items, pursuing options to capture the leaking
gas, prepare for a second relief well, reduce reservoir
pressure by producing stored gas, continuing to not inject gas
into the storage reservoir and maximizing the rate of
withdrawal from the facility. DOGGR reports convening a panel
of technical experts from national labs to assist it in its
response to the leak.
The Governor's State of Emergency, among other provisions,
directed DOGGR to strengthen oversight of gas storage wells by
promulgating new emergency regulations and directed DOGGR, the
CPUC, ARB and California Energy Commission to assess the
long-term viability of natural gas storage facilities in
California.
On January 15, 2016, DOGGR announced emergency regulations to
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improve the regulation of gas storage wells. While much is
left at the discretion of the supervisor, the emergency
regulations provide for more regulatory oversight including
testing.
On January 21, 2016, the CPUC wrote to SoCal Gas ordering the
working gas capacity at Aliso Canyon be reduced to 15 billion
cubic feet until further notice. SoCal Gas agreed in its
response the next day.
Comments
Public process. The public has an opportunity to comment on the
DOGGR emergency regulations through the rulemaking process. The
public did not have a formal role in developing the proposal to
best of the Senate Natural Resources and Water Committee's
staff's knowledge. Two 1940s era wells at Aliso Canyon have
recently had upgraded operating and other conditions imposed
upon them (API #s 03700722 and 03700723, originally drilled in
1945 and 1946, respectively). It is not known what results
prompted the additional requirements for these two wells.
State-of-the-art technology? DOGGR's existing gas storage
regulations have been criticized for detecting leaks only after
the leak has started. The proposed emergency regulations are
substantially revised, although, as noted above, provide
significant discretion to the supervisor. Proactive leak
detection using, for example, ultrasonic imaging, is, according
to reports, widely available. The two wells noted in the
preceding comment have both been required to undergo ultrasonic
imaging.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
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Unknown, but potentially in the hundreds of thousands of
dollars from the Oil, Gas, and Geothermal Administrative Fund
(special) to the Department of Conservation for the additional
required evaluation of wells at the Aliso Canyon storage
facility.
Minimum costs likely in the high hundreds of thousands and
possibly in the low millions to the Public Utilities
Reimbursement Account (special fund) for the CPUC to determine
the feasibility of minimizing or eliminating the use of the
Aliso Canyon storage facility and to make a determination
regarding the lifting of the moratorium.
Unknown costs to the California Energy Commission to the
Energy Resources
Program Account (General Fund).
SUPPORT: (Verified1/27/16)
None received
OPPOSITION: (Verified1/27/16)
None received
ARGUMENTS IN SUPPORT: According to the author, "My
constituents have been on the receiving end of a natural
disaster for the last three months. The uncontrolled leak of
natural gas from the Aliso Canyon facility is a public health
and climate emergency."
"Over 2,500 Porter Ranch households have relocated, and another
1,600 are in the process of being relocated. The Los Angeles
Unified School District relocated two schools to avoid students
and staff breathing in the noxious fumes. There are concerns
about public health, the health of our children, long-term
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damage to a robust and happy community, lost business revenues,
property value loss and more. Not all of these issues are
necessarily appropriately addressed by the Legislature. For
example, the Los Angeles City Attorney, the Los Angeles City
Council, the Los Angeles Board of Supervisors, local regulators,
including City and County Fire, the Department of Public Health
and the South Coast Air Quality Management District have all
taken action to address and facilitate response to the leak for
areas within their jurisdiction. Additionally, state
regulators, coordinated by the Governor's Office, have and are
taking appropriate action to respond too."
"However, we have an important role in ensuring that this never
happens again and taking appropriate steps to calm and address
the community's concerns about the risks associated with the
continued operation of Aliso Canyon. SB 380 builds on the two
DOGGR orders, the Governor's State of Emergency declaration,
DOGGR's proposed emergency gas storage regulations and
statements by the CPUC and the California Energy Commission,
among others. It institutes a public, rigorous and transparent
process to ensure the integrity of the gas storage wells. We
have an obligation to the public to ensure that they have a
formal voice in this process to ensure its credibility to them."
"With the first relief well likely to be completed within weeks
and a hoped-for successful effort to stop the leak using the
relief well, it is urgent that we pass this legislation in order
to address the community's fears about moving back to their
homes and near the gas storage facility."
Prepared by:Katharine Moore / N.R. & W. / (916) 651-4116
1/28/16 10:22:36
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