BILL ANALYSIS Ó
SB 380
Page 1
Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 380
(Pavley) - As Amended March 30, 2016
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|Policy |Utilities and Commerce |Vote:|13 - 0 |
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Urgency: Yes State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill continues the moratorium on injecting natural gas into
the Aliso Canyon gas storage facility, requires the Division of
Oil, Gas and Geothermal Resources (DOGGR) to complete a gas
storage well comprehensive safety review (safety review), and
requires the California Public Utilities Commission (PUC) to
determine the feasibility of minimizing or eliminating use of
the facility, as specified. This bill, in part, codifies
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administrative actions ordered by the Governor in his January 6,
2019 Proclamation of a State Emergency. Specifically, this
bill:
1)Requires the DOGGR Supervisor to continue prohibiting the
Southern California Gas Company (SoCalGas) from injecting gas
into the Aliso Canyon Storage Facility until the safety review
is completed and the Supervisor makes a variety of
determinations, as specified.
2)Prohibits the Supervisor from lifting the prohibition on
injection until the PUC has concurred with the determination
of safety via letter.
3)Requires the Supervisor to determine the criteria and
methodology for the safety review, as specified. Requires
DOGGR to hold at least one public meeting to provide the
opportunity for comment on the criteria.
4)Establishes required steps, as specified, for the safety
review to ensure external and internal well mechanical
integrity.
5)Provides the safety review is not complete until all wells are
categorized and the appropriate action is taken as follows: a)
gas storage wells have completed testing and remediation; b)
gas storage wells have been temporarily abandoned and isolated
from the reservoir; or c) gas storage wells have been fully
plugged and abandoned, as specified.
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6)Requires the operator of the facility to propose maximum
reservoir pressure limits and associated data to DOGGR before
commencing operations. Requires the Supervisor to review and
approve the maximum reservoir pressure limit, as specified.
7)Requires any wells returning to service to inject or produce
gas only through interior metal tubing, and expressly
prohibits injection or production through the annulus (space )
between the tubing and the well casing. Requires wells
returning to service to conduct ongoing pressure monitoring
and comply with any other requirements specified by the
Supervisor.
8)Requires plugged and abandoned wells to be periodically
inspected, as specified.
9)Prior to the completion of the safety review, limits the
production of natural gas to wells that have completed testing
and remediation unless insufficient production capacity is
available, as specified.
10)Requires DOGGR to post all testing, safety review, and
compliance status and remediation requirements on its website
in a timely manner.
11)Requires the PUC, no later than July 1, 2017, to determine
the feasibility of diminishing or eliminating the use of the
Aliso Canyon natural gas storage facility while maintaining
energy reliability in the region. Requires the PUC to consult
with the California Energy Commission (CEC), Independent
System Operator (ISO), locally public owned utilities, DOGGR,
affected balancing authorities, and other relevant government
entities prior to making its determination.
12)Requires the PUC to publish a report within 30 days of
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enactment of the bill regarding gas production at the
facility. Requires the PUC to seek public comments and publish
the report on its Internet Web site.
13)Requires the PUC Executive Director to direct the operations
of the facility, as specified, to ensure reliability and just
and reasonable rates.
14)Sunsets January 1, 2021
FISCAL EFFECT:
1)Increased costs for the PUC of approximately $1.7 million to
determine the feasibility of a full or partial closure of the
facility through a proceeding (Public Utilities Commission
Utilities Reimbursement Account.)
2)To the extent this bill requires DOGGR to repeat steps already
taken, increased costs of $250,000 or more (Oil, Gas, and
Geothermal Administrative Fund).
3)Potential unknown increased costs for CEC and ISO to consult
with DOGGR and the PUC as specified (special fund).
COMMENTS:
1)Purpose. According to the author, the leak of natural gas
from the Aliso Canyon facility posed a public health and
climate emergency. This bill builds upon and codifies
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portions of the Governor's State of Emergency declaration and
proposed emergency regulations and DOGGR orders.
2)Aliso Canyon Gas Leak. The Aliso Canyon Gas Storage Facility
is owned by the SoCalGas and is located in Los Angeles County
just north of Porter Ranch. SoCalGas is a gas corporation
regulated by the PUC.
On October 23, 2015, SoCalGas detected a methane gas leak at
its Aliso Canyon Gas Storage Facility at Well # SS-25.
Following an initial evaluation and several attempts to stop
the leak, SoCalGas began drilling a relief well in order to
plug the leaking well. The initial attempts to plug the leak
failed, and the leak lasted 112 days before being permanently
capped on February 18, 2016.
A study in the journal Science confirmed that the methane gas
leak was not only the largest in California's history, but
also the second largest in the nation. According to the lead
author of the study, as much as 60 metric tons of methane
spewed from the leak each hour.
The leak displaced nearly 2,290 households, requiring families
to move into temporary housing and hotels provided by
SoCalGas.
Since October 25, 2016, no natural gas has been injected into
the facility.
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3)Chronology of Events and State Response. Following the
detection of the leak, in November and December 2015, DOGGR
and the PUC issued orders establishing a moratorium on natural
gas injection at Aliso Canyon. The orders included
requirements to provide data, retain evidence, and track the
costs of the effort to plug the well. Additionally, the Air
Resources Board (ARB) began collecting and publishing data on
methane emissions caused by the leak.
On January 6, 2016, the Governor issued a Proclamation
directing various state entities to oversee SoCalGas' actions
to stop the leak, protect public safety, ensure accountability
and strengthen oversight of natural gas storage facilities.
On February 11, 2016, SoCalGas announced it had temporarily
controlled the flow of natural gas at the leaking well and
would continue to work in coordination with DOGGR and other
agencies during the process of permanently sealing the well.
On February 18, 2016, DOGGR confirmed the leaking well was
permanently sealed and taken out of
service.
On March 4, 2016, DOGGR issued an order to SoCal Gas to follow
a comprehensive safety
review, upgrade equipment and detection devices, and plug and
abandon wells as specified. This
order prohibits the Supervisor from lifting the injection
prohibition until all specified
requirements have been met.
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On March 28, 2016, the PUC, DOGGR, ARB, and CEC issued an
update on the status of state
actions taken in response to the gas leak.
4)Governor's Emergency Proclamation and Budget Proposals. In
addition to the provisions in this bill, the Governor's
Proclamation required DOGGR to issue emergency regulations and
require all gas storage facilities in the state to undertake
specific actions to protect against uncontrolled has leaks.
Additionally, the Proclamation: 1) requires ARB to expand its
monitoring of emissions in the community; 2) requires the
Office of Environmental Health Hazzard Assessment (OEHHA) to
review health concerns and determine if additional measures
are necessary; and 3) requires the PUC and CEC, in
coordination with the ISO, to take all steps necessary to
ensure energy reliability during the moratorium.
On April 1, 2016 the Governor revised his proposed January
budget to include additional augmentations to the following
agencies to implement the directed actions and improve public
safety statewide:
a) CEC - $1,739,000 and three positions to monitor, model
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and analyze the interaction of electricity and natural gas
systems for reliability (Public Interest Research,
Development, and Demonstration Fund);
b) DOGGR - $4,172,000 and 20 positions to support increased
regulatory activities and $1 million to increase efforts to
remediate orphan wells (Oil, Gas and Geothermal Resources
Fund);
c) ARB - $2,276,000 and four positions to provide air
quality monitoring near oil and gas operations (Oil, Gas
and Geothermal Resources Fund);
d) OEHHA - $350,000 and 2 positions to support ARB's air
quality monitoring (Oil, Gas and Geothermal Resources
Fund);
e) PUC - $1,479,000 and 10 positions for increased workload
related to regulating natural gas facilities and $1,694,000
and 11 positions to create the Division of Safety Advocates
(Public Utilities Commission Utilities Reimbursement
Account).
1)Amendments. The Committee is proposing two amendments to
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address implementation concerns. First, per Administrative
directive, the safety review is already underway and over 50
of the 114 wells have been reviewed. Thus, the public hearing
requirement on the safety review criteria is not timely and
may require re- starting the review process. Instead, the
Committee proposes requiring DOGGR to hold a noticed public
hearing in the community on the safety review findings, as
well as the proposed pressure limits prior to commencing
operations at the facility.
Second, the CEC and PUC are currently conducting a statewide
reliability review. This information will help inform the PUC
to meet its requirement to determine the feasibility of
diminishing or eliminating the use of the Aliso Canyon natural
gas storage facility. Currently the bill requires the PUC to
make its determination by July 1, 2017. Alternatively, the
Committee proposes requiring the PUC to open a proceeding on
the issue by July 1, 2017 to allow the statewide reliability
review to be completed before making a determination.
2)Emergency Authority for Reliability. This bill limits
natural gas production at the facility prior to the completion
of the safety review to wells that have completed testing and
remediation, unless production capacity is insufficient to
ensure reliability. There is no similar provision for well
injection.
In order to ensure electrical and gas energy reliability
during the moratorium, the Administration is proposing an
amendment to expressly give the Governor the authority to
adjust the requirements of the bill in the event of
extraordinary circumstances, catastrophic events, or threat to
public health and safety from the loss of energy reliability.
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The author has rejected this amendment and contends the
Governor and Supervisor have sufficient
existing authorities to address emergencies. Specifically,
Section 8558(c), Chapter 7 of
Division 1 of Title 2 of the Government Code which allows the
Governor to take all
actions necessary in the event of a sudden and severe energy
shortage, among other things.
Further, the author contends the Supervisor has broad discretion
under existing law.
3)Related Legislation. Numerous bills have been introduced to
respond to the Aliso Canyon Gas Storage Facility leak. AB
1902 (Wilk) extends the statute of limitations for civil
actions resulting from exposure to hazardous materials from
the Aliso Canyon gas leak. This bill is pending in the
Judiciary Committee.
AB 1903 (Wilk) directs the Public Utilities Commission and
the State Department of Public Health to jointly study the
long-term health impacts of the Aliso Canyon natural gas leak.
This bill is pending in the Health Committee.
AB 1904 (Wilk) Requires the Office of Environmental Health
Hazard Assessment (OEHHA) to evaluate and report to the
Legislature on natural gas odorants and potential alternatives
by January 1, 2018. This bill is scheduled to be heard in
this Committee today.
AB 1905 (Wilk) directs the Natural Resources Agency to conduct
an independent scientific study on natural gas injection and
storage practices and facilities. This bill is pending in
this Committee.
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SB 886 (Pavley) requires the Division of Oil, Gas, Geothermal
Research (DOGGR) to institute a moratorium on natural gas
injections at the Aliso Canyon gas storage facility and
prevent use of wells drilled pre-1954. This bill is pending
in the Senate Energy, Utilities and Communications Committee.
SB 887 (Pavley) requires DOGGR to prescribe standards for
natural gas storage wells and requires annual inspections.
This bill is pending in the Senate Environmental Quality
Committee.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081