BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 380


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          SENATE THIRD READING


          SB  
          380 (Pavley)


          As Amended  April 19, 2016


          2/3 vote.  Urgency


          SENATE VOTE:  40-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Utilities       |13-0 |Gatto, Achadjian,     |                    |
          |                |     |Bonilla, Burke,       |                    |
          |                |     |Dahle, Eggman,        |                    |
          |                |     |Hadley, Roger         |                    |
          |                |     |Hernández, Obernolte, |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Ting, Williams        |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |15-0 |Gonzalez, Bloom,      |                    |
          |                |     |Bonilla, Bonta,       |                    |
          |                |     |Calderon, Daly,       |                    |
          |                |     |Eggman, Eduardo       |                    |
          |                |     |Garcia, Roger         |                    |
          |                |     |Hernández, Holden,    |                    |
          |                |     |Obernolte, Quirk,     |                    |
          |                |     |Santiago, Weber, Wood |                    |








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          |                |     |                      |                    |
          |                |     |                      |                    |
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          SUMMARY:  Continues the moratorium on injecting natural gas into  
          the Aliso Canyon gas storage facility, requires the Department  
          of Conservation's 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 (CPUC) to determine the feasibility of  
          minimizing or eliminating use of the facility, as specified.   
          This bill, in part, codifies administrative actions ordered by  
          the Governor in his January 6, 2019, Proclamation of a State  
          Emergency.  Specifically, this bill: 


          1)Requires the DOGGR Supervisor (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 CPUC 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 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.


          4)Establishes required steps, as specified, for the safety  
            review to ensure external and internal well mechanical  
            integrity.  








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          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.  


          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 Web site  
            in a timely manner.









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          11)Requires the CPUC, no later than July 1, 2017, to open a  
            proceeding 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 CPUC 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 CPUC to publish a report within 30 days of  
            enactment of this bill regarding gas production at the  
            facility. Requires the CPUC to seek public comments and  
            publish the report on its Internet Web site.  


          13)Requires the CPUC Executive Director to direct the operations  
            of the facility, as specified, to ensure reliability and just  
            and reasonable rates.


          14)Sunsets the provisions of this bill on January 1, 2021.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee:




          1)Increased costs for the CPUC 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  








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            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 CPUC 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  
            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 SoCalGas and is located in Los Angeles County just  
            north of Porter Ranch.  SoCalGas is a gas corporation  
            regulated by the CPUC.


            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.









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            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.


          3)Chronology of Events and State Response:  Following the  
            detection of the leak, in November and December 2015, DOGGR  
            and the CPUC 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 SoCalGas 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 CPUC, 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:  a) requires ARB to expand its  
            monitoring of emissions in the community; b) requires the  
            Office of Environmental Health Hazzard Assessment to review  
            health concerns and determine if additional measures are  
            necessary; and c) requires the CPUC and CEC, in coordination  
            with the ISO, to take all steps necessary to ensure energy  
            reliability during the moratorium.




          Analysis Prepared by:                                             
                          Sue Kateley / U. & C. / (916) 319-2083  FN:  
          0002760