BILL ANALYSIS Ó SB 380 Page 1 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 | | SB 380 Page 2 | | | | | | | | | | ------------------------------------------------------------------ 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. SB 380 Page 3 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. SB 380 Page 4 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 SB 380 Page 5 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. SB 380 Page 6 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. SB 380 Page 7 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