BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 380|
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UNFINISHED BUSINESS
Bill No: SB 380
Author: Pavley (D), et al.
Amended: 4/19/16
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
SENATE FLOOR: 40-0, 1/28/16
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner,
Stone, Vidak, Wieckowski, Wolk
ASSEMBLY FLOOR: 70-2, 4/28/16 - See last page for vote
SUBJECT: Natural gas storage: moratorium
SOURCE: Author
DIGEST: This bill continues the moratorium on injection of
natural gas at the Aliso Canyon gas storage facility until
specified criteria, including testing, are met, requires the
feasibility of the storage facility to be addressed and requires
the California Public Utilities Commission (Commission), with
input from others, to determine the amount of gas necessary at
the facility for safety, regional reliability and to ensure just
and reasonable rates, as specified, among other provisions.
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This bill codifies elements of the Governor's Proclamation of a
State of Emergency on January 6, 2016.
Assembly Amendments incorporate the Division of Oil, Gas and
Geothermal Resources' (DOGGR's) announced comprehensive safety
review criteria for well testing, revise and clarify the
Commission's obligations to assess energy reliability, specify
the use of a Commission proceeding to address the feasibility of
the Aliso Canyon gas storage facility and sunset the bill's
provisions on January 1, 2021.
ANALYSIS:
Existing law:
1) Establishes 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.
3) Requires DOGGR's leader, the state oil and gas supervisor
(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 Commission to supervise and regulate every
public utility in the state.
This bill continues the moratorium on injection of natural gas
at the Aliso Canyon gas storage facility until specified
criteria, including testing, are met, requires the feasibility
of the storage facility to be addressed and requires the
Commission, with input from others, to determine the amount of
gas necessary at the facility for safety, regional reliability
and to ensure just and reasonable rates, as specified, among
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other provisions. This bill codifies elements of the Governor's
Proclamation of a State of Emergency on January 6, 2016.
Specifically, this bill:
1) Requires the supervisor to continue prohibiting the Southern
California Gas Company (SoCalGas) from injecting gas into the
Aliso Canyon gas 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 Commission executive director 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.
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.
6) Requires the operator of the facility to propose maximum
reservoir pressure limits and associated data to DOGGR before
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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 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.
11)Requires DOGGR to post all testing, safety review, and
compliance status and remediation requirements on its Web
site in a timely manner.
12)Requires the Commission, 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 Commission 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
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making its determination.
13)Requires the Commission to publish a report within 30 days
of enactment of this bill regarding gas production at the
facility. Requires the Commission to seek public comments and
publish the report on its Internet Web site.
14)Requires the Commission's executive director to direct the
operations of the facility, as specified, to ensure
reliability and just and reasonable rates.
15)Sunsets the provisions of this bill on January 1, 2021.
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 SoCalGas' 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 storage facility is the largest in
the western United States. The leak received local, national and
international news coverage.
The leak caused severe disruption in the vicinity. Over 8,000
households relocated at some point during the almost four months
of the leak (at SoCalGas' expense) and the Los Angeles County
Department of Public Health and the local air quality regulator
(the South Coast Air Quality Management District) received
thousands of health and odor complaints between them. The Los
Angeles Unified School District relocated two schools. Several
news reports cite losses for local businesses. After drilling a
relief well, SS-25 was finally "killed" and the leak was
declared stopped on February 18, 2016. Estimates are that
100,000 metric tons of methane, a potent greenhouse gas and
short-lived climate pollutant, were emitted to the atmosphere
from the leak.
Over two months after the leak was stopped, public health
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complaints continue from many who have returned to their homes.
Community monitoring of ambient concentrations of methane,
benzene and related gases also continues.
State agency response. Numerous state agencies responded to the
leak as the magnitude became clear. 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.
The Aliso Canyon gas storage facility is under the jurisdiction
of the Commission, although DOGGR has jurisdiction over the
wells. Both the Commission and DOGGR have active investigations
of the leak underway. No natural gas has been injected into the
facility since October 25, 2016, and in late January 2016, the
Commission ordered SoCalGas to retain 15 billion cubic feet of
working gas in the facility for use, as needed, as gas supply.
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.
Energy reliability. The Governor's Proclamation requires the
Commission and CEC, in coordination with the ISO, to take all
steps necessary to ensure energy reliability during the
moratorium. A report assessing summer reliability was issued in
early April followed by a public workshop. Efforts continue to
assess winter reliability. Under the California Emergency
Services Act, the Governor has the authority to take all actions
necessary in the event of a sudden and severe energy shortage.
Additionally, news reports indicate that SoCalGas anticipates
meeting the DOGGR safety criteria in the late summer. As of
April 29, almost all of the 114 wells at the facility have
completed the first two leak tests, nine wells have undergone
the additional four proactive tests required by the criteria to
return to service and seven more wells are undergoing the
proactive tests. Information on the tests is available on
DOGGR's Web site. Eight work-over rigs are at work on wells at
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Aliso Canyon now and SoCalGas has stated publicly that more may
be brought in.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Assembly Appropriations Committee, for a prior
version of this bill, this bill increases Commission costs by
approximately $1.7 million for the require proceeding, increase
DOGGR costs by an estimated $250,000 or more and have the
potential to increase costs an unknown amount to the CEC and ISO
for their required roles.
SUPPORT: (Verified4/29/16)
American Lung Association in California
Asian Pacific Environmental Network
Azul
California League of Conservation Voters
California Public Interest Research Group
Center on Race, Poverty & the Environment
Chatsworth Neighborhood Council
Chatsworth Porter Ranch Chamber of Commerce
Clean Water Action
Climate Action Campaign
Courage Campaign
Dignity Health
Environment California
Environmental Defense Fund
Environmental Working Group
Food & Water Watch
Friends Committee on Legislation of California
Los Angeles City Council
Los Angeles County Board of Supervisors
Los Angeles Unified School District
Mayor Eric Garcetti, City of Los Angeles
National Parks Conservation Association
People Demanding Action
Porter Ranch Neighborhood Council
Religious Action Center of Reform Judaism
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Rootskeeper
Santa Susana Mountain Park Association
Save Porter Ranch
Scott Schmerelson, LAUSD District 3 Board
Sierra Club California
South Coast Air Quality Management District
Supervisor Linda Parks, Ventura County
U.S. Representative Ted Lieu
U.S. Senator Dianne Feinstein
Voices for Progress
OPPOSITION: (Verified4/29/16)
Alhambra Chamber of Commerce
California Asian Pacific Chamber of Commerce
California Business Roundtable
California Chamber of Commerce
California League of Food Processors
California Manufacturers and Technology Association
California Retailers Association
Central City Association of Los Angeles
Command Packaging
Congress of California Seniors
DE Solutions
Desert Valley Builders Association
Harris Ranch Beef Company
Industry Manufacturers Council
Inland Empire Economic Partnership
Keenan Farms, Inc.
Kern Economic Development Corporation
Kheir Clinic
Los Angeles Area Chamber of Commerce
Los Angeles Latino Chamber of Commerce
Orange County Business Council
Pomona Chamber of Commerce
San Gabriel Valley Economic Partnership
Shaw Industries Group, Inc.
Southern California Leadership Council
Sweetener Products Company
VerdeXchange Institute
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Western Milling Quality Feeds
Western States Petroleum Association
Wiretech, Inc.
ARGUMENTS IN SUPPORT: According to the author, "Now that the
leak is stopped, the community and many of my constituents
remain deeply concerned and worried about moving back home.
Health complaints have continued for many who have moved back."
"SB 380 provides a statutory framework for the gas storage wells
at Aliso Canyon only to be rigorously evaluated and the risks to
the community minimized before injections of natural gas restart
at the facility."
"The amendments reflect the Administration's safety criteria
which allow for some wells to be temporarily plugged and go
offline in order to speed up the inspection of the other wells
so that the facility could be cleared for injections which could
occur if needed for energy reliability. Additional equipment
and operators could accelerate this process further without
compromising safety."
"SB 380 will ensure that operations at the Aliso Canyon storage
facility do not rapidly return to resuming injections into and
withdrawals from wells that have not been sufficiently inspected
for leaks. It is a far greater risk to rush too quickly to
increase pressure in the reservoir which could cause another
leak. Certainty about safety and energy reliability must be
provided to the community and the entire LA region."
ARGUMENTS IN OPPOSITION: Opponents generally express concern
about the risk of gas supply interruption during the injection
moratorium at the Aliso Canyon storage facility and seek
specific language to provide an exception to the moratorium for
energy reliability.
For example, in a joint sign-on letter, the California
Manufacturers and Technology Association and others state "We
strongly urge you to amend SB 380 to ensure ongoing natural gas
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supplies critical to Southern California for both power
generation and industrial customers. We believe that this may be
accomplished in a safe manner by allowing state regulators to
permit injection when it has been deemed necessary for
maintaining reliability of natural gas and electrical supplies.
ASSEMBLY FLOOR: 70-2, 4/28/16
AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd,
Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Harper,
Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, McCarty,
Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell,
Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth,
Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk,
Williams, Wood, Rendon
NOES: Beth Gaines, Grove
NO VOTE RECORDED: Travis Allen, Bigelow, Chávez, Daly, Mathis,
Mayes, Olsen, Patterson
Prepared by:Katharine Moore / N.R. & W. / (916) 651-4116
4/29/16 12:39:21
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