BILL ANALYSIS Ó
SENATE COMMITTEE ON NATURAL RESOURCES AND WATER
Senator Fran Pavley, Chair
2015 - 2016 Regular
Bill No: SB 887 Hearing Date: March 29,
2016
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|Author: |Pavley | | |
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|Version: |March 28, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Katharine Moore |
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Subject: Natural gas storage wells
BACKGROUND AND EXISTING LAW
Existing law establishes the Division of Oil, Gas and Geothermal
Resources (division) in the Department of Conservation at the
Natural Resources Agency. The division is the state's oil and
gas regulator.
Existing law provides the division's leader, the state's oil and
gas supervisor (supervisor), with broad authority to supervise
oil and gas operations to prevent damage to life, health,
property and natural resources, among other requirements (see
Public Resources Code (PRC) §3106).
While natural gas storage facilities are subject to the overall
jurisdiction of the California Public Utilities Commission
(commission), natural gas storage wells and associated piping
and equipment are under the jurisdiction of the division.
In California, gas storage wells are regulated through the
state's underground injection control (UIC) program (see Title
14, Code of California Regulations, §§1724.6 - 1724.10, (14 CCR
§§1724.6 - 1724.10)). The principal regulation specific to gas
storage wells is 14 CCR §1724.8. Prior to February 2016, none
of these regulations had been updated since 1978.
Natural gas storage wells represent a small component of the
overall UIC program (approximately 400 wells out of 50,000
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statewide). The division has acknowledged widespread failures
in the implementation of its UIC program (see, for example, the
review of the division's Cypress (Los Angeles) district office
released in October 2015), although how the regulation of gas
storage wells was affected by this remains unclear. At the same
time the Cypress report was released, the division released a
"Renewal plan" to guide its commitment to reform. The division
has received personnel and funding through recent budgets to
improve program implementation, data management, enforcement and
other functions.
Pursuant to regulation, an operator wishing to drill gas storage
wells would have to provide certain information about the
proposed reservoir to the division for approval. If approved,
the division would issue a "project approval letter" setting
specific requirements (e.g. maximum storage pressure) for the
wells. The 14 project approval letters for natural gas storage
facilities in California include a wide variety of requirements
and are not generally available online to the public.
Additionally, while required by regulation, it is not clear - as
the dates of the letters span decades - what further review,
absent litigation, the project approval conditions received
after initial issuance.
After a project approval letter is issued, the operator would
still be required to obtain an approved permit for each
individual well serving the reservoir. Additionally, "field
rules" may be established for a reservoir that also set
requirements for wells.
On October 23, 2015, efforts started to stop a significant
natural gas leak from the "Standard Sesnon 25" gas storage well
located at the Southern California Gas Company's (SoCal Gas')
Aliso Canyon gas storage well facility. This well was
originally drilled in 1954 for oil and gas production and
subsequently converted to a natural gas storage well. While
SoCal Gas was aware of increasing well integrity problems at
Aliso Canyon and had proposed a
still-pending-before-the-commission Storage Integrity Management
Program (SIMP) for implementation, the leaking well was not one
of those designated for the program. The 18 wells proposed for
SIMP were all originally drilled from 1943 - 1955 and later
converted in the 1970s to gas storage wells.
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The Aliso Canyon gas storage facility is located adjacent to the
community of Porter Ranch in Los Angeles County. Some wells at
the Aliso Canyon facility appear to be less than one mile away
from homes, although the well that failed was approximately
1-1/2 miles away from the nearest home. The local air quality
management district began receiving complaints about the smell
(from added odorants) the next day. Several days passed before
SoCal Gas acknowledged to the community that a significant
uncontrolled leak was occurring.
While SoCal Gas called in both the division and contracted with
experts to stop the leak quickly, contemporaneous news reports
indicate considerable missteps in public communication and
initial efforts to relocate members of the community (at SoCal
Gas' expense).
The supervisor issued two orders to SoCal Gas related to leak
response and the Governor issued a State of Emergency
proclamation on January 6, 2016. Drilling a relief well in
combination with reducing the pressure in the reservoir
ultimately allowed for the leaking well to be brought under
control and the division confirmed this on February 18, 2016.
Over 5,000 households were relocated during the leak, two public
schools were moved and hundreds of public health complaints were
logged by the County. In addition to the public health
concerns, the amount of methane released has been estimated to
be about 100,000 metric tons, fully 20% of the state's methane
emissions over the four months of the leak. Natural gas
(methane) is a potent greenhouse gas and a short-lived climate
pollutant.
The division released emergency regulations for gas storage
wells during the leak which went into effect in February. These
emergency regulations include a number of provisions and require
operators to provide complete project data to the division, put
in regulation the division's ability to impose pressure limits
on projects, require monitoring for annular gas in the well,
valve testing, the use of leak detection technology to monitor
wells and equipment and the development of risk management
plans.
Existing law establishes the Air Resources Board (board) in the
California Environmental Protection Agency. The board has
jurisdiction over greenhouse gas emissions.
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PROPOSED LAW
This bill would comprehensively reform natural gas storage well
standards and develop information specific to natural gas
storage well operations necessary to understand and prevent
risks to safety.
Specifically this bill would:
1)Require the board to develop, with appropriate consultation, a
natural gas storage facility monitoring program that includes
continuous monitoring of ambient natural gas concentrations
and may include daily leak detection checks, as specified.
a) Require operators to submit proposed plans to implement
the program to the board for approval.
2)Require the division to annually inspect all natural gas
storage wells.
3)Require existing natural gas storage wells to comply with
these requirements by a future date.
4)Require the phase-out use of older wells of unspecified age by
a future date.
5)Require new standards for gas storage wells including:
a) The use of subsurface safety wells on all wells, as
specified.
b) Proactive evaluation of well integrity using best
available technology, a risk assessment interpreting these
results, and repair of leaking wells or wells at imminent
risk of leaking, as specified.
c) Annual re-testing of wells at high risk of failure.
d) Gas injections and withdrawals limited to tubing and
packer only.
e) Continuous well annular pressure and flow rate
monitoring, as specified.
f) Approved programs for regular maintenance (including
training); design and operation; inspection, leak detection
and monitoring; and site specific risk management, as
specified, that includes prevention and response protocols
to ensure timely public notice, and emergency response and
training, among other requirements.
g) Enhanced reporting of all well-related activities to the
division.
6)Within 10,000 feet of sensitive receptors, as defined, require
continuous monitoring of ambient concentrations of natural gas
and annual proactive evaluations for wells.
7)Set setbacks from sensitive receptors of undetermined
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distance, and phase-out the use of wells violating this
provision, as specified.
8)Require immediate leak notification to the division with
follow-on dissemination of information requirements for the
division.
9)Require starting the process of drilling a relief well within
24 hours of the start of a significant leak.
10) Require the division to
convene an independent panel of experts to determine best
practices for natural gas storage facilities, as specified, to
be incorporated into the division's regulations.
11) Require the division to
perform a risk assessment of natural gas storage wells, as
specified.
12) Provide for an increase in
the amount of potential fines in the event of a leak.
13) Require submittal of
monitoring and other data to the appropriate state agencies
with subsequent posting online for the public, as specified.
In addition, the bill would provide the public with a right to
review the location of a well and a right to take action against
the division for failing to enforce these requirements.
Finally, the bill would make appropriate and supporting
legislative findings particularly regarding ensuring the safety
of natural gas storage well operations.
ARGUMENTS IN SUPPORT
According to the author, "a leak like the one in Aliso Canyon
must not be allowed to happen again. Thousands of my
constituents have had their health or their loved ones' health
affected by the leak. Lives, families, businesses and
communities have been disrupted for months and this disruption
continues even though the leak was finally stopped last month.
We must not allow a rapid return to "business-as-usual." We now
are aware of the all-to-real risks to public health and the
environment posed by natural gas facilities and must ensure
meaningful changes occur in their operations."
"State and local regulators worked diligently to protect the
public and stop the leak. Going forward, it is important that
new minimum standards for gas storage wells be set to ensure
safe operations, including the development of best practices by
experts. New air monitoring requirements will help to identify
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leaks early. SB 887 will also ensure a rapid response to stop a
leak and proactive testing and evaluation of wells to prevent a
leak from even starting. SB 887 also addresses the public
communication problems experienced at the start of the Aliso
Canyon leak by requiring improved planning and more rapid and
complete reporting and dissemination of information to the
public."
ARGUMENTS IN OPPOSITION
None received
COMMENTS
Double-referral . This bill is double-referred to this Committee
and to the Senate Environmental Quality Committee (Senate EQ).
Parts of this bill subject to Senate EQ's jurisdiction and
included here for context and completeness.
Work-in-progress . This bill is a work-in-progress. While the
author's intent to revise minimum standards for natural gas
storage wells and their operations is evident, necessary
technical specifics and the nuances and implications of certain
potential requirements continue to be evaluated by the author's
office with input from experts and stakeholders (see, for
example, the concerns raised by independent gas storage
operators detailed below). In addition to its new emergency
regulations, the division has recently released a pre-rulemaking
discussion document for gas storage operations that goes beyond
the material included in emergency regulations. The author's
office may further consider how to incorporate the division's
existing and proposed regulations, the approaches of other
states, and industry recommended practices into an appropriate
statutory framework. The Committee may wish to direct staff to
continue working with the author's office as the bill
progresses.
Concern raised by independent gas storage facility operators .
Three independent gas storage facility operators writing jointly
expressed numerous concerns regarding this bill. Specifically,
the operators noted that the seasonality of their operations and
their business can be markedly different from those of public
utilities. In addition, their facilities are located in rural
areas, their wells are designed specifically for natural gas
storage and are typically newer construction, and there are no
co-located oil and gas production wells that could present risks
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to the gas storage wells. In general, the operators supported
site-specific risk-based assessments and emphasized that each
storage facility and its wells present a unique situation. They
also noted their commitment to safety and the potential risks
associated with repeated "downhole" operations.
Aliso Canyon safety criteria. The division, in consultation
with independent experts from national laboratories, released a
comprehensive safety review plan for Aliso Canyon. The safety
review requires temperature and noise logs to check for existing
leaks on all wells serving the facility (approximately 115).
Following a review of these logs (and any necessary
remediation), wells will either go through an additional four
tests to return to service, be temporarily plugged-and-abandoned
or permanently plugged-and-abandoned. The four additional tests
that must be successfully completed include a casing thickness
evaluation, a cement bond log, a multi-caliper arm evaluation
and a pressure test. These are proactive tests to evaluate the
risk of well integrity failure during operation. Additionally
future withdrawals at the facility will be through tubing and
packer only to protect the integrity of the casing. The
division issued an order on March 4, 2016 to SoCal Gas regarding
the steps necessary to complete the comprehensive safety review.
Investigation of the Aliso Canyon leak . The commission and the
division are currently investigating the causes of the leak at
Aliso Canyon. A preliminary report is not expected for several
months at the earliest. A "root cause" analysis of the leak by
a third party will likely be released earlier (possibly by the
fall).
Committee oversight/informational hearing. This Committee will
be holding an oversight/informational hearing on natural gas
storage well safety in the near future.
Recent related legislation
Senate Bills 380, 887, 888, 1383 and 1441 are part of the
Senate's announced bill package to respond to the Aliso Canyon
leak.
AB 1902 (Wilk, 2016) would establish a 3 year statute of
limitations for Aliso Canyon leak-related civil actions (before
the Assembly Judiciary Committee).
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AB 1903 (Wilk, 2016) would require the commission and the
Department of Public Health to conduct a long-term health study
of the Aliso Canyon leak (before the Assembly Utilities and
Commerce Committee).
AB 1904 (Wilk, 2016) would require the Office of Environmental
Health Hazard Assessment to undertake a study of odorants
(before the Assembly Environmental Safety and Toxic Materials
Committee).
AB 1905 (Wilk, 2016) would require an independent science study
of natural gas storage facilities (before the Assembly Natural
Resources Committee).
AB 2729 (Williams, 2016) would revise oil and gas well
operations, including idling requirements (before the Assembly
Natural Resources Committee).
AB 2748 (Gatto, 2016) would facilitate the claims for property
damage stemming from the Aliso Canyon leak (before the Assembly
Judiciary Committee).
AB 2756 (Thurmond, 2016) would revise enforcement processes and
procedures for oil and gas wells (before the Assembly Natural
Resources Committee).
AB 2798 (Gatto, 2016) would require applicants to build new
power plants and electric transmission lines to determine the
effect of the plant on natural gas storage facilities (before
the Assembly Utilities and Commerce Committee).
SB 380 (Pavley, 2016) would extend the Administration's
moratorium on injection at the Aliso Canyon facility until the
wells are determined to be safe (before the Assembly
Appropriations Committee).
SB 888 (Allen, 2016) would establish the Governor's Office of
Emergency Services as the lead state responder in the event of a
natural gas leak and bar leak-related costs from being borne by
rate payers (before the Senate Energy Committee).
SB 1383 (Lara, 2016) would establish goals for the emissions of
short-lived climate pollutants (including methane) (before
Senate EQ).
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SB 1441 (Leno, 2016) would require vented and fugitive emissions
to count against compliance requirements (before the Senate
Energy Committee).
SB 248 (Pavley, 2015) would require the division to update it
standards, among other provisions (2 year bill in the Assembly
Appropriations Committee).
SUPPORT
American Lung Association in California
Asian Pacific Environmental Network
California Coastal Protection Network
CalPIRG
Clean Water Action
Consumer Attorneys of California
Environment California
Natural Resources Defense Council
Porter Ranch Neighborhood Council
Scott Schmerelson, LAUSD Board Member, District 3
Sierra Club California
Santa Susana Mountain Parks Association
South Coast Air Quality Management District
OPPOSITION
None Received
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