BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 887|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 887
          Author:   Pavley (D), et al.
          Amended:  5/31/16  
          Vote:     21 

           SENATE NATURAL RES. & WATER COMMITTEE:  7-2, 3/29/16
           AYES:  Pavley, Allen, Hertzberg, Hueso, Jackson, Monning, Wolk
           NOES:  Stone, Vidak

           SENATE ENVIRONMENTAL QUALITY COMMITTEE:  6-1, 4/20/16
           AYES:  Wieckowski, Gaines, Hill, Jackson, Leno, Pavley
           NOES:  Bates

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 5/27/16
           AYES:  Lara, Beall, Hill, McGuire, Mendoza
           NOES:  Bates, Nielsen

           SUBJECT:   Natural gas storage wells


          SOURCE:    Author
          
          DIGEST:  This bill provides a framework for reforming oversight  
          of natural gas storage facilities by, among other things,  
          mandating minimum standards for gas storage well inspections,  
          monitoring, and testing; training of personnel; leak monitoring,  
          planning for emergency response; developing and incorporating  
          best practices into regulations; and an assessment of risk to  
          determine setback distances for gas storage wells.

          ANALYSIS:  
          
          Existing law:

          1)Establishes the Division of Oil, Gas and Geothermal Resources  








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            (DOGGR) in the Department of Conservation at the Natural  
            Resources Agency.  DOGGR is the state's oil and gas regulator,  
            and DOGGR's leader is the oil and gas supervisor (supervisor).

          2)Provides that natural gas storage facilities are subject to  
            the overall jurisdiction of the California Public Utilities  
            Commission (CPUC).  Natural gas storage wells and associated  
            piping and equipment are under the jurisdiction of DOGGR.

          3)Establishes the Air Resources Board (ARB) and the Office of  
            Environmental Health Hazard Assessment (OEHHA) in the  
            California Environmental Protection Agency.  ARB has  
            jurisdiction over greenhouse gas emissions and OEHHA's mission  
            is to protect and enhance public health and the environment by  
            scientific evaluation of risks posed by hazardous substances.

            In California, gas storage wells are currently regulated  
            through the state's underground injection control program.   
            Prior to February 2016, none of these regulations had been  
            updated since 1978.

          This bill provides a framework for reforming oversight of  
          natural gas storage facilities by, among other things, mandating  
          minimum standards for gas storage well inspections, monitoring,  
          and testing; training of personnel; leak monitoring, planning  
          for emergency response; developing and incorporating best  
          practices into regulations; and an assessment of risk to  
          determine setback distances for gas storage wells.   
          Specifically, this bill:

           1) Directs ARB to develop a natural gas storage facility  
             monitoring program, as specified, that includes continuous  
             monitoring of the ambient concentrations of natural gas and  
             may be supplemented by daily leak detection measurements.

              a)    Requires operators of gas storage facilities to  
                develop and submit facility monitoring plans to ARB for  
                review and approval or disapproval.

              b)    Requires monitoring data be provided to ARB and all  
                data provided shall be reported to and posted on-line by  
                DOGGR.








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           2) Requires natural gas storage wells by January 1, 2018 and  
             annually thereafter to be tested for a loss of integrity  
             resulting in a leak, as specified.

           3) Requires a natural gas storage well to have an automatic  
             downhole shutoff system, including subsurface safety valves,  
             as specified.

              a)    The system shall be tested and results reported  
                semiannually.

              b)    DOGGR shall review and update practices for the use of  
                subsurface safety valves to reflect the best practices  
                determined by independent experts, as specified.

           4) Requires baseline and follow-on proactive evaluations of the  
             integrity of a natural gas storage well, well casing, and  
             cementing, using best available technology, as specified.

              a)    DOGGR shall develop a schedule for the completion of  
                baseline-proactive testing for all natural gas storage  
                wells by January 1, 2018.  DOGGR shall also develop a  
                schedule for the follow-on proactive testing after  
                baseline testing is completed.  The interval between tests  
                shall be no more than four years.  Wells at high risk of a  
                loss of integrity shall be reevaluated annually.

           5) Requires gas storage well injection and withdrawal be  
             limited to through the tubing only and annular pressure and  
             production/injection flowrate monitoring be continuous.

           6) Directs OEHHA to perform a science-based risk assessment of  
             natural gas storage wells with the goal to determine  
             appropriate setback distances for natural gas storage wells  
             from different locations, activities and receptors, as  
             specified. The results of the assessment shall be reported to  
             the Legislature and DOGGR shall review and, as appropriate,  
             incorporate them into regulation.

           7) Requires the operator of a natural gas storage well to  
             provide to DOGGR for the supervisor's approval certain  








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             programs, as specified.  These programs include a maintenance  
             program, design and operating conditions, and a site-specific  
             risk management plan, among others.

           8) Provides to the public a right to review the location of a  
             natural gas storage well or the conversion of an existing  
             well to gas storage service prior to its approval.

           9) Requires that in the event of a large ongoing leak, as  
             specified, from a well that preparations for the drilling of  
             a relief well start within 24 hours of the discovery of the  
             leak.

           10)Requires that DOGGR be notified immediately in the event of  
             a leak from a gas storage well, as specified.

           11)Requires that DOGGR convene an independent panel of experts  
             to develop best practices for natural gas storage facilities,  
             as specified.

           12)Requires, where feasible, that DOGGR incorporate federal  
             regulations applicable to gas storage facilities into its  
             regulations.

           13)Requires enhanced reporting to DOGGR of well operations, as  
             specified.

           14)Requires DOGGR to perform unannounced random on-site  
             inspections of natural gas storage wells annually, as  
             specified.

           15)Requires an operator of a natural gas storage well to  
             develop and maintain a comprehensive gas storage well  
             training and mentoring program, as specified.

           16)Requires DOGGR to post online materials provided to meet  
             these requirements.

           17)Provides that a member of the public may bring suit for writ  
             of mandate against DOGGR for failure to enforce these  
             requirements.









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           18)Provides additional civil penalties, as specified, for gas  
             storage well violations.

           19)Makes legislative findings relevant to gas storage wells,  
             including the recent well failure at Aliso Canyon.

          Background
          
          On October 23, 2015, a significant leak was discovered from a  
          natural gas storage well in Southern California Gas Company's  
          (SoCal Gas') Aliso Canyon storage facility.  During the course  
          of the leak, finally officially capped on February 18, 2016,  
          estimates published in the peer-reviewed scientific press  
          indicate almost 100,000 metric tons of the potent greenhouse gas  
          methane were released to the atmosphere.  (SoCal Gas recently  
          claimed that the leak released about 84,000 tons of methane, but  
          has not provided any supporting material to justify this claim.)  
          The methane released by the leak estimated to be about 20% of  
          the entire state's methane emissions over the same time period.   
          Several months after the end of the leak, members of the  
          adjacent community in Porter Ranch and nearby continue to report  
          adverse health impacts to Los Angeles County. 

          SoCal Gas was unable to "kill" the leaking well on its own and  
          brought in a contractor to continue efforts to control the well.  
           Additional kill attempts were delayed due to the need to bring  
          in specialized equipment.  Nearby residents who reported the  
          leak to the local air quality regulator were told by SoCal Gas  
          for several days that "routine maintenance" was responsible.  It  
          was only after several days that the serious nature of the leak  
          was revealed to the public.  Initial communication and efforts  
          by the operator to serve the community were woefully inadequate.  
           Eventually DOGGR required that a relief well be drilled.  The  
          relief well was used to ultimately control the leaking well. 

          The leak caused major and unprecedented upheaval in the  
          surrounding Porter Ranch community.  Over 8,000 households  
          relocated and thousands have had indoor air filters installed.   
          The Los Angeles County Department of Public Health ordered SoCal  
          Gas to provide cleaning services to houses due to the discovery  
          of trace amounts of heavy metals in accumulated household dust. 









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          The leak highlighted the need, long acknowledged by DOGGR, to  
          update its regulations.  Numerous reports have raised concerns  
          about the age, operation, maintenance practices and safety of  
          the Aliso Canyon and other gas storage facilities state-wide.   
          DOGGR issued emergency regulations in February specific to  
          natural gas storage wells.  A separate regulatory proposal from  
          DOGGR is expected imminently. 


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes


          According to the Senate Appropriations Committee, there are the  
          following costs:


           First year costs of approximately $4.68 million and ongoing  
            costs of approximately $3.75 million (Oil, Gas and Geothermal  
            Administrative Fund) for the DOGGR staffing costs resulting  
            from increased regulatory activities for underground gas  
            storage facilities.


           Minor and absorbable costs to the ARB and the CPUC.


           Potentially significant costs to the Office of Environmental  
            Health Hazard Assessment to conduct risk assessments.





          SUPPORT:   (Verified5/27/16)


          American Lung Association in California
          Asian Pacific Environmental Network
          California Coastal Protection Network
          CalPIRG
          Center on Race, Poverty & the Environment








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          Clean Power Campaign
          Clean Water Action
          Consumer Attorneys of California
          Environment California
          Environmental Working Group
          Los Angeles City Council
          Los Angeles County
          Los Angeles County Democratic Party
          Los Angeles Unified School District
          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
          Voices for Progress


          OPPOSITION:   (Verified5/27/16)


          None received

          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. This  
          disruption continues even though the leak was finally stopped in  
          February.  We must not allow a rapid return to  
          'business-as-usual' when it comes to the oversight and  
          monitoring of these wells and facilities. We now are aware of  
          the all-too-real risks to public health and the environment  
          posed by natural gas facilities and must ensure meaningful  
          changes occur in their operations."

          "After the leak started, state and local regulators worked  
          diligently to protect the public and stop it.  Going forward, it  
          is important that new minimum standards for gas storage wells be  
          set to ensure safe operation, including the development of best  
          practices by experts. SB 887 institutes proactive testing and  
          evaluation of wells to prevent leaks from starting. This is the  








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          best method to protect against another disaster on the scale of  
          Aliso Canyon. If a leak does occur, however, new air monitoring  
          requirements will help to identify it quickly. This will help to  
          limit emissions of methane, a potent short-lived climate  
          pollutant, to the atmosphere."

          "When the South Coast Air Quality Management Board went to  
          investigate the facility at Aliso Canyon after the well failure,  
          an additional 15 leaks were found.  The CPUC reported that  
          another 200 leaks were found at other gas storage facilities  
          statewide during first quarter testing.  Eight of those leaks  
          were serious.  These results highlight the need for SB 887 and  
          for better oversight and monitoring."

          "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."




          Prepared by:Katharine Moore / N.R. & W. / (916) 651-4116
          5/31/16 20:45:45


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