BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 887| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 SB 887 Page 2 (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. SB 887 Page 3 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 SB 887 Page 4 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. SB 887 Page 5 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. SB 887 Page 6 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 SB 887 Page 7 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 SB 887 Page 8 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 **** END ****