BILL ANALYSIS Ó
SB 887
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Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 887
(Pavley) - As Amended June 30, 2016
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill establishes a framework for reforming the oversight of
natural gas storage wells including continuous monitoring and
the installation of specified safety technology. The bill also
phases out certain wells, and requires the independent
development and incorporation of best practices into
regulations. Among other things, this bill:
1)Requires the Air Resources Board (ARB) in consultation with
any local air district and the Division of Oil, Gas, and
Geothermal Resources (DOGGR), to develop a Facility monitoring
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program to identify natural gas leaks, as specified.
Requires a Facility operator to develop and submit a
monitoring plan and data to the ARB.
2)Requires DOGGR to review and update practices for the use of
subsurface safety valves in natural gas storage wells to
reflect best practices.
3)Requires natural gas storage wells to meet various evaluations
and requires DOGGR to adopt a schedule for the completion of
the evaluations based on risk.
4)Requires the Office of Environmental Health Hazard Assessment
(OEHHA) and the Department of Public Health, in consultation
with DOGGR, to perform a science-based risk assessment of
natural gas storage wells to determine the appropriate setback
distances from specified populations. Requires DOGGR to
review the assessment and appropriately revise its
regulations.
5)Requires DOGGR to convene an independent review panel to look
at risk management and automatic shutoff systems and
incorporate best practices into its regulations.
6)Requires DOGGR to post all materials required to comply with
this bill on its website.
7)Establishes a minimum of $10,000 per day and maximum of
$25,000 per day penalties for unreasonable waste of natural
gas.
FISCAL EFFECT:
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1)Increased first-year costs of approximately $4.68 million and
ongoing annual costs of approximately $3.75 million (Oil, Gas
and Geothermal Administrative Fund) for DOGGR regulatory
activities.
1)Potentially significant costs, in the million dollar range,
for OEHHA to conduct the risk assessment (Oil, Gas and
Geothermal Administrative Fund).
2)Increased costs of approximately $360,000 (Oil, Gas and
Geothermal Administrative Fund) for DPH to contribute to the
risk assessment.
2)Minor and absorbable costs to the Air Resources Board (ARB)
and the California Public Utilities Commission (PUC).
COMMENTS:
1)Purpose. 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
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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.
The leak displaced over 5,000 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.
According to the author, we are now 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. This bill will ensure a rapid response to
stop a leak and proactive testing and evaluation of wells to
prevent a leak from ever starting.
2)Background. Although natural gas storage facilities are
subject to the overall utilities jurisdiction of the PUC,
natural gas storage wells and associated piping and equipment
are under the jurisdiction of DOGGR. Natural gas storage
wells represent a small component of the overall Underground
Injection Control (UIC) program (approximately 400 wells out
of 52,000 statewide), which generally covers permitting,
inspection, enforcement, mechanical integrity testing,
plugging and abandonment oversight, data management, and
public outreach.
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DOGGR has acknowledged widespread failures in the
implementation of its UIC program, and has released a "Renewal
Plan" to guide its commitment to reform. DOGGR has received
personnel and funding through recent budgets to improve
program implementation, data management, enforcement and other
functions.
On July 8, 2016, DOGGR publicly released pre-rulemaking draft
regulations (Discussion Draft) for the purpose of receiving
public input on the development of updates to the regulations
governing the gas storage program. The public comment period
ends on August 11, 2016.
3)Discussions Continue. The author's office is continuing to
discuss how to incorporate DOGGR's existing and proposed
regulations and suggestions of various stakeholders into an
appropriate statutory framework.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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