BILL ANALYSIS                                                                                                                                                                                                    Ó




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                                UNFINISHED BUSINESS 


          Bill No:  SB 887
          Author:   Pavley (D), et al.
          Amended:  8/19/16  
          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

           SENATE FLOOR:  30-9, 6/1/16
           AYES:  Allen, Anderson, Beall, Block, De León, Gaines,  
            Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill,  
            Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire,  
            Mendoza, Mitchell, Monning, Moorlach, Pan, Pavley, Roth,  
            Wieckowski, Wolk
           NOES:  Bates, Berryhill, Cannella, Fuller, Morrell, Nguyen,  
            Nielsen, Stone, Vidak
           NO VOTE RECORDED:  Runner

           ASSEMBLY FLOOR:  75-1, 8/24/16 - See last page for vote

           SUBJECT:   Natural gas storage wells


          SOURCE:    Author










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          DIGEST:  This bill provides a framework for reforming the  
          oversight and regulation of natural gas storage wells.


          Assembly Amendments align the bill's provisions with regulatory  
          activities underway at the Division of Oil, Gas and Geothermal  
          Resources (DOGGR), extend DOGGR's emergency regulations, and  
          revise the existing fee that supports DOGGR's regulatory  
          activities.  


          ANALYSIS:   


          Existing law:


           1) Establishes 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) Requires the supervisor to supervise the drilling,  
             operation, maintenance, and abandonment of oil and gas wells  
             and the operation, maintenance, and removal or abandonment of  
             tanks and facilities attendant to oil and gas production in  
             order to prevent damage to life, property and natural  
             resources, among other reasons.

           3) Requires the operator of any oil and gas well, before  
             commencing the work of drilling the well, among other  
             actions, to file with the supervisor a notice of intention,  
             and the notice of intention is subject to approval.

           4) 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.

           5) Establishes the Air Resources Board (ARB) in the California  
             Environmental Protection Agency.  ARB has jurisdiction over  
             greenhouse gas emissions and is required to adopt rules and  








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             regulations to achieve maximum technologically feasible and  
             cost-effective greenhouse gas emission emissions reductions.

           6) Requires the supervisor to continue the prohibition against  
             the Southern California Gas Company (SoCalGas) injecting  
             natural gas into the Aliso Canyon gas storage facility in Los  
             Angeles until a comprehensive review of the safety of the gas  
             storage wells at the Aliso Canyon facility is completed and  
             the supervisor determines that well integrity has been  
             ensured by the review, as specified.

           7) Requires the CPUC, no later than July 1, 2017, to open a  
             proceeding on the feasibility of minimizing or eliminating  
             use of the Aliso Canyon gas storage facility while still  
             maintaining energy and electric reliability for the region. 

          This bill provides a framework for reforming the oversight and  
             regulation of natural gas storage wells.  Specifically, this  
             bill:


           1) Requires ARB, as specified, to develop a natural gas storage  
             facilities monitoring program that includes continuous  
             monitoring of ambient concentrations of natural gas to  
             identify leaks.  


           2) Requires an operator of a gas storage facility to develop  
             and submit to the ARB a monitoring plan and the monitoring  
             data.


           3) Defines "gas storage well" as an active or idle well used  
             primarily to inject natural gas or withdraw natural gas from  
             an underground natural gas storage facility.


           4) Requires, on or before January 1, 2018, all gas storage  
             wells to have commenced a mechanical integrity testing regime  
             that includes leak testing, casing wall thickness inspection,  
             pressure testing, and any other testing deemed necessary by  
             DOGGR.








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           5) Requires DOGGR to promulgate regulations that establish  
             standards for the design, construction, and maintenance of  
             all gas storage wells to ensure that integrity concerns with  
             a gas storage well are identified and addressed before they  
             can become a threat to life, health, property, the climate,  
             or natural resources.


           6) Requires gas storage wells to be designed, constructed, and  
             maintained to ensure that a single point of failure does not  
             pose an immediate threat of loss of control of fluids.


           7) Requires operators to submit for the supervisor's approval  
             various material including: 


              a)    Data demonstrating stored gas is confined to the  
                approved zone;


              b)    A risk management plan;


              c)    A natural gas leaks prevention and response program;


              d)    A protocol for public notice of a large,  
                uncontrollable leak;


              e)    A plan for corrosion monitoring and evaluation; 


              f)    Planned risk mitigation efforts; and,


              g)    A regular maintenance program.










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              8)    Requires DOGGR to perform unannounced random onsite  
                inspections of some gas storage wells annually.


           9) Requires an operator to develop and maintain a comprehensive  
             gas storage well training and mentoring program for  
             employees.  In addition, if storage field employees are  
             represented by a labor union, the operator must consult with  
             the relevant union local.


           10)Revises the annual fees charged to support gas storage well  
             regulatory efforts at DOGGR be proportional to the product of  
             the number of wells and the total field capacity of the  
             reservoir divided by the statewide sum of this product across  
             all storage reservoirs.


           11)Requires, in the event of a large uncontrolled release of  
             gas from a storage reservoir, that an additional charge to  
             defray DOGGR's costs for its response be assessed, as  
             specified. 


           12)Requires for any new gas storage facility proposed that the  
             CPUC ensures a risk assessment is conducted that evaluates  
             potential impacts of a leak on public and environmental  
             health, safety, and welfare. 


           13)Requires DOGGR's emergency regulations related to  
             underground gas storage projects to remain in effect until  
             January 1, 2019.


           14)Provides that specific provisions for the Aliso Canyon gas  
             storage facility instituted by SB 380 (Pavley, Chapter 14,  
             Statutes of 2016) shall not be diminished or impaired by this  
             bill.


          Background








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          On Friday, October 23, 2015, a natural gas storage well owned by  
          SoCalGas and located in the Aliso Canyon storage field in close  
          proximity to the Porter Ranch neighborhood in Los Angeles County  
          began leaking natural gas.  The leak continued until it was  
          initially controlled on February 11, 2016, and the plug was  
          confirmed on February 18, 2016.  During the four months the well  
          leaked, there were numerous attempts to control it.  All  
          attempts to stop the leak from the top of the well failed.  A  
          relief well was finally able to stop the natural gas leak by  
          plugging the leaking well at its base.  According to a recent  
          study, the leak at Aliso Canyon released approximately 100,000  
          metric tons of the potent greenhouse gas methane to the  
          atmosphere.  This was estimated to be about 20% of total  
          statewide emissions during the four months of the leak.  


          On Wednesday following the discovery of the leak, SoCal Gas  
          acknowledged that the leak was not "routine maintenance."  The  
          South Coast Air Quality Management District (SCAQMD), the local  
          air quality regulator, had begun receiving complaints from the  
          community when the leak started.  Ultimately, SCAQMD received  
          thousands of complaints regarding the odor.  Some people may  
          experience adverse health effects to the odorants added to  
          natural gas, such as nausea and headaches.  In mid-November, the  
          Los Angeles County Department of Public Health, citing public  
          health concerns associated with the use of odorants in the  
          natural gas, ordered SoCal Gas to provide temporary housing  
          relocation assistance to affected residents and announced a  
          local health emergency.  Over 8,000 households were relocated  
          due to the leak.  Now that the leak has been stopped, residents  
          are returning home, regulators are investigating the cause of  
          the leak, and a comprehensive safety review of the other 114  
          wells at the field is in progress. 


          Numerous state entities responded to the leak.  In particular,  
          the supervisor issued two orders (in November and December) to  
          provide direction on actions taken while trying to stop the  
          leak.  On January 6, 2016, the Governor issued a proclamation of  
          a state of emergency, which directed several state agencies -  








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          DOGGR, CPUC, ARB, the California Energy Commission, the Office  
          of Environmental Health Hazard Assessment, among others - to  
          take specific actions in response to the Aliso Canyon gas leak.   
          In particular, DOGGR was directed to issue emergency regulations  
          to improve regulation for gas storage wells, and, on February 5,  
          2016, these emergency regulations went into effect.  The  
          emergency regulations instituted risk-based management of  
          natural gas storage wells among other things.  When the leak was  
          capped, the supervisor issued another order to SoCal Gas which  
          established a certain safety protocol focused on a rigorous  
          evaluation of well integrity that needed to be completed before  
          injections could resume at Aliso Canyon.  DOGGR continues to  
          work with Lawrence Berkeley National Laboratory, Lawrence  
          Livermore National Laboratory, and Sandia National Laboratory in  
          developing permanent regulations for gas storage wells.  A  
          discussion draft of the regulations was released July 8, 2016.   
          This bill is consistent with the proposals in DOGGR's discussion  
          draft.





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


          According to the Assembly Appropriations Committee there are no  
          additional costs associated with this bill.




          SUPPORT:   (Verified8/23/16)


          American Lung Association in California
          Asian Pacific Environmental Network
          Michael Bennett, Goleta City Councilmember
          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 Defense Fund
          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
          Utility Workers Union of America
          Voices for Progress


          OPPOSITION:   (Verified8/23/16)


          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 were disrupted for months.  This  
          disruption continues even though the leak was finally stopped  
          over 5 months ago.  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 standards for gas storage wells be set to  
          ensure safe operation, including regular testing and evaluation  








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          of wells to prevent leaks from 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."




           ASSEMBLY FLOOR:  75-1, 8/24/16
           AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dodd, Eggman, Beth Gaines, Gallagher,  
            Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,  
            Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández,  
            Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,  
            Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty,  
            Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Rendon
           NOES: Harper
           NO VOTE RECORDED: Dahle, Daly, Frazier, Melendez




          Prepared by:Katharine Moore / N.R. & W. / (916) 651-4116
          8/25/16 17:45:07


                                   ****  END  ****


          












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