BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 887| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 SB 887 Page 2 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 SB 887 Page 3 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. SB 887 Page 4 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. SB 887 Page 5 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 SB 887 Page 6 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 - SB 887 Page 7 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 SB 887 Page 8 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 SB 887 Page 9 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 **** SB 887 Page 10