BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 888 (Allen) - Gas corporations: emergency management
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|Version: May 11, 2016 |Policy Vote: G.O. 9 - 0, E., |
| | U., & C. 9 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 16, 2016 |Consultant: Narisha Bonakdar |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 888 declares the Office of Emergency Services as
the lead agency for emergency response to a significant leak of
natural gas from a natural gas storage facility. The bill also
directs the CPUC to place any penalties assessed against a gas
corporation for a natural gas storage facility leak into a
special account and places requirements and restrictions on the
use of the monies in the account.
Fiscal
Impact:
Potentially significant costs for OES and ARB to deploy
resources when a gas leak is reported. (See staff comments).
Minor costs to the Department of Conservation (DOC) and the
CPUC for consultation and gas leak response activities when a
gas leak is reported.
Unknown, but potentially significant, redirection of penalty
revenue from the General Fund to the Gas Storage Facility Leak
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Mitigation Account.
Background:
Regulation of natural gas storage wells. Although natural gas
storage facilities are subject to the overall utilities
jurisdiction of the CPUC, natural gas storage wells and
associated piping and equipment fall under the jurisdiction of
DOC's Division of Oil, Gas and Geothermal Resources (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. 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.
Aliso Canyon gas leak impacts. On October 23, 2015, Southern
California Gas Company (SoCalGas) discovered a significant
natural gas leak from "Standard Sesnon 25" (SS 25) well at their
Aliso Canyon Natural Gas Storage Facility (Aliso Canyon). The
Aliso Canyon is located adjacent to the community of Porter
Ranch within the city of Los Angeles. Several days passed
before SoCalGas disclosed to the community that a significant
uncontrolled leak was occurring. The leak lasted for four
months, resulted in the relocation of more than 5,000 households
(at SoCal Gas's expense), and resulted in hundreds of public
health complaints. In addition to the public health concerns,
ARB's initial coarse estimates indicate that about 95,000 metric
tons of methane was released into the air, adding approximately
20% to the statewide methane emissions during the duration of
the leak.
What is a gas leak? On Jan. 26, 2016, the California Public
Utilities Commission's (CPUC) Safety and Enforcement Division
(SED) directed all California natural gas storage operators to
immediately inspect all natural gas storage facilities for leaks
and report the information to the state. The results indicated
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that 218 of the 229 (95 percent) of the leaks reported across
all natural gas storage fields between October 26, 2015 and
February 5, 2016, were non-hazardous and required minor
responses such as tightening or lubricating valves. Eight were
"Grade 1", meaning that they potentially posed a safety hazard.
All the identified leaks were above ground (not leaking from the
well storage zone) except for one below ground leak on a flange,
which has been repaired.
Proposed Law:
This bill:
Declares OES as the lead agency for emergency response to a
significant leak of natural gas from a natural gas storage
facility.
Requires OES to coordinate among other state and local
agencies the emergency response, public health and
environmental assessment, monitoring, and long-term management
and control of the leak.
Requires the CPUC to deposit any penalties assessed against a
gas corporation into the Gas Storage Facility Leak Mitigation
Account, which is established by the bill.
Requires moneys in the account to be expended, upon
appropriation by the Legislature solely for direct emissions
reductions.
Requires penalty revenues to achieve GHG emission reductions
equal to the amount of gases emitted by a gas leak, as
determined by the ARB.
Related
Legislation:
AB 56 (Hill, Chapter 519, Statutes of 2011) prohibited a gas
corporation from recovering any fine or penalty in any rate
approved by the CPUC.
SB 380 (Pavley, 2016) calls for a moratorium on injecting or
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producing natural gas at the Aliso Canyon facility until certain
safety measures have been performed and confirmed. On the
Governor's desk.
SB 887 (Pavley, 2016) reforms natural gas storage well standards
and operations. The bill is pending consideration in this
committee.
Staff
Comments: The annual cost of this bill would depend upon how
many "significant" leaks occur in that year. Both OES and ARB
provided the per incident costs below:
Approximately $600 (including staffing and travel costs) for
OES to deploy an onsite coordinator. This would be recovered
from the responsible party.
Approximately $100,000 for ARB to contract for downwind
flights to characterize the natural gas release rate at
reasonable periodic intervals using small planes with monitors
to measure methane.
The bill does not define a "significant" leak. The
above-referenced CPUC report indicated that 229 leaks occurred
across all natural gas storage fields between October 26, 2015
and February 5, 2016, though only eight potentially posed a
safety hazard. It unclear how each operator would define
"significant" for the purposes of this bill.
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