On July 19, 2017, Southern California Gas Company (SoCalGas) was notified that the prohibition on natural gas injection was conditionally lifted from its Aliso Canyon natural gas storage facility. This operational restriction was put in place in December 2015 due to a significant leak that was detected in October of that year. The leak, which emitted approximately 100,000 metric tons of methane, displaced thousands of families in the affected area. Upon fulfilling the conditional requirements, SoCalGas can start operating under new terms.
Despite the mitigation measures established after the CPUC’s 2016 review and community pressure to shut down the facility, the increased reliability of service (i.e., reduction in the risk of natural gas service interruptions and the associated risk of energy disruptions) provided by Aliso Canyon has been recognized by the Commission. Natural gas working inventories in Southern California were 25% lower than last year and 50% lower than the five-year average for 2011–2015, which has impacted the availability of natural gas resources for regional power generation. Authorizing service for Aliso Canyon will increase the amount of storage capacity in the area, thereby increasing natural gas supply.
Additionally, the Aliso Canyon issue has contributed to greater industry scrutiny of underground natural gas storage facilities. A recent outcome of this scrutiny is certain federal legislation (i.e., the PIPES Act of 2016), which expands the rulemaking scope of the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) to storage facilities. New safety standards will have significant operational impacts, as inspection, monitoring, and repair requirements are expected to increase. The cost to implement these safety standards may require storage operators to conduct a detailed economic assessment of the costs to comply (i.e., continue to operate) versus other supply alternatives. These operational and cost implications may be magnified, as reliance on natural gas for power generation increases. Going forward, gas storage may have a more significant and scrutinized role in a typical fuel supply portfolio.
CA Department of Conservation: Test Results of Aliso Canyon Wells
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Additional Contributing Author: Jonathan Harb
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