Aliso Canyon Natural Gas Storage Facility Cleared for the Resumption of Operations
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.
- Aliso Canyon, the largest natural gas storage facility in California, has provided fuel to 17 natural gas-fired power plants.
- The California Public Utilities Commission (CPUC or Commission) confirmed the integrity of the wells and cleared the facility to operate, citing benefits such as the avoidance of energy disruptions in the Los Angeles area and reduction of gas curtailment risk.
- The storage facility will resume operations on a limited basis for the foreseeable future.
- Only 23.6 Bcf (or 27%) of the overall 86 Bcf capacity will be available.
- Operating pressure is reduced to 2,926 pounds per square inch from the previous pressure of 3,600 pounds per square inch.
- SoCalGas must abide by certain requirements to resume and continue operations:
- Prior to recommencing injections, SoCalGas will need to complete a thorough leak survey, aerial monitoring to survey background emissions, and reviews to ensure compliance with technology and equipment requirements.
- Once injections are resumed, SoCalGas must conduct additional leak surveys, periodic flyovers to ascertain safe operations, and daily reports on pressure and volumes withdrawn/injected to maintain safe operations.
- As of September 2017, 52 (or 46%) of the facility’s 114 wells have final approval for use from the California Department of Conservation’s Division of Oil, Gas and Geothermal Resources.
- However, 69 wells are needed to operate at 23.6 Bcf capacity; the remaining 17 wells will not be ready for withdrawal until the first quarter of 2018.
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
This report is part of the Gas Minute series. To view all featured Minutes, please click here.
Additional Contributing Author: Jonathan HarbView More
Welcome to ScottMadden!
Sussex Economic Advisors is now part of ScottMadden. We invite you to learn more about our expanded firm. Please use the Contact Us form to request additional information.