Aliso Canyon and Winter Reliability in Southern California

This summer, California’s hot weather lifted gas and power generation loads. Luckily, the need to withdraw any of the remaining storage from Southern California Gas Company’s (SoCal Gas) beleaguered Aliso Canyon natural gas storage facility to support gas-fired generation did not occur.

The potential 14 days of power blackouts that state officials warned about in the spring due to depleted reserves of natural gas in the storage field, did not happen due to a mix of factors. These factors include:

• Operational coordination between the state energy agencies.
• Impact of load reduction programs such as demand response.
• Increased solar capacity year-over-year.
• Luck with the weather in avoiding severe and prolonged heat waves.

The State is not out of the woods, however. Seasonal demand is very different in the winter. While summer demand comes mainly from electric generation, winter demand comes from core customers – residential load mostly. A risk of natural gas curtailments this winter remains as SoCal Gas could face challenges meeting peak load demand on critical days.

Current Conditions

Aliso Canyon’s inventories remain critically low at 15 Bcf versus a capacity of 86 Bcf. Even with other gas storage facilities basically full, total SoCal Gas storage currently sits at 64 Bcf versus a capacity of 135 Bcf. In order to return to service, all 114 wells at Aliso Canyon must go through a battery of safety-related tests. So far, only 23 have passed the full series of tests. Every well needs to complete the testing protocol, meaning they either need to pass all tests or be removed from service, before the State’s Division of Oil, Gas, and Geothermal Resources (DOGGR) can certify that any of the wells are safe for SoCal Gas to resume gas injections.

Before they do grant any certification to return to service, a public hearing must be scheduled in the Porter Ranch Community where the field is located. DOGGR will explain the safety status of the field and take the public’s comments. The community resistance towards returning the facility to service is expected to be intense. Even if SoCal Gas receives permission to resume injections, there is the possibility of legal action to block resumption of operations.

Constellation continues to work with all involved stakeholders, the legislature and the state energy agencies to ensure the best possible outcome for continued service to our customers. 

Below are further details on this situation.

How to Meet Winter Demand

As described in the Aliso Canyon Gas and Electric Reliability Winter Action Plan, prepared jointly by the California Energy Commission (CEC), the California Public Utility Commission (CPUC), the California Independent System Operation (CAISO) and Los Angeles Department of Water and Power (LADWP), how SoCal Gas will be able to meet winter demand will come down to several key factors:

• How cold it gets in SoCal Gas territory as well as surrounding regions.
• How long the cold temperatures last.
• What demand can be curtailed.
• How well the joint agencies coordinate efforts to forecast and procure sufficient natural gas to meet demand.

SoCal Gas can accept up to 3.875 Bcf/day of gas from interstate pipelines that deliver gas from Canada or producing regions such as Colorado, Texas and New Mexico, although the maximum amount of natural gas flowing in each day from the interstate pipelines is not likely to be more than 3 Bcf/day. On many winter days, natural gas demand can average over 4 Bcf/day and be as high as 5.2 Bcf/day.

The assessment concluded that SoCal Gas cannot fulfill the 5.2 Bcf/day of demand on the coldest projected days (1-in-10 year and 1-in-35 year peak demand scenarios) without storage from Aliso Canyon. It also concluded SoCal Gas can only meet 4.5 Bcf/day assuming pipeline capacity of 95 percent, which may not be practical. SoCal Gas may have to curtail 0.7 Bcf/day of gas load on a 1-in-10 year peak day. Thus, the absence of Aliso Canyon, which accounts for 63 percent of SoCal Gas storage, represents a serious challenge in managing load with supply.

A proposal in the Winter Action Plan would be to curtail 60 percent of gas-fired generation demand, then refineries and the balance of power generation demand. Non-Core customers would be curtailed on their gas usage first. Core customers would be curtailed as a last resort because this would require inspecting individual homes and relighting pilot lights.

Winter Pipeline System Risks

The Winter Action Plan assumes that SoCal Gas can deliver 4.5 Bcf/day of supply via pipeline and other storage fields, and that the 10 Bcf of working gas currently in the field could be withdrawn if necessary. There are currently two constraints on the SoCal Gas system that could reduce the amounts that can be delivered through the interstate pipeline system.

• The first constraint is on the line between SoCal Gas’s receipt point with the El Paso pipeline at Topock, AZ and the Newberry compressor station. Due to the age of this part of the system, pressure test results due this fall may require remediation work. This could reduce capacity by 540 mmcf/day. However, all but 200 mmcf/d could be replaced.
• The second concern is on the western side of the SoCal Gas system at Wheeler Ridge, CA. The Wheeler Ridge receipt point receives gas from the Kern River pipeline and delivers that gas to Los Angeles. The issue is that the Honor Rancho storage facility in Los Angeles would be delivering up to 1 Bcf/day of gas onto that line at the same time. Scenario testing of the Winter Action Plan showed that it is not feasible to deliver the full amount from both Wheeler Ridge and Honor Rancho. Honor Rancho deliveries would have to be reduced to 850 mmcf/day (a 150 mmcf/day reduction).

Now What?

Efforts to have more conservation are being pursued, including the development of demand response programs. Also, the CPUC ordered Southern California Edison (SCE) and San Diego Gas & Electric (SDGE) to develop new energy storage projects. In response, SDGE has come back with a plan for a lithium-ion battery storage facility that could store 37.5 MW and be ready by January 31, 2017. SCE is working with three developers to bring 27 MW of new energy storage online by December 31^st.

Constellation remains actively engaged in monitoring these activities to ensure our customers are fully informed of any changes.

Please contact your Constellation representative or West Regional Vice President, Jay Cattermole, at 925-552-9604 or Jay.Cattermole@constellation.com with any questions you may have about how the proposed changes could impact your business.