Update on Aliso Canyon Natural Gas Leak

Since January 19th, when we posted our first blog about the natural gas leak at Southern California Gas Company’s (SoCal Gas) Aliso Canyon underground storage facility, new developments have come out that you should be aware of:

1. A new investigation has been launched by the California Public Utilities Commission (CPUC).
2. A public nuisance lawsuit has been filed against SoCal Gas.
3. A moratorium on any injections of natural gas into the Aliso Canyon storage field continues.
4. New legislation that would impact storage field operations at Aliso Canyon and elsewhere continue to be deliberated at the California legislature.

The following update provides more detail on the key regulatory and legislative actions that have been taken with respect to the Aliso Canyon natural gas leak and the current status of the natural gas field and storage field.

At this time, it remains unclear whether the field will be operable during the 2016 summer period. This is a crucial time for injecting natural gas that will be available for the next winter heating season and also is a vital summer supply source for natural gas fired electric power plants that are called to run during the summer cooling season.

Status of the Storage Field

SoCal Gas has been ordered by the CPUC to reduce the inventory in the field to 15 BCF. According to the most recent reports available from the Governor’s Office of Emergency Services, the working gas at the field has been reduced from 81.5 BCF to under 20 BCF as of January 26, 2016. SoCal Gas continues to report that they expect to have the leak well contained by the end of February, if not sooner.

Implications Going Forward

While the public authorities have made no final decisions about the future of the Aliso Canyon natural gas storage field, many factors call into serious question whether the field will be operable for the summer injection season or next winter, such as:

• The depth and breadth of the investigations that have been initiated to date.
• The lawsuit that has been filed by South Coast Air Quality Management District (SCAQMD) and the many more lawsuits we expect to be filed.
• The impact of the legislation that has been introduced by Senator Pavley, which we expect will pass.

If the field is not operational by the summer, injections of natural gas for the next winter heating seasons will be compromised, as will summer supply to the electric power plants that rely on natural gas from the storage field as the fuel source for their electricity production.

Recent Events

Recent news media reports tell us that the CPUC has announced that they are launching an investigation into the impact of a permanent closure of the Aliso Canyon storage field. The CPUC has also directed the owners of all underground gas storage fields in the state to immediately test all the wells for potential leaks. This CPUC directive was issued in tandem with orders from the state’s environmental agencies for SoCal Gas to turn over all records on the storage field for review.

The SCAQMD has filed a complaint in the Los Angeles Superior Court against SoCal Gas for creating a public nuisance. With respect to new legislation relative to Aliso Canyon, there are now two bills, Senate Bill (SB) 886 and SB 887, both introduced by Senator Fran Pavley. These will be heard in legislative committees, on their way to likely passage.

SB 886 would impose a moratorium on injections into the Aliso Canyon storage field and would ban the production from any wells in the field that were drilled before 1954 until additional specified testing is complete.

SB 887 would impose many new regulations on all natural gas storage fields with respect to ongoing testing of wells, operational reports, and implementation of safety measures.

Customers can contact West Regional Vice President, Jay Cattermole, at 925-552-9604 or Jay.Cattermole@constellation.com to assess any impact on their gas budgets for the open portion of existing contracts.