A state agency this week ordered Southern California Gas Co. to quickly refill three depleted natural gas storage fields to reduce the risk of shortages and potential power interruptions this summer.
The order, issued Monday, is in response to a letter SoCal Gas wrote late last month that cautioned state energy officials that the L.A. region could run short of gas because its local gas fields had low levels of supply. Gas demand can spike in the summer when electricity plants need to add capacity to power air conditioners during heat waves.
One of those fields that is not under a refill order is the now-famous Aliso Canyon Natural Gas Storage Facility. It has been under a state moratorium for injections and non-emergency withdrawals for more than a year. A gas well failed disastrously in late 2015, causing the uncontrolled release of 109,000 metric tons of natural gas, the nation’s largest gas well blowout.
It led more than 8,000 families to temporarily relocate from their Porter Ranch homes to avoid the smell and health risks. The leak was sealed in February 2016. SoCal Gas has overhauled dozens of its 114 wells and shut down others in preparation for bringing the gas field back online.
Without Aliso's mammoth storage capacity, SoCal Gas has relied on three smaller and more remote storage fields, and they became depleted over the winter months. They are at Valencia, Playa del Rey and Goleta. The company maintains a public website that shows gas inventories and withdrawals. The company has 41 billion cubic feet of gas on hand in a system that can accommodate 135 billion cubic feet.
Typically, the company would fill up its gas fields in summer months when the price of gas is lower and withdraw from the fields over the winter when supply is lower and prices go up. The three fields have 40 percent less gas now than at the same time last year.
In a letter to state energy officials in April, the company warned that relying on the three smaller gas fields leaves them very little room if gas demand peaks, like during a prolonged heat wave. The assumption that the system can deliver 1.47 billion cubic feet of gas per day to the L.A. area was based on the three smaller fields being full.
"Our natural gas system, in its current state, may not be able to provide reliable service when electric generation needs it the most this summer," SoCal Gas spokeswoman Melissa Bailey said in an email statement.
"This is because for more than a year we have needed to use the other fields more heavily to make up for natural gas that would have been normally drawn from Aliso Canyon," she said.
The company can only inject gas underground into the depleted oil field rock formations that serve as storage reservoirs when the company has an excess supply, that is, they procure more gas than they need to sell to customers, Bailey said.
"Aliso Canyon is SoCalGas’ single largest asset to support demand swings, and not having Aliso limits our ability to meet reliability needs. In addition, having Aliso available for injections enhances the ability to bring supplies onto the system in excess of demand and thereby support injections at Aliso itself and the other three fields as well," she said.
"Until Aliso Canyon can resume injection operations, SoCalGas has concerns over the system’s ability to meet energy reliability requirements," Bailey said.
Location and the slow speed that gas moves through pipelines partly explain why the other three gas fields cannot completely fill in for Aliso Canyon, she said.
The Los Angeles Basin has a low-pressure gas transmission system called the L.A. Loop, and two of the fields are connected to that loop: massive Aliso and the much smaller Playa del Ray field, according to an Energy Information Agency report. Aliso could put up to 1.9 billion cubic feet per day into the L.A. Loop, but the Playa field puts out much less, only 0.4 billion cubic feet per day.
The other two gas storage fields, Honor Rancho in the Santa Clarita Valley and La Goleta in Santa Barbara County, have a combined potential daily output of 1.4 billion cubic feet, but they are farther from the L.A. Loop. Gas travels slowly in transmission pipelines, so location really matters.
Some Porter Ranch residents and environmental activists who view the gas field as too hazardous to reopen argue that new state rules imposed on gas customers and sellers have reduced the risk of shortfalls in the distribution system.
The new rules, imposed by the state Energy Commission, the PUC and California Independent System Operator, require large customers to more carefully match their advance orders and actual usage of gas. That tactic, known as balancing, along with a mild summer and some other gas-stretching measures were credited with the region avoiding a gas shortage last year. The region has gotten along without the use of the large gas field for nearly 570 days.
Unusual weather, such as a multi-day hot spell, or some incident like the August 2016 Blue Cut Fire that burned over and shut down major power transition lines, can cause local power plants to demand more gas, possibly leading to a shortage during which SoCal Gas would cut off the supply of large power plants and other big gas companies.
State energy officials still consider the nearly 15 billion cubic feet of gas held in the underground storage field at Aliso Canyon to be a backup supply that could be used in case a shortage looms. However, the company said that supply could be quickly used up if some other part of the gas distribution system fails.
The U.S. Energy Information Agency, which reports daily gas inventories, reported that SoCal Gas’ three other gas fields, which can hold a combined 49 billion cubic feet, were nearly full in summer 2016.
SoCal Gas Blowout costs continue to rise
The latest SEC filing by SoCal Gas and parent Sempra Energy puts the cost of the nation’s largest gas well blowout at $799 million, as of March 31.
That’s up from $780 million that the company reported at the end of December, and up from $717 million in August.
Of the $799 million cost, 70 percent was for housing residents away from Porter Ranch during and after the blowout, 20 percent was for controlling the leak and conducting a root cause analysis, which is ongoing. The company says that it expects about $621 million to be covered by insurance policies, and it has already collected $173 million in insurance payments. The company has said it has about $1.2 to $1.4 billion worth of insurance coverage.
All these amounts do not include what the company might be made to pay in damages in civil lawsuits, or to meet the county Department of Public Health demand that the company fund an extensive health study of the long-term effects of the gas release on Porter Ranch residents. That would be $12 million for the first three years, and a few million dollars per year after that.
Clarification: An earlier version of this story did not make clear that the Aliso Canyon natural gas facility near Porter Ranch is not part of the PUC order to refill depleted gas fields.