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State Regulators, Critics Crack Down On SoCalGas Storage Field Operations

Further signs appeared Friday that California intends to pay closer attention to its myriad of natural gas underground storage facilities, as state regulators levied civil penalties for gas venting against an ongoing oil producer at Southern California Gas Co.'s (SoCalGas) now closed Aliso Canyon storage field, where a four-month-long well leak ended last month (see Daily GPI, Feb. 18).

The state Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR) issued a $75,000 civil penalty order to The Termo Co. for illegally venting natural gas at the Aliso Canyon facility, applying $25,000 penalties for each of three violations. DOGGR investigators allege that not only was the venting intentional, but the company tried to hide it.

The venting was spotted by a site flyover conducted by researchers for Southern California-based Caltech Jet Propulsion Laboratory and the South Coast Air Quality Management District using an infrared camera.

"Someone clearly made an effort to conceal the pipe, because even though we knew from aerial readings where it was generally, our field staff had to search carefully before finding it behind a tree," said state Oil/Gas Supervisor Ken Harris, who heads DOGGR. Without the aerial surveillance, the discharge could have continued indefinitely, he said.

A DOGGR spokesperson noted that the venting was coming at the terminus of a 2.5-inch diameter pipeline, reportedly part of an emergency relief system installed during the leak stoppage work by Termo because gas produced in association with oil at the field could not be re-injected into Aliso.

"The [oil producer] closed a valve on the pipeline in question, which diminished but did not halt the flow of gas," the DOGGR spokesperson said. Termo was cited with three violations -- wasting gas, improper disposal of oilfield waste, and failure to maintain/monitor its production facility, according to DOGGR.

In response to questioning from NGI, the spokesperson said it is "fair to say that [we] will be taking a more aggressive stance going forward; the division is committed to the principles outlined in its renewal plan”(see Daily NGI, Oct. 9, 2015).

A $236 million request to check, repair and close storage wells at the Aliso Canyon facility, included in a pending general rate case for the Sempra Energy gas-only utility, may be problematic, according to a Los Angeles Times report. State regulatory staff have criticized the utility for allegedly delaying safety work, pending added rate coverage from the California Public Utilities Commission (CPUC), according to the Times. A utility spokesperson disagreed with that assessment.

A SoCalGas spokesperson told NGI that there were no wells that the utility delayed working on because of the pending rate case filing. "SoCalGas continued to conduct its regular integrity testing as required by regulations," she said. Since 2012, the utility has been working on a stepped up well assessment program to enhance integrity testing "beyond what is provided for the regulations and incorporating the latest technology tools and integrity verification methods." That work is what led SoCalGas to develop the $236 million six-year storage integrity management plan (SIMP) methodology.

The spokesperson said that well inspection activity has continued even though the formal SIMP funding request is still pending. She confirmed that SoCalGas used the outer casing of some wells to increase withdrawal rates from the 86 Bcf, 3,600-acre Alison Canyon storage facility to get around volume limitations when using the smaller diameter (less than three-inch) inner pipe in the wells.

The latest fallout from the prolonged storage well leak is further confirmation that Sempra Energy and its SoCalGas utility face a long regulatory and legal battle ahead. After independently reviewing multiple tests on the leaking well -- including temperature, noise and cement-bond tests -- in mid-February DOGGR confirmed that the Standard Sesnon 25 [SS-25] well at the Aliso Canyon was no longer leaking and the well was sealed. DOGGR, along with other regulatory agencies, has overseen the work of SoCalGas and its contractors through the well closure process.

The ongoing investigations will look at what is almost a seven-year history in which SoCalGas has been treading water in attempting to move forward with multi-million-dollar proposals to upgrade some of its vast underground storage in the state. Three years ago, it was in the midst of a long-term effort to finalize environmental reviews that wary local residents were using to question plans to expand Aliso and its Santa Barbara County underground storage facility (see Daily GPI, May 29, 2013).

At one point, an environmental impact report was required by the Santa Barbara County local planning commission regarding the utility's plans to expand the capacity at its La Goleta storage field by 3-5 Bcf and extract additional local gas supplies from the former gas field.

In late 2013, California regulators approved the plans to enhance Aliso Canyon, with a $200.9 million project that was originally outlined nearly five years earlier (see Daily GPI, Nov. 18, 2013). It was part of a larger storage expansion by the nation's largest gas distributor.

In late 2013, the CPUC approved a compressor replacement project at Aliso Canyon that is still moving forward.

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