Sempra Energy and its Los Angeles-based Southern California Gas Co. (SoCalGas) utility have said in a regulatory filing that the full costs of the Aliso Canyon natural gas storage well leak are still unknown but could be significant.

There could eventually be “material adverse effects” on the “cash flows, financial condition[s], and results of operations,” of both the gas-only utility and parent company, according to a May 20 filing at the Securities and Exchange Commission (SEC)

While SoCalGas has pointed to more than $1 billion in insurance coverage that could cover most, if not all, of the costs related to the leak and its impact on a nearby upscale residential community, it also said that it “cannot predict all of the potential categories of costs or the total amount of costs that [it] may incur as a result of the leak.”

If the now-closed 3,600-acre, 86 Bcf capacity underground storage field, California’s largest, is permanently shut down there are impairments and adverse financial impacts on the two companies, the SEC report said.

A new California law (SB 380) (see Daily GPI, May 11) could carry some harsh penalties for SoCalGas and San Diego-based Sempra, even though the companies supported the measure. It requires the publication later this month of a state assessment of California’s overall gas storage needs, and by July 1, 2017 regulatory proceedings to determine “the feasibility of minimizing or eliminating use of Aliso Canyon, while still maintaining energy and electric reliability for the region.”

SoCalGas said that if Aliso Canyon is closed “for any meaningful period of time,” it could result in “an impairment of the facility, significantly higher-than-expected operating costs and/or additional capital expenditures” that result in natural gas and electric generation reliability being “jeopardized.”

At the end of 1Q2016, Aliso Canyon’s net book value was $415 million, including $180 million of construction work in progress for the construction of a new compression station on the site, an old oil field that shut down essentially in the 1950s, prior to the gas utility developing the underground storage facility in 1972.

“Any significant impairment of this asset could have a material adverse effect on SoCalGas’ and Sempra Energy’s results of operations for the period in which it is recorded,” according to the SEC filing. Higher operating costs and additional capital expenditures incurred by the nation’s largest gas-only utility “may not be recoverable in customer [utility] rates.”

SB 380 prohibits gas injection operations being restarted at Aliso Canyon until ongoing comprehensive, six-part safety and reliability tests are completed on all 114 storage wells at the facility in accordance with rules enforced by the California Division of Oil, Gas and Geothermal Resources (DOGGR). In a separate local report last Friday, SoCalGas said 101 wells had completed phase one inspections, and 13 other are awaiting completion of first phase temperature and noise tests, while 72 wells are into phase two tests.

“Only wells that pass the full battery of six DOGGR-required tests will be considered for [resuming] storage operations,” SoCalGas said in the report.

While the utility has estimated the total volume of leaked gas was 4.62 Bcf and that thus far it has paid out $85 million in 46,000 reimbursements to residents displaced and/or otherwise harmed by the incident, SoCalGas has said that there are no definitive cost estimates on the response to the incident other a $665 million figure released during Sempra’s 1Q2016 earnings conference call early in May (see Daily GPI, May 6).

The last court-imposed deadline for displaced resident reimbursements passed on Tuesday, and SoCalGas was still paying, albeit smaller amounts, for the remaining dislodged families, of which 5,300 of 8,300 had returned home as of the end of May. In April a court hearing on the combined lawsuits filed against the Sempra Energy gas utility drew 80 attorneys representing 73 separate law firms and thousands of plaintiffs in 131 separately filed legal actions that are all pending.