Sempra Energy’s Southern California Gas Co. utility, operator of several major underground natural gas storage fields, now has a cost- and revenue-sharing process in place so it can explore for and produce supplies located adjacent to its storage fields in Southern California, following unanimous action Thursday by the California Public Utilities Commission. SoCalGas reached a settlement last July with a number of major stakeholders, including consumer groups, large customers and large producers, that was the basis for the regulatory action.

“The adoption of this sharing mechanism will provide an incentive for SoCalGas to explore for and produce native gas that is located at its gas storage fields, while providing an opportunity for [the utility’s] ratepayers and shareholders to equally share in the benefits of such a program,” the CPUC said in its decision, which was part of its growing consent agenda. SoCalGas made its original filing with the CPUC in January 2004.

Under the decision the utility will provide a base amount of gas to its core customers annually at no charge, and the rest of whatever native gas it produces would be sold on the open market with ratepayers receiving a 10% royalty on the sales revenue. “SoCalGas patterned the arrangement after the procedures that landowners and exploration/production companies have used, as well as a revenue-sharing mechanism that was approved with Southern California Edison,” the CPUC said.

The gas utility thinks two of its reservoirs have “economically viable” native supplies: Aliso Canyon Storage Field (about 500 MMcf of recoverable gas with an estimated value of $775,000) and La Gloleta Storage Fields near Santa Barbara (3-12 Bcf, but with no estimated dollar value).

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.