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California Energy Markets / Bottom Lines

[August 3, 2018 / No. 1499]

Aliso Canyon Mitigation Still Under Negotiation After Nearly Three Years

On Dec. 18, 2015, as the enormity of the natural gas leak at Southern California Gas Co.'s Aliso Canyon storage facility was sinking in and making national headlines, the utility committed to mitigate the effects of the disaster.

"SoCal Gas recognizes the impact this incident is having on the environment," then-SoCal Gas President and CEO Dennis Arriola said in a company statement at the time. "I want to assure the public that we intend to mitigate environmental impacts from the actual natural gas released from the leak and will work with state officials to develop a framework that will help us achieve this goal."

A subsequent proclamation from Gov. Jerry Brown ordered the California Air Resources Board to consult with other state agencies to develop a mitigation program for the leak's methane emissions by March 31, 2016. Brown directed that the program be funded by SoCal Gas, that it be limited to projects in California, and that it prioritize projects to reduce short-lived climate pollutants.

Today, nearly three years since the leak was first discovered and nearly 30 months since CARB released its recommended approach for SoCal Gas to achieve full mitigation, a settlement is still being negotiated.

'The ability of a single source to materially affect total statewide emissions is a serious concern.'

The location and duration of specific mitigation projects could be issues that remain to be hammered out. CARB proposed methane-reduction projects targeting the Central Valley dairy and agriculture industries, while several other parties, including the City of Los Angeles and the Porter Ranch community, want to see local mitigation projects. SoCal Gas as recently as May of this year disagreed with the air board's final estimate of the total amount of methane released from the leak.

CARB declined to comment on the timing for a final settlement, as did SoCal Gas, which pointed California Energy Markets to the May quarterly report SoCal Gas parent Sempra Energy filed with the U.S. Securities and Exchange Commission. The utility continues to work on a plan for the mitigation, according to the 10-Q.

The four-month leak from the underground storage facility's SS-25 well, first reported on Oct. 23, 2015, and finally stopped on Feb. 11, 2016, released 108,950 metric tons of methane, according to CARB's determination of the leak's total emissions. The leak at Aliso Canyon is considered the largest documented methane leak in the U.S., according to CARB. Two separate methodologies SoCal Gas used in 2016 to estimate emissions yielded estimates of 84,200 metric tons and 86,000 metric tons of methane released, well below the air board's estimate.

The leak forced the dislocation of nearly 7,000 families and generated more than 2,000 complaints to authorities and health agencies over odor; dizziness; headaches; nausea; eye, nose and throat irritation; and nosebleeds. Emissions from the leak were responsible for 20 percent of all statewide methane emissions over the leak's duration, according to CARB.

"The ability of a single source to materially affect total statewide emissions is a serious concern," CARB said in its October 2016 determination of total methane emissions.

CARB has insisted the mitigation program assign the leaked methane a global-warming potential of 84 and use a 20-year period, meaning one ton of methane has the global-warming potential of 84 tons of carbon dioxide over a 20-year period. Using this GWP, the emissions reductions required under the mitigation program would equate to a target of 9 million metric tons of carbon dioxide-equivalent, according to Sempra.

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SoCal Gas, in its initial comments on the draft mitigation proposal, not only declared CARB's proposal did not impose any legal obligations on the utility, it also argued that using the 20-year GWP was inappropriate because CARB uses a 100-year GWP for other climate programs. The utility objected to CARB addressing mitigation program costs and directing that mitigation projects be completed within 10 years; SoCal Gas, which said it wants to do the mitigation in the most cost-effective way possible, also called for mitigation projects to not be restricted to projects within California.

SoCal Gas also said there was no basis for an approach directing mitigation to a reduction of short-lived climate pollutants and objected to CARB prohibiting the use of allowances and offsets issued under the state's cap-and-trade program to satisfy mitigation objectives.

Considering that hard initial stance, it's no wonder negotiations are dragging on. But other parties to the settlement, including the City of Los Angeles and Los Angeles County, pushed for mitigation projects at the local level, including support for Los Angeles Mayor Eric Garcetti's proposal for a net-zero-energy neighborhood in Porter Ranch, the hardest-hit of local communities affected by the leak.

The Environmental Defense Fund, which was instrumental in early efforts to quantify the size of the leak, called for methane pollution reductions from the oil and gas sector within the Los Angeles air basin.

Sempra reports second-quarter earnings Aug. 6, and might provide an update or new information on the climate mitigation settlement in its quarterly report to the SEC. It's certainly past time to get started on actually mitigating the climate damage from the leak. –Mavis Scanlon

Bottom Lines is excerpted from NewsData's California Energy Markets publication. If you aren't a current subscriber, see for yourself how NewsData reporters put events in an accurate and meaningful context—request a sample of California Energy Markets.

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