Bill Text: CA SB887 | 2015-2016 | Regular Session | Chaptered
Bill Title: Natural gas storage wells.
Spectrum: Slight Partisan Bill (Democrat 3-1)
Status: (Passed) 2016-09-26 - Chaptered by Secretary of State. Chapter 673, Statutes of 2016. [SB887 Detail]
Download: California-2015-SB887-Chaptered.html
BILL NUMBER: SB 887 CHAPTERED
BILL TEXT
CHAPTER 673
FILED WITH SECRETARY OF STATE SEPTEMBER 26, 2016
APPROVED BY GOVERNOR SEPTEMBER 26, 2016
PASSED THE SENATE AUGUST 26, 2016
PASSED THE ASSEMBLY AUGUST 24, 2016
AMENDED IN ASSEMBLY AUGUST 19, 2016
AMENDED IN ASSEMBLY AUGUST 17, 2016
AMENDED IN ASSEMBLY JUNE 30, 2016
AMENDED IN SENATE MAY 31, 2016
AMENDED IN SENATE APRIL 26, 2016
AMENDED IN SENATE MARCH 28, 2016
INTRODUCED BY Senator Pavley
(Coauthors: Senators Allen and De León)
(Coauthor: Assembly Member Wilk)
JANUARY 20, 2016
An act to add Chapter 6 (commencing with Section 42710) to Part 4
of Division 26 of the Health and Safety Code, to amend Section 3403.5
of, and to add Article 3.5 (commencing with Section 3180) to Chapter
1 of Division 3 of, the Public Resources Code, and to add Section
1103 to the Public Utilities Code, relating to natural gas.
LEGISLATIVE COUNSEL'S DIGEST
SB 887, Pavley. Natural gas storage wells.
(1) Under existing law, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation regulates the drilling,
operation, maintenance, and abandonment of oil and gas wells in the
state. Existing law provides that a person who fails to comply with
specific laws relating to the regulation of oil or gas operations is
guilty of a misdemeanor.
This bill would require the operator of a gas storage well, before
January 1, 2018, to have commenced a mechanical integrity testing
regime specified by the division and would require the division to
promulgate regulations that establish standards for all gas storage
wells, as specified. This bill would require the division to
determine by regulation what constitutes a reportable leak from a gas
storage well and the timeframe for reporting those leaks, as
specified. Until the regulations are in effect, this bill would
require the operator to notify the division immediately of a leak of
any size from a gas storage well. This bill would require the
division to post information about a reported leak that cannot be
controlled within 48 hours on its Internet Web site, as prescribed.
This bill would require the State Oil and Gas Supervisor, within 72
hours of being notified of a reportable leak, to determine if a
relief well is necessary. If the supervisor makes that determination,
whether within the first 72 hours or after, the bill would require
the operator to immediately begin preparation for, and, as soon as
practicable at the determination of the supervisor, commence the
drilling of, a relief well. This bill would require an operator of a
gas storage well to develop and maintain a comprehensive gas storage
well training and mentoring program for those employees whose job
duties involve the safety of operations and maintenance of gas
storage wells and associated equipment, as specified. This bill would
require certain materials, relating to wells serving or located in a
natural gas storage facility, including, among others, a risk
management plan, to be submitted by the operator and approved at the
supervisor's discretion. This bill would require the division to
perform unannounced random onsite inspections of some gas storage
wells annually. This bill would require the State Air Resources
Board, in consultation with any local air district and the division,
to develop guidelines for a monitoring program that includes
continuous monitoring of the ambient concentration of natural gas at
sufficient locations throughout a natural gas storage facility or
planned natural gas storage facility to identify natural gas leaks
and the presence of natural gas emissions in the atmosphere. The bill
would require an operator of a natural gas storage facility to
develop and submit to the state board a facility monitoring plan that
satisfies the program requirements, and would require the state
board to review the plan and to either approve or disapprove the
plan. This bill would require an operator of a natural gas storage
facility to provide the monitoring data to the state board. This bill
would require the state board or the division, as applicable, to
post and make available on its respective Internet Web site all
materials that are provided to the state board or division, as
applicable, in order to comply with the provisions added by this act.
Because a violation of these requirements would be a crime, the bill
would impose a state-mandated local program.
(2) Existing law requires the operator of a well to file a written
notice of intention to commence drilling with, and prohibits any
drilling until approval is given by, the State Oil and Gas Supervisor
or district deputy. Under existing law, the notice is deemed
approved if the supervisor or district deputy fails to respond to the
notice in writing within 10 working days from receipt and is deemed
canceled if operations have not commenced within one year of receipt.
Existing law provides that these provisions also apply to the
deepening or redrilling of the well, any operation involving the
plugging of the well, or any operations permanently altering in any
manner the casing of the well.
This bill would require the division, on a weekly basis, to post
on its Internet Web site a list of the notices of intention received
by the division, and to provide copies of those notices to the public
upon request.
(3) Under existing law, the State Oil and Gas Supervisor is
required to impose an annual charge computed at a uniform rate based
on the number of wells used to inject and withdraw gas from an
underground storage facility during the preceding calendar year.
Existing law requires the charge to defray the costs incurred by the
state in maintaining surveillance over those facilities.
This bill would instead require that annual charge to be the
proportionate share of the total regulatory costs projected for each
fiscal year based on the field capacity and number of wells of each
underground gas storage facility, as specified. The bill would
require an additional charge to be imposed on an operator, if an
uncontrolled leak or release of gas occurs at the operator's
underground gas storage facility, to defray the costs of the response
effort of the division, as specified.
(4) The Administrative Procedure Act governs the procedure for the
adoption, amendment, or repeal of regulations by state agencies and
for the review of those regulatory actions by the Office of
Administrative Law. Existing law provides that, if a state agency
makes a finding that the adoption of a regulation or order of repeal
is necessary for the immediate preservation of the public peace,
health and safety, or general welfare, the regulation or order of
repeal may be adopted as an emergency regulation or order of repeal.
Under existing law, a regulation, amendment, or order of repeal
adopted as an emergency regulation remains in effect no more than 180
days unless the adopting agency and the Office of Administrative Law
comply with certain requirements.
Until January 1, 2019, this bill would instead require that
emergency regulations adopted by the division effective February 5,
2016, continue in effect until the adoption, amendment, or repeal of
the regulation is promulgated by the division pursuant to the act.
(5) Under existing law, the Public Utilities Commission has
regulatory authority over public utilities, including gas
corporations. The Public Utilities Act prohibits any gas corporation
from beginning the construction of, among other things, a line,
plant, or system, or of any extension thereof, without having first
obtained from the commission a certificate that the present or future
public convenience and necessity require or will require that
construction.
This bill, if a new underground gas storage facility is proposed,
would require the commission to ensure that a risk assessment
evaluating the potential impact of a leak from the facility on public
and environmental health, safety, and welfare is conducted by the
project proponent, as specified. This bill would require that the
findings of any risk assessment conducted pursuant to these
provisions be subjected to peer review by independent experts and
reported to the Legislature, as specified.
(6) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares as follows:
(a) Public transparency regarding risks, the regulations designed
to mitigate those risks, and regulatory activity are essential to
protect public health and welfare and natural resources.
(b) Public disclosure and safe operation of gas storage wells and
associated piping and equipment are essential in order to provide for
public, environmental, and occupational health and welfare,
including a proactive approach to potential problems.
(c) On October 23, 2015, a significant, uncontrolled leak from a
natural gas storage well that was originally drilled over 60 years
ago was discovered in the Aliso Canyon natural gas storage facility
located in the County of Los Angeles. Initial efforts to stop the
leak failed.
(d) The Division of Oil, Gas, and Geothermal Resources in the
Department of Conservation responded swiftly to the leak, including
by issuing two orders that, among other things, require the use of
relief wells. The division worked around the clock overseeing efforts
to stop the leak.
(e) It was several days before the community was notified of the
leak, although numerous residents started reporting odor concerns
almost immediately. The leaking well is up the hill and approximately
one and one-quarter miles away from the nearest home. Other natural
gas storage wells serving this facility are located closer to homes
and businesses.
(f) The operator of the leaking well had removed a subsurface
safety valve decades earlier and had not replaced it. Regulations in
effect at that time did not require approval or replacement of the
valve. There was no automatic downhole shutoff system installed in
the event of a leak. In 2014, the operator acknowledged publicly in a
filing to the Public Utilities Commission that many of its wells
needed additional assessment and repair. There was no requirement to
disclose to potential homebuyers and business owners the existence of
the Aliso Canyon natural gas storage facility and its attendant
risks.
(g) The Governor declared a state of emergency on January 6, 2016,
in order to facilitate the ongoing state response and efforts to
stop the leak.
(h) On February 18, 2016, the Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation certified that the Aliso
Canyon leak had been stopped. Reports estimate almost 100,000 metric
tons of the potent greenhouse gas methane were emitted to the
atmosphere. In addition to climate risks, community health concerns
continue postleak with hundreds of complaints reported to the County
of Los Angeles along with widespread concern about the short- and
long-term impacts of the leak on public health and economic welfare
in the area.
(i) The standards for natural gas storage wells need to be
improved in order to reflect 21st century technology, disclose and
mitigate any risks associated with those wells, recognize that these
facilities may be in locations near population centers, and ensure a
disaster like the Aliso Canyon leak does not happen again.
SEC. 2. Chapter 6 (commencing with Section 42710) is added to Part
4 of Division 26 of the Health and Safety Code, to read:
CHAPTER 6. NATURAL GAS STORAGE FACILITY MONITORING
42710. (a) The state board, in consultation with any local air
district and the Division of Oil, Gas, and Geothermal Resources in
the Department of Conservation, shall develop a natural gas storage
facility monitoring program that includes continuous monitoring of
the ambient concentration of natural gas at sufficient locations
throughout a natural gas storage facility or planned natural gas
storage facility to identify natural gas leaks and the presence of
natural gas emissions in the atmosphere. The continuous monitoring
program may be supplemented by daily leak detection measurements.
(b) (1) The program shall include guidelines for the continuous
monitoring which shall include, at minimum, optical gas imaging,
where applicable, and accurate quantitative monitoring of natural gas
concentrations. The program shall include protocols for both
stationary and mobile monitoring, as well as fixed and temporary
monitoring locations.
(2) The program shall require optical gas imaging when a large,
ongoing leak occurs.
(c) An operator of a natural gas storage facility shall develop
and submit to the state board a facility monitoring plan that
satisfies program requirements pursuant to subdivisions (a) and (b).
The state board shall review the plan and may approve or disapprove
the plan.
(d) An operator of a natural gas storage facility shall conduct
monitoring in accordance with the facility monitoring plan approved
by the state board pursuant to subdivision (c).
(e) An operator of a natural gas storage facility shall provide
monitoring data to the state board. All materials provided to comply
with this section shall be posted and available to the public on the
Internet Web site of the state board.
SEC. 3. Article 3.5 (commencing with Section 3180) is added to
Chapter 1 of Division 3 of the Public Resources Code, to read:
Article 3.5. Natural Gas Storage Wells
3180. (a) As used in this article, "gas storage well" means an
active or idle well used primarily to inject natural gas into or
withdraw natural gas from an underground natural gas storage
facility.
(b) On or before January 1, 2018, the operators of all gas storage
wells shall have commenced a mechanical integrity testing regime
specified by the division. The testing regime shall include all of
the following:
(1) Regular leak testing.
(2) Casing wall thickness inspection.
(3) Pressure test of the production casing.
(4) Any additional testing deemed necessary by the division to
demonstrate the integrity of the well.
(c) All anomalies identified in the testing shall be immediately
reported to the appropriate district office and explained to the
supervisor's satisfaction.
(d) (1) The division shall promulgate regulations that establish
standards for the design, construction, and maintenance of all gas
storage wells to ensure that integrity concerns with a gas storage
well are identified and addressed before they can become a threat to
life, health, property, the climate, or natural resources.
(2) The regulations shall require that gas storage wells be
designed, constructed, and maintained to ensure that a single point
of failure does not pose an immediate threat of loss of control of
fluids, as determined by the supervisor.
(3) In developing the regulations, the division shall consider
enhanced design, construction, and maintenance measures that could
meet the standard in paragraph (2), including any of the following:
(A) Primary and secondary mechanical well barriers to isolate the
storage gas within the storage reservoir and transfer storage gas
from the surface into and out of the storage reservoir.
(B) Production casing to the surface with the required integrity
to contain reservoir pressure.
(C) Tubing and packer and production tree with the required
integrity to contain reservoir pressure.
(D) Surface controlled subsurface safety valves or Christmas tree
valves with the required integrity to contain reservoir pressure that
halt flow through the well.
(E) Secondary barrier with overlapping cement casing between two
concentric casings with good quality cement bond.
(F) Wellhead with annular valves and seals and the required
integrity to contain reservoir pressure.
(G) Casing with a hanger and seal assembly.
(H) Any other well construction requirements the supervisor
determines would improve the protection of public health, safety, the
environment, and natural resources.
(4) In developing the regulations, the division shall develop a
schedule for ongoing mechanical integrity testing.
(e) In order to facilitate consistency, standardization, and
training for site inspection and maintenance, to the extent that the
regulations promulgated by the division pursuant to subdivision (d)
address surface equipment associated with an underground gas storage
facility, the division shall ensure that those regulations are
consistent with comparable requirements in Parts 190 to 199,
inclusive, of Title 49 of the Code of Federal Regulations.
3181. (a) The operator of a gas storage well shall submit for the
supervisor's approval the following materials:
(1) Data describing the gas storage project and gas storage wells
that demonstrate that stored gas will be confined to the approved
zone or zones. Updated data shall be provided to the division if
conditions change or if more accurate data become available.
(2) A risk management plan to identify and plan for mitigation of
all threats and hazards and potential threats and hazards associated
with gas storage well operation in order to ensure internal and
external mechanical integrity of a well, including site-specific
information. The risk management plan shall provide for regular
review and revision, as needed, to ensure the plan appropriately
reflects current conditions. The risk management plan shall include,
but is not limited to, all of the following:
(A) A natural gas leak prevention and response program that
addresses the full range of natural gas leaks possible at the
facility with specific response plans that provide for immediate
control of the leak. The operator shall consult with local emergency
response entities on the response plans. The prevention and response
program shall include, but is not limited to, all of the following:
(i) A protocol for public notice of a large, uncontrollable leak
to any potentially impacted community, as defined in the risk
management plan, if the leak cannot be controlled within 48 hours of
discovery by the operator.
(ii) Prepositioning, as feasible, and identification of materials
and personnel necessary to respond to leaks. This shall include
materials and equipment to respond to and stop the leak itself as
well as to protect public health.
(iii) The identification of personnel responsible for notifying
regulatory authorities with jurisdiction over the range of leaks
possible.
(B) A plan for corrosion monitoring and evaluation.
(C) A schedule for regular well and reservoir integrity
assessments.
(D) An assessment of the risks associated with the gas storage
well and its operation.
(E) Planned risk mitigation efforts.
(F) A regular maintenance program for the well and the portion of
the facility within the division's jurisdiction. The maintenance
program shall include training for site personnel and proactive
replacement of equipment at risk of failure to ensure safe operation.
(3) In addition to other factors deemed relevant by the
supervisor, the risk management plan required in paragraph (2) shall
consider all of the following:
(A) The facility's distance from dwellings, other buildings
intended for human occupancy, or other well-defined outside areas
where people may assemble such as campgrounds, recreational areas, or
playgrounds.
(B) The risks to and from the well related to roadways, rights of
way, railways, airports, and industrial facilities.
(C) Proximity to environmentally or culturally sensitive areas.
(D) The risks of well sabotage.
(E) The current and predicted development of the surrounding area.
(F) Topography and local wind patterns.
(b) All of the materials described in subdivision (a) shall be
reported to the division according to a schedule approved by the
supervisor. The operator shall not deviate from the programs, plans,
and other conditions and protocols contained in the materials without
prior written approval by the supervisor.
3182. On a weekly basis, the division shall post a list of
notices received pursuant to Section 3203 on the division's Internet
Web site. Copies of any notice shall be provided to members of the
public upon request.
3183. (a) The division, in consultation with the State Air
Resources Board, shall determine and adopt by regulation what
constitutes a reportable leak from a gas storage well and the
timeframe for reporting that leak. The regulations shall require an
operator to immediately report to the division a leak that poses a
significant present or potential hazard to public health and safety,
property, or to the environment.
(b) Until the regulations pursuant to subdivision (a) are in
effect, a leak of any size from a gas storage well shall be deemed a
reportable leak, and the operator shall notify the division
immediately.
(c) If a leak from a gas storage well that is reported to the
division pursuant to subdivision (a) or (b), as applicable, cannot be
controlled within 48 hours, the division shall post information
about the leak on its Internet Web site and provide regular updates
to the public until the leak is stopped.
3184. (a) Within 72 hours of being notified of a reportable leak,
pursuant to Section 3183, the supervisor shall determine if the
reportable leak poses a significant present or potential hazard to
public health and safety, property, or to the environment such that a
relief well is necessary. If the supervisor makes that
determination, the operator shall immediately begin preparation for,
and, as soon as practicable at the determination of the supervisor,
commence the drilling of, a relief well.
(b) Nothing in subdivision (a) shall prevent the supervisor from
making a determination after the initial 72-hour period that a
reportable leak poses a significant hazard to public health and
safety, property, or to the environment and that a relief well is
necessary. If the supervisor makes that determination, the operator
shall immediately begin preparation for, and, as soon as practicable
at the determination of the supervisor, commence the drilling of, a
relief well.
(c) If the operator is required to drill a relief well under
subdivision (a) or (b), the operator's efforts to drill the relief
well shall continue until the reportable leak has been stopped and
the cause of the reportable leak has been fully addressed or the
supervisor determines that other means of controlling the reportable
leak are appropriate.
3185. The division shall perform unannounced random onsite
inspections of some gas storage wells annually. The results shall be
posted and available to the public on the division's Internet Web
site.
3186. An operator of a gas storage well shall develop and
maintain a comprehensive gas storage well training and mentoring
program for those employees whose job duties involve the safety of
operations and maintenance of gas storage wells and associated
equipment. The training program shall include, but is not limited to,
gas storage well operations, including best practices to prevent
leaks, maintenance and testing, gas storage well safety regulations,
emergency response, and incident reporting. If storage field
employees are represented by a labor union, the operator shall
consult with the relevant union local on safety issues and, when
requested, establish a framework to provide training through a joint
labor-management training program.
3187. All materials provided to the division and approved by the
supervisor to comply with Sections 3181, 3184, and 3185 shall be
posted and available to the public on the Internet Web site of the
division in a timely manner.
SEC. 4. Section 3403.5 of the Public Resources Code is amended to
read:
3403.5. (a) The Legislature finds that there are underground
storage facilities for gas that utilize depleted or partially
depleted oil or gas reservoirs. Purchased gas, usually from out of
state, is injected for storage and withdrawn during peak load
periods. The supervisor is required to maintain surveillance over
these facilities to ensure that the original reserves are not lost,
that drilling of new wells is conducted properly, and that no damage
occurs to the environment by reason of injection and withdrawal of
gas.
(b) In order to help support the regulatory effort of the
supervisor, there shall be imposed an annual charge on operators of
underground gas storage facilities to defray the regulatory costs
incurred by the state in conducting the activities described in
subdivision (a). Each underground gas storage facility operator shall
pay a proportionate share of the total regulatory costs projected
for each fiscal year based on the field capacity and number of wells
for each underground gas storage facility. For each underground gas
storage facility, the portion owed by the operator shall be computed
by multiplying the operator's field capacity by the number of the
operator's wells, and dividing that product by the statewide sum
across all underground gas storage facilities of the product of the
field capacity of each individual underground gas storage facility
multiplied by the number of wells at that facility.
(c) In order to defray the costs of the response effort of the
division in the event of a large, uncontrolled release of gas from an
underground storage facility that poses a significant present or
potential hazard to public health and safety, property, or to the
environment, there shall be an additional charge imposed entirely on
the operator of the underground storage facility at which the
uncontrolled leak or release of gas occurred. The charge shall be in
the amount of the total directly associated costs incurred by the
division in the previous calendar year in the course of responding to
the release, including personnel hours, travel expenses, contracting
costs, and any other directly associated costs incurred by the
division.
(d) For purposes of this section, the following terms have the
following meanings:
(1) "Field capacity" means the total gas storage capacity,
including base and working gas capacity, of an underground gas
storage facility, in cubic feet.
(2) "Wells" means all wells associated with an underground gas
storage facility except those that have been plugged and abandoned
pursuant to Section 3208 before the preceding calendar year.
SEC. 5. Section 1103 is added to the Public Utilities Code, to
read:
1103. (a) If a new underground gas storage facility is proposed,
the commission shall ensure that a risk assessment evaluating the
potential impact of a leak from the facility on public and
environmental health, safety, and welfare is conducted by the project
proponent. Both acute and chronic exposures from a range of expected
emissions and emissions rates shall be evaluated. The evaluation
shall include consideration of population density in proximal
communities, environmentally sensitive areas, emergency response
times, evacuation times, possible leak duration, possible chemical
species emitted, and local meteorology.
(b) In evaluating the potential risks and impacts of acute and
chronic exposures from emissions from a proposed new gas storage
facility, the project proponent shall assess or cause to be assessed
risks associated with the proposed facility's proximity to any living
quarters, including private homes, condominiums, apartments,
retirement homes, prisons, dormitories, or other housing; education
resources, including preschools and schools operating kindergarten or
any of grades 1 to 12, inclusive; day care centers; and health care
facilities, including hospitals, nursing homes, and long-term care
and hospice facilities. Based on the risk analysis, appropriate
setbacks to the listed structure types shall be determined by the
commission.
(c) The risk assessment conducted pursuant to this section shall
be subjected to peer review by independent experts whose demonstrated
expertise includes, but is not limited to, the fields of public
health, epidemiology, and toxicology.
(d) The findings of any risk assessment required by this section
shall be reported to the Legislature in accordance with Section 9795
of the Government Code.
SEC. 6. (a) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
including subdivisions (e) and (h) of Section 11346.1 of the
Government Code, the emergency regulations amending Section 1724.9 of
Title 14 of the California Code of Regulations adopted by the
Division of Oil, Gas, and Geothermal Resources in the Department of
Conservation effective February 5, 2016, shall continue in effect
until the adoption, amendment, or repeal of the regulations is
promulgated by the division pursuant to Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code.
(b) This section shall remain in effect only until January 1,
2019, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2019, deletes or extends
that date.
SEC. 7. This act shall neither impair nor diminish requirements
imposed by Chapter 14 of the Statutes of 2016 related to the Aliso
Canyon natural gas storage facility located in the County of Los
Angeles.
SEC. 8. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
