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With Aliso Canyon compromised, California may face 14 days of summer blackouts

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Essential Energy Insights - February 2021

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Six trends shaping the industries and sectors we cover in 2021

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With Aliso Canyon compromised, California may face 14 days of summer blackouts

California electricity customers could be in for two weeksof blackouts thissummer with the Aliso Canyon gas storage facility still depleted andcompromising reliable access to gas supplies for power generation, according toan engineering analysis released April 5.

After a multi-monthleak that was resolved in February, the facility is down to about afifth of its capacity, but state regulators have said storage operatorSouthern California Gas Co.cannot inject more gas into the field until the utility proves its wells aresafe.

With that supply severely depleted, the region will have torely on other gas sources and demand management to make it through the comingmonths, state regulators and the CaliforniaISO said during an April 5 conference call with reporters.

Robert Weisenmiller, chair of the California EnergyCommission, said during the call that the region may need to bring in morepower both from around the state and out of state, and electricity users may becalled on to reduce their demand when power generators' gas supplies run low.

"We could be in situations this summer where we may nothave enough gas in the basin, and when that occurs, we have a variety of thingswe'll do. … With those measures, we will work hard to reduce the possibility ofan outage," Weisenmiller said. "If we do have outages, we anticipatethey will be controlled outages … for, say, an hour or two."

He said he did not expect to see rolling blackouts —uncontrolled losses of power that sweep across the region — but rather moreplanned, rotating power curtailments. These are the types of localizedblackouts to which the customers could be exposed for 14 days this summer. Thatestimated number of days is based on normal summer weather conditions and otherhistorically based factors, according to state regulators and CAISO.

While SoCalGas owns and operates high-pressure gas pipelinesthat can move nearly 3.9 Bcf/d of gas, various factors can combine to createlocalized shortages and outages, CAISO Vice President Mark Rothleder saidduring the call.

"The condition that sets up this potential risk is[when] there's a large mismatch between what is scheduled to come in on thepipeline system day-ahead and what actual demand is. That difference can occurdue to some … uncertainties," said Rothleder, pointing to the possibilityof unexpected temperature shifts and system downtimes as key factors. "It'sthe combinational events of mismatches of gas demand relative to scheduled gas,overlaid with outages on the gas system that create the biggest risk of gascurtailments."

Gas from storage is best suited to address the fluctuatingdemands of the region's power generators because storage fields offerpredictable pressures and volumes, according to the engineering analysis,completed by the California Energy Commission, CAISO, the California PublicUtilities Commission, and the LosAngeles Department of Water and Power.

According to SNL Energy data, LADWP has 4,376 MW ofnameplate gas-fired generating capacity, more than half of its generation portfolio.The city-owned utility serves 1.4 million electricity customers, and some ofits power plants are some distance away from the city.

Aliso Canyon and Playa del Rey are the only two gas fieldsinside the Los Angeles basin. Aliso Canyon has working gas capacity of 86.2 Bcfand would normally be capable of supplying up to 1.9 Bcf/d of gas. But now thatthe field's storage is down to 15 Bcf, SoCalGas is holding that in reserve fortruly pressing needs, state regulators said. Playa del Rey, by contrast, has aworking gas capacity of 1.8 Bcf and 400 MMcf/d can be withdrawn from thefacility.

SoCalGas discoveredthe Aliso Canyon leakin late October 2015, and the SempraEnergy subsidiary sealed the breached well in mid-February.

A division of the California Department of Conservation isoverseeing SoCalGas' progress on evaluating the safety of Aliso Canyon's 114remaining wells, but Ken Harris, the department's oil and gas supervisor, saidhe could not speculate on how long it would be before the safety checks arecompleted. For each well, SoCalGas must either put it through a six-part testor seal it off before the company can get a green light to begin injecting gasinto Aliso Canyon again.

With such an ambiguous timeline, state regulators said theyare planning for the storage facility to be out of commission not only duringthis summer but also during the coming winter and possibly even the followingsummer.

"I don't think we want to prejudge or presuppose theoutcome of the efforts to ensure integrity at Aliso Canyon. It's possible itmay come back. I'm certainly not predicting or sure it will come back or, if itdoes, how it will be operated [or] how much gas can be stored there," CPUCPresident Michael Picker said during the call.

Tim O'Connor, the Environmental Defense Fund's Californiaoil and gas director, said in an emailed statement April 5 that California'sregulators should exercise the utmost caution in deciding whether the storagefield can reopen.

"[U]nder no circumstances should Aliso Canyon ever bereturned to service, even for a short period of time, if the company and thestate cannot guarantee that it will be operated safely and with zero leaks, andprovide hard evidence to that effect," O'Connor said.