Sempra Energyhopes to have the Aliso Canyon natural gas storage field operating again by theend of summer, well before the investigation into the facility's is complete,company officials said during a May 4 earningscall.
Sempra's utility subsidiary is workingthrough a three-phase process to bring the field back online, first puttingevery active well through diagnostic noise and temperature testing, thensubjecting the wells that pass to additional tests, and finally seekingregulatory approval for reopening the facility.
So far, about 100 of the 114 wells have completed the firstphase of inspections, and Sempra is moving those to phase-two tests, companyofficials said.
"Our target right now … is to have the field ready forfull operation … by the late summer, probably late August," DennisArriola, SoCalGas' chairman, president and CEO, said during the call. "Ican tell you right now that it's really clear that the regulators andpolicymakers truly understand the importance of Aliso Canyon and gas storage toboth gas and electric reliability.So the tone is, basically, 'Let's make sure it's safe, but let's get it back upand running as quickly as we can.'"
Aliso Canyon contains less than a fifth of its working gascapacity of roughly 86 Bcf, and state regulators have forbidden the companyfrom injecting any more gas until the whole facility passes the battery oftests. However, state regulators and other stakeholders have expressed concernsthat without the storage facility in operation, the region could face 14 daysof blackouts over the summer.
"We are working with state and local agencies toaddress electric reliability concerns," Sempra Chairman and CEO Debra Reedsaid during the call. "Aliso Canyon currently has about 15 Bcf of gasavailable for withdrawal. When deciding how best to use that gas, reliabilityfor both the summer and winter seasons must be considered."
Meanwhile, on behalf of the California Public UtilitiesCommission and the state's Division of Oil, Gas and Geothermal Resources,consultant Blade Energy Partners is investigating what caused the Aliso Canyonwell leak. The investigation is expected to take six to nine months, and thestate regulators may release the results at the end of 2016 or beginning of2017, Reed said.
Sempra expects to spend roughly $665 million as a result ofthe leak, which spanned late October 2015 through mid-February. About 70% ofthat sum stems from costs related to relocating residents who lived in and nearthe Porter Ranch community close to Aliso Canyon, assuming that the relocationprogram extends through June 7, according to Arriola. Approximately 15% of thespending is related to stopping the leak and the root-cause investigation, andthe remaining 15% is related to legal expenses and other costs, he said.
Since the leak was sealed, 54% of the residents who lefttheir homes in response have returned, Arriola noted, and the company has beentaking steps to try to reduce the costs associated with the relocation program.For instance, Sempra has had folks move from hotels to temporary apartments,allowing the company to stop paying a per diem since the apartments make itpossible for the displaced residents to cook for themselves.
Sempra on May 4 reported $370 million, or $1.47 per share, infirst-quarter adjusted earnings, down from $428 million, or $1.71 per share, ayear ago. The result missed the S&P Capital IQ consensus normalized EPSestimate of $1.66.
Sempra also lowered its 2016adjusted earnings guidance to a range of $4.60 per share to $5 per share.