California regulators approved an increase in the maximum natural gas storage level allowed at Southern California Gas Co.’s (SoCalGas) Aliso Canyon facility in Los Angeles County to 68.8 Bcf from 41.16 Bcf, the highest amount deemed safe by the California Geologic Energy Management Division (CalGEM).
The decision allows SoCalGas to inject more gas into the facility during fall in order to protect consumers from natural gas and electricity price spikes in winter, the California Public Utilities Commission (CPUC) said.
“The Western region of the U.S. saw substantial increases in wholesale natural gas prices from November 2022 to March 2023,” regulators said. “Preliminary estimates from stakeholders suggest that the CPUC’s decision to temporarily increase natural gas storage at Aliso Canyon could lead to savings ranging from $200 to $450 million for Southern California natural gas customers during the winter of 2023-2024.
“Electricity customers may also see savings due to the close connection between natural gas and electricity prices.”
The increase in maximum allowed capacity was sought by SoCalGas and fellow Sempra subsidiary, San Diego Gas & Electric Co. The companies said the additional storage capacity would be used for the Unbundled Storage Program, which allows large natural gas customers such as power plants, large commercial and industrial facilities, and natural gas marketers to purchase storage, CPUC said.
Many of these large customers have not had access to storage capacity in Southern California in recent years, regulators noted.
Wholesale natural gas prices in Southern California soared near $50/MMBtu last winter amid a tightly supplied global gas market and pipeline constraints in the Lower 48. As of Friday, NGI’s SoCal Citygate forward fixed price stood at $8.213/MMBtu for winter 2023/2024.
Commissioners highlighted that the increased storage limits do not impact how much gas may be consumed, and that the CPUC remains committed to reducing the state’s demand for natural gas through measures such as electrification deployment and building decarbonization programs.
Prior to a massive methane leak at the facility in 2015, Aliso Canyon’s maximum allowed storage capacity was 86 Bcf.
After the leak, CalGEM reduced the Aliso Canyon safe inventory limit to 68.6 Bcf. As a result, the Unbundled Storage Program was suspended “because all the current natural gas storage capacity is dedicated to supporting residential and other core customers and the balancing function, which supports the system’s overall reliability,” CPUC said.
Regulators continue to assess the feasibility of reducing or eliminating altogether the use of Aliso Canyon in order to meet the state’s lofty climate change goals.
CPUC is aiming to release a plan by the first quarter of 2024 to reduce the state’s reliance on Aliso Canyon.
