SoCalGas Reaches Aliso Canyon Settlement

By Published On: September 28, 2021

Southern California Gas has proposed a $1.8 billion settlement to resolve thousands of lawsuits filed by San Fernando Valley victims of the gas company’s massive, months-long methane leak from its Aliso Canyon Storage Field in 2015 and 2016. The agreement, announced Sept. 27, was reached with lawyers who represent 80% of the nearly 36,000 individuals who sued the company, including those who were hospitalized and evacuated, following one of the largest leaks of the potent greenhouse gas in the U.S.

The pending legal agreement requires that at least 97% of the suing plaintiffs sign on by June 1 to the settlement, though SoCalGas can waive that condition, according to its Sept. 27 Securities Exchange Commission filing. As one observer noted, agreement with 97% of the plaintiffs is a very high bar to reach.

The $1.8 billion settlement is not supposed to come from ratepayer pockets, according to SoCalGas.

Investigations found the gas company was running the old well too hard when it blew out, injecting gas into it at high pressure through both its tubing and its casing. The casing ruptured and the force of the gas blew out the ground on one side of the well. It was months before the leak was successfully brought under control and the gas company finished drilling a second well that intercepted and shut off the first one. Laws enacted since come close to banning that practice

The gas utility also reached two related settlements with property owners in the valley and Santa Susana Mountains in Los Angeles County. One is for $40 million to put to rest a class action by property owners. It also reached a $100,000 agreement with another group of property owners in exchange for dropping all claims arising from harm caused by the leak.

The three “agreements cover substantially all of the material civil litigation against both SoCalGas and Sempra related to the leak,” the company stated. They do not include lawsuits by five property developers, four shareholder derivative actions alleging some directors breached their fiduciary duties, or ones based on Proposition 65 claims.

SoCalGas and its parent Sempra are recording a loss of approximately $1.13 billion, after tax, this month. Earlier the company reached settlements with the Los Angeles City Attorney’s Office, the County of Los Angeles, the California Office of the Attorney General, and the California Air Resources Board for the months-long methane leak.

Aliso Canyon is one of the largest methane disasters

Aliso Canyon is often described in the media as the largest terrestrial natural gas disaster in U.S. history. But a scientific paper published in the journal PNAS in 2019 says there was another gas infrastructure failure that was even larger. In 2004, an underground storage facility in Moss Bluff, Texas, collapsed and sent 115 kilotons of gas into the atmosphere. That compares to 97 kilotons from Aliso Canyon. The paper has 15 authors, most with Dutch institutions, including SRON Netherlands Institute for Space Research.

Perhaps even worse, the researchers, who employed satellite data analysis, say that a further well blowout in Ohio exceeded Aliso’s massive flow rate by a factor of two. For 20 days over February and March 2018, a gas well belonging to XTO Energy in rural Belmont County, Ohio spewed a torrent of gas, plainly visible in images shot by the Ohio State Highway Patrol. After 20 days, the researchers estimated that failure cost the atmosphere another 60 kilotons of mostly methane.

Since the leak in the San Fernando Valley, there have been strenuous struggles to close Aliso Canyon to protect surrounding communities and assure California’s energy sector decarbonizes by 2045. Tuesday morning after the settlement was announced, residents again gathered to call for the permanent closure of the pressurized storage field.

But Southern California Gas considers Aliso Canyon to be a key asset. It allows the company to buy and store gas when prices are low, and not be subject to just-in-time delivery constraints for gas entering California through Blythe from Texas and Colorado.

In July 2017, the California Public Utilities Commission allowed SoCalGas to begin reinjecting gas into Aliso Canyon after a moratorium.

“This chapter in California’s fossil fuel history will not be closed until the Commission closes Aliso Canyon,” said Bill Powers, Protect Our Communities Foundation board member and expert witness.

Contribution by Ingrid Lobet

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