California natgas storage upgrades to reduce withdrawals

(Reuters) -- Southern California Gas Co told state regulators on Wednesday the amount of natural gas it will be able to pull from its three smaller storage facilities would decline as it upgrades wells at those fields.

SoCalgas, a unit of California energy company Sempra Energy, is upgrading the wells at all of its storage facilities following a massive leak at Aliso Canyon, its biggest field, between October 2015 and February 2016.

The utility plans only to use wells that have been converted so the flow of gas in or out is through an inner tube surrounded by an outer casing. That will limit the amount of fuel that can be injected into or pulled out of the storage facilities.

In the past, SoCalGas, like many utilities, injected and pulled gas through both the inner tubing, if there was one, and outer casing.

In a letter to state regulators, Rodger Schwecke, vice president gas transmission and storage at SoCalGas, said the utility will temporarily plug all wells at its Playa del Rey, La Goleta and Honor Rancho fields that have not been converted to inner tubing flow by April 1.

SoCalGas estimated those changes would have nominal deliverability impacts at Playa del Rey and La Goleta, but could potentially reduce withdrawals from Honor Rancho by more than 50 percent. (See table below)

At low inventory levels, the forecast reduction in deliverability would be greater for all fields and could exceed 75 percent at Honor Rancho.

Due to the potential big reduction at Honor Rancho, SoCalGas said it would return eight to 10 of that field's wells to service by Aug. 1, the traditional start of the utility's peak summer air conditioning demand season.

California's Public Utilities Commission and the Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR) are considering a plan that would allow SoCalGas to inject a reduced amount of gas into Aliso Canyon to help maintain gas and power reliability in the Los Angeles area.

The regulators proposed to reduce the amount of gas in Aliso Canyon to a maximum of 29 Bcf. Aliso Canyon can hold up to 83 Bcf.

In 2016, the state required SoCalGas to keep 15 Bcf in Aliso Canyon to help prevent gas shortages that could cause power outages but would not allow injections into the facility until regulators determined it was safe.

Reporting by Scott DiSavino; Editing by Alan Crosby

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