SoCalGas Raises Estimated Cost of Aliso Canyon Gas Leak to $1.07 Billion

Southern California Gas Co raised the estimated cost of the massive leak at its Aliso Canyon natural gas storage facility in Los Angeles between October 2015 and February 2016 to $1.071 billion as of March 31.

That is up about 1.5 percent from SoCalGas’ $1.055 billion estimate at the end of its fourth quarter, the company said on Tuesday in report on first-quarter results.

SoCalGas, a unit of California energy company Sempra Energy, warned the “estimate may rise significantly” because of pending lawsuits, possible fines and other costs. SoCalGas said the company still faces 394 lawsuits, including 48,500 plaintiffs.

It said costs not covered by insurance or delays in receiving insurance payments “could have a material adverse effect” on SoCalGas and Sempra.

The utility said the estimate included $1.043 billion of costs already recovered or likely to be recovered from insurance. About 53 percent of the total was for temporary relocation of thousands of residents living near the facility.

Aliso, with a capacity of 86 billion cubic feet (bcf), is SoCalGas’ biggest storage facility. State regulators estimated 4.62 bcf of gas leaked. One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day.

The facility represents 63 percent of the utility’s storage capacity, making it a key part of its ability to deliver fuel to customers, especially when demand for heating and air conditioning is at its highest.

State regulators have limited the amount of gas SoCalGas can inject into Aliso to 34 bcf and said the utility can only withdraw gas from the facility when other options are not available to meet demand.

Many residents and government officials want SoCalGas to shut Aliso. State regulators are evaluating what impact reducing or closing Aliso will have on the reliability of gas and power systems.

SoCalGas said its system will likely be in a “better position” this summer than last year as the result of an increase in capacity after pipeline repairs.

The company said it expects to be able to meet a peak demand of between 3.6 billion to 4.3 billion cubic feet per day (bcfd) with the use of Aliso or just 3.1 to 3.6 bcfd without. Last summer, SoCalGas projected it could meet a peak of 3.4 to 3.6 bcfd.

SoCalGas projects demand will peak at 3.4 bcfd this summer.