Gas Prices Drop To Lowest Level In Nearly Four Years

On January 15, 2016, the California Department of Conservation (DOC) issued a notice of intent to propose emergency natural gas storage regulations in response to Governor Brown’s emergency proclamation to address the ongoing natural gas leak at the Aliso Canyon Natural Gas Storage Facility in Los Angeles County. The leak, detected in October 2015, is attributed to the failure of a 40-year-old pipe more than a thousand feet underground, allowing pressurized gas to flow back to the surface and into the atmosphere. While the methane emissions rate has been slowing due to reducing pressure from gas withdrawals, at one point, the leak was estimated to account for 25 percent of all methane emissions in the state.

Underground gas storage facilities involve injection of large quantities of gas into underground reservoirs for withdrawal during peak load periods. Industry stores methane underground in depleted oil and gas fields, aquifers, or salt caverns for future use as it is more economic than storing gas in tanks on the surface. The Aliso Canyon storage facility is an oil field that was converted into a natural gas storage reservoir in the 1970s. Although natural gas storage is critical for the economy and grid resilience in the transition to a low-carbon future, the California incident illustrates the risks associated with aging natural gas infrastructure and underscores the need for rigorous oversight using effective technology.

Natural gas is composed primarily of methane (approximately 80 percent) – a potent greenhouse gas. While natural gas burns cleaner than other fossil fuels, fugitive emissions during the production, storage, and delivery have the potential to undo much of the greenhouse gas benefits. Given the scale of the California site leak, regulatory outcomes could not only impact natural gas practices, but also the electricity sector, as natural gas utilization is assumed to grow significantly over the next decade as utilities shift away from coal generation in response to the Clean Power Plan.

Current methane reduction measures from oil and gas operations primarily target above-ground pipeline infrastructure on storage sites, rather than subsurface malfunctions. Given methane’s substantial environmental impact, regulatory requirements for real-time methane detection and controls to address below-ground leaks will become increasingly crucial for sustainability.

Originally published by EnerKnol.

EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.