Market commentary recaps prior day’s spot and futures trading activity Natural gas news, including FERC rulings and insights Price reporting at 94 geographic locations Platts Analytics market fundamentals supplement NYMEX Henry Hub 36-month forward contract prices Houston — The multi-agency federal and state task force, which was convened in the wake of the Aliso Canyon natural gas release, on Tuesday announced recommendations designed to prevent such incidents from occurring in the future. Receive daily email alerts, subscriber notes & personalize your experience. In addition, Pipeline and Hazardous Materials Safety Administration will issue an interim final rule by the end of the year, which would incorporate two American Petroleum Institute recommended practices, and would apply to the more than 400 underground natural gas storage wells in the US. The API practices call for operators of underground storage facilities to conduct a systematic evaluation of their wells, including compiling and standardizing all available well records; instituting an integrity testing program that includes usage of leakage surveys and cement bond and corrosion logs; creating and documenting a risk management plan to guide future monitoring; establishing design standards for new well casing and tubing; and establishing safe operating pressures for existing casing and tubing. PHMSA will conduct the rulemaking under the new powers given to the agency in the Protecting our Infrastructure of Pipelines and Enhancing Safety (PIPES) Act of 2016, which was signed into law by President Barack Obama in June. The law, which was passed in response to the four-month release of methane from Southern California Gas' Aliso Canyon storage field, gives PHMSA the authority to act quickly to address urgent safety concerns. Article Continues below... "Moving forward, PHMSA will take a more phased approach to rulemaking to look at some of the recommendations specific to this report and how to learn from those lessons and capture that in the form of public policy," Marie Therese Dominguez, PHMSA administrator and task force co-chair, said during a conference call to announce the report's findings. Franklin Orr, the US Department of Energy's undersecretary for Science and Technology and co-chair of the task force, said the task force's recommendations are designed to prevent incidents such as Aliso Canyon from ever recurring. "We need to work to make sure that something like that doesn't happen again. It caused real destruction and they're still working to deal with the problems created by not having that facility available," he said on the call. The leak, which lasted from October 2015 until February of this year, resulted in the estimated release of about 4.72 Bcf of methane and forced evacuations of nearby communities. The sustained shutdown of the storage field during the entire injection season has pushed the Pacific region's gas storage to near-capacity levels as only 3.66 Bcf to 10.96 Bcf of storage capacity remains in the entire region, according to Platts Analytics. Among the report's key findings is a recommendation that, except under limited circumstances, underground facility operators should phase out the "single point of failure" designs, such as the design that contributed to the inability to swiftly control and repair the Aliso Canyon leak. The task force's report focused on three primary areas of study: integrity of wells at natural gas storage facilities, public health and environmental effects from natural gas storage leaks, and energy reliability concerns in the case of future leaks. The report identified for more specific study 12 underground storage facilities around the country, including Aliso Canyon, where potential shutdowns could have the most potential to affect electric reliability, Dominguez said. "The report recommends that industry, federal and state agencies strengthen planning and coordination efforts to decrease the potential impacts on any prolonged disruption, should there be any impact on a natural gas facility specifically related to natural gas storage," she said. "We looked at facilities that were connected in some way to up to 2 GW of power generations -- those are big enough to have a significant effect," Orr said. In addition to Aliso Canyon, the task force looked at one other large underground storage facility in California, Pacific Gas & Electric's McDonald Island facility in the San Francisco Bay Area. The others facilities examined "were clustered in the Gulf Coast region, where the facilities tend to be in salt-cavern settings," Orr said. "They tend to be bigger and the way they're connected to pipeline networks caused them to be in this part of study." He added that the task force found that there is a lack of good data regarding the interconnectivity of the natural gas storage network and the electric power grid. "We need to have better resolution of the kind of data of how those facilities are connected to power plants and that's one of the things that we're calling for in the report, data that will allow us to do a more detailed analysis of the vulnerabilities there," he said. --Jim Magill,jim.magill@spglobal.com --Brandon Evans, brandon.evans@spglobal.com --Edited by Annie Siebert, ann.siebert@spglobal.com
A US federal and state task force has made a series of recommendations to prevent a recurrence of the the San Francisco Bay Area natural gas release. The leak in California, which lasted from last October to February this year, released about 4.72 Bcf of methane and forced nearby residents from their homes. The report recommended that underground facility operators should phase out "single point of failure" designs. In addition, it said that industry, federal and state agencies should strengthen coordination efforts.