California’s Aliso Canyon review could offer key lessons on transition from natural gas, analysts say

California regulators are taking a closer look at the possibility of closing one of the nation’s largest natural gas storage facilities, located just northwest of Los Angeles, in an effort that some experts think could offer valuable lessons on a broader transition away from the fuel.

The Aliso Canyon natural gas storage field, operated by Southern California Gas Company (SoCalGas), has the capacity to store 86 billion cubic feet of natural gas and plays an important role in maintaining energy reliability, especially in the L.A. Basin.

But six years ago, the facility experienced a leak that released more than 100,000 tons of methane into the air, prompting the temporary relocation of more than 8,000 households and leading then-Gov. Jerry Brown, D, to declare the incident a state emergency. In the wake of the leak, the California Public Utilities Commission (CPUC) opened a proceeding to investigate the possibility of either reducing or entirely eliminating the use of the storage field, without compromising on reliability.

Part of the pathway to reducing Southern California’s dependence on the Aliso Canyon facility will be to explore reductions in natural gas usage, including weaning off gas-fired generation, said Seth Hilton, partner at Stoel Rives. And if California can figure that out, it could serve as a model for other areas that are looking to do the same. 

“It definitely could be, and probably should be [a model], if California is successful in reducing the amount of natural gas it relies on and gas storage that it needs,” Hilton said. “It’s either a disaster and it’s a model — or it works, and it’s a model.”

California’s reliability challenges

Closing down the Aliso Canyon storage field without a proper plan in place could have broader implications for electric and gas reliability, Hilton said, from the potential for local gas shortages — for heating and other end-use purposes  to a hit to natural gas-fired electric generation that could impact the system overall. 

Part of the challenge is that as California experiences hotter summers due to a changing climate while simultaneously shifting to renewables, its key focus will be on meeting the net demand peak period, which tends to occur later in the evening, than the total demand peak. While the state is installing more energy storage to help with that net peak period, it still leans on gas-fired generation, Hilton said. And facilities like Aliso Canyon also help protect against events like the recent reliability crisis in Texas, which could impact the flow of gas from other states into California.

Additionally, having in-state underground gas storage provides a layer of protection to SoCalGas’ system, which is at the end of the line for multiple pipelines that bring gas into California, the utility said in a July filing with the California Energy Commission (CEC). If a wildfire, freezing temperatures or other weather conditions were to affect the supply of gas to the state, underground storage is “the primary safeguard against curtailments and the significant safety and economic impacts that can result,” the utility stated. 


“We’ve already spent a lot of time recognizing the immense dependency that we have on Aliso, and I really didn’t want to spend all this great time… looking at the alternatives and not actually do come up with a plan…”

Martha Guzman Aceves

Commissioner, California Public Utilities Commission


Another difficulty in shutting down and replacing the storage field is the particular complexities of studying the L.A. Basin area. The region faces multiple transmission constraints, Neil Millar, vice president of transmission planning and infrastructure development at the California Independent System Operator (CAISO), said at a CEC workshop in early July. 

And while there are opportunities for energy storage resources to replace gas-fired generation in the region, that analysis “has to take into account the charging requirements, which could be met either from importing energy from outside of the area or from other in-basin gas-fired generation in the off-peak hours,” Millar said. “So there is still a potential there for the use of gas-fired generation for charging… .”

‘Certain communities in our state bear the brunt’

When the CPUC first opened the proceeding, in 2017, to explore the feasibility of shutting down Aliso Canyon, regulators envisioned a two-phase process  developing the analysis and scenarios within which to evaluate the impact of closing down or reducing the use of the facility, and then actually evaluating those impacts.

In December 2019, the agency added a third phase, which involved bringing on board an expert consultant to identify the resource portfolio and infrastructure  including renewables, energy efficiency, storage, demand response and additional gas transmission  that could help entirely replace the Aliso Canyon field. The analysis is focused on two time horizons: 2027 and 2045.

Early this year, CPUC Commissioner Martha Guzman Aceves took over the proceeding, replacing Commissioner Liane Randolph, who has since gone on to head the California Air Resources Board. Her biggest priority now, she told Utility Dive in an interview, is to get that study completed in a way that is robust, comprehensive and specific, with actual estimates of costs and feasible timelines.

A key part of her thinking around the question of Aliso Canyon is the impact that the facility has on the communities who live around it. 

“Certain communities in our state bear the brunt  and the communities around Aliso Canyon are those, in this instance,” she said. 

Guzman Aceves issued a ruling in July expanding the scope of the commission’s effort to also look at what steps it would need to take if it does authorize closing down the Aliso Canyon facility  including what to replace it with, when to do so, what directions to provide utilities and how to begin implementing the closure. 

“[W]e’re actually going to come up with a plan here. We’ve already spent a lot of time recognizing the immense dependency that we have on Aliso, and I really didn’t want to spend all this great time… looking at the alternatives and not actually… come up with a plan, an actionable plan around it,” she said.

How  and when to replace the Aliso Canyon storage field

FTI Consulting and Gas Supply Consulting, the companies that the CPUC brought on board to study resource alternatives to the Aliso Canyon storage field, are evaluating four investment portfolios as part of their analysis, as outlined in a March filing  investments in new pipeline infrastructure; gas demand-side strategies, like demand response, energy efficiency and electrification; increasing the build out of renewables that California is currently envisioning under its integrated resource planning process; and adding transmission capacity to the system. The consultants intend to look into these options and use that analysis to craft a fifth portfolio, designed to include elements from the first four, down the line. Their study is expected to be completed later this year. 


“[T]he more renewables you put onto the market, into the system, the more volatility you carry forth and bring forth into the system, which requires some sort of offsetting resource to address that volatility.”

Jonathan Peress

Senior Director of Business Strategy and Energy Policy, Southern California Gas Company


Utilities, clean energy groups and other stakeholders have different perspectives on the timeline for weaning the system off, and replacing, the Aliso Canyon field. Jonathan Peress, senior director of business strategy and energy policy at SoCalGas, told Utility Dive that the need and value of storage is increasing, not decreasing, amid California’s shifting energy landscape.

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