California Says Sempra Well Sealed After Months-Long Leak

  • Utility had temporarily stopped escaping gas on Feb. 11
  • Leak sickened residents and forced thousands to relocate

Sempra Energy has permanently sealed a well near Los Angeles that leaked natural gas for months, sickening residents and forcing thousands to relocate, California regulators confirmed on Thursday.

Tests showed the well was no longer leaking after it was plugged with cement, Jason Marshall, chief deputy director of the California Department of Conservation, said at a press conference in Chatsworth, California. Sempra’s Southern California Gas Co. utility was able to temporarily halt the release of methane from the broken well on Feb. 11 by pumping it with heavy fluids.

The leak, first discovered on Oct. 23, touched off a tirade from federal lawmakers, state agencies and local officials who’ve opened investigations, threatened fines and questioned whether Sempra’s gas storage complex should remain open. The company is facing more than 60 lawsuits including one filed by the California Attorney General.

"This is a turning point for shareholders as well as for the company and our customers," Southern California Gas Chief Executive Officer Dennis Arriola said in a telephone interview. "From a certainty standpoint, this is something that shareholders have got to be pleased about. Obviously, there is more work to do."

Sempra rose 1.5 percent to $96.88 in New York.

State regulators said wells at the Aliso Canyon storage facility would need to be inspected and tested before new gas could be injected into the reservoir, which serves 11 million customers in the Los Angeles area.

California Energy Commission Chair Robert Weisenmiller said at the press event that concerns remained that the storage facility’s limited use could lead to shortfalls in summer and winter energy supplies. Regulators are making contingency plans that will include asking residents to reduce energy use on days with high demand, he said.

Sempra said in a filing Feb. 11 that it had more than $1 billion in insurance that’s expected to cover many of the expenses. The San Diego-based company estimated that costs associated with the leak would total at least $250 million, excluding penalties and legal expenses.

Arriola said utility customers wouldn’t have to pay for the costs of the incident, which were still being added up. In the interview, he said it was "too early to tell" what will happen to the company’s insurance rates and the utility was still in the process of determining the potential financial impact of new gas storage safety regulations.

Residents who were relocated to short-term housing while Sempra worked to plug the release will have as many as eight days to return home. Southern California Gas said it has temporarily moved 6,400 families who live near the well on the northern rim of the San Fernando Valley.

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