The potential environmental and public hazards posed by the proposed Sacramento Natural Gas Storage LLC facility are too risky to justify the project, California Public Utilities Commissioner Mike Florio said in a draft decision.

The planned project would use a depleted Sacramento natural gas reservoir as a 7.5-Bcf gas storage facility, and both Administrative Law Judge Richard Smith and Commissioner Timothy Simon have supported it in previous draft decisions. But Florio argued that the commission's primary responsibility is to protect the safety of the California public, and that the SNGS project's unavoidable environmental risks and possible safety concerns are too great.

"Despite the proposed project's consistency with the commission's competitive gas storage policy, the risk of unavoidable, significant environmental impacts of the proposed project require us to deny the proposed project," according to Florio's draft alternate proposed decision. "State policy requires that the commission place the safety of the public and utility employees as the top priority. We do not take this obligation lightly."

The potential for stored gas to migrate to the surface through or around the cap rock poses a threat to the environment and the residents near the Florin gas field, situated approximately 3,800 feet below ground, the draft decision said. The unknowns surrounding the project outweigh the potential advantages of added storage and economic benefits to the Sacramento region, the document concluded.

"Without a long-term data collection process we do not know if stored gas could seep from the edges of the reservoir through lateral spreading under pressures that exceed the original reservoir pressure," the draft said.

According to the draft, migrating gas could contaminate an aquifer or accumulate under pavement and within confined spaces such as manholes, and it would take time to remediate the effects of any gas migration after it is detected.

"The potential impact remains significant, unavoidable and unacceptable," the draft said. "Given the significant risks to public safety we have taken an expanded look at the question of need, specifically as it relates to reliability."

While the project would serve as a contingency plan in the event of interruptions or curtailments of Pacific Gas and Electric Co.'s gas service, Florio's alternative decision said those problems are "unlikely" based on the records, and SNGS has acknowledged the low probability. Further, there is no evidence the SNGS project would remain unaffected if a catastrophic event were to shut down the PG&E Corp. subsidiary's pipelines, the draft noted.

Copyright 2012 SNL Financial LC. All Rights Reserved.

(Originally published May 11, 2012, in SNL Daily Gas Report.)