8-KOther Events

SEMPRA 8-K Report, Corporate Update (Dec 10, 2015)

Filed December 10, 2015For Securities:SRESREA

Summary

This 8-K filing from Sempra Energy (SRE) and its subsidiary Southern California Gas Company (SoCalGas) reports on a significant natural gas leak discovered on October 23, 2015, at SoCalGas's Aliso Canyon storage facility. The leak, originating from one of over 100 wells, has prompted immediate mitigation efforts, including drilling a relief well expected to take three to four months to complete. SoCalGas is working with experts to stop the leak and reduce environmental and neighborhood impacts, including customer relocations. While SoCalGas assures that it can still reliably provide natural gas to customers and continues to withdraw gas to reduce pressure at the facility, the incident has drawn attention from regulatory agencies, leading to notices and potential fines or penalties. Additionally, multiple class-action lawsuits have been filed seeking damages, and the Los Angeles City Attorney has initiated a complaint for public nuisance and other violations. The company believes it has insurance coverage exceeding $1 billion for these claims and litigation, though policy limits and exclusions apply.

Key Highlights

  • 1Discovery of a natural gas leak at the Aliso Canyon storage facility on October 23, 2015.
  • 2SoCalGas is actively working to stop the leak, including drilling a relief well expected to take 3-4 months.
  • 3The company assures continued safe and reliable natural gas service to customers.
  • 4The leak has resulted in regulatory actions, including notices and potential fines from various agencies.
  • 5Multiple class-action lawsuits and a complaint from the Los Angeles City Attorney have been filed, seeking damages and injunctive relief.
  • 6Sempra Energy/SoCalGas believes it has insurance policies with a combined limit exceeding $1 billion to cover potential claims and litigation costs.

Frequently Asked Questions

The Aliso Canyon facility is a natural gas storage facility operated by Southern California Gas Company (SoCalGas) since 1972. It is crucial for ensuring natural gas system reliability and service to customers in the Los Angeles Basin.

SoCalGas is working with leading experts to stop the leak. This includes drilling a relief well designed to intercept the leaking well, an operation expected to take three to four months. They are also withdrawing natural gas from the facility to reduce pressure, which helps minimize emissions, and evaluating other mitigation measures.

While the company cannot currently estimate the amount of gas lost or the total costs, they believe they have insurance policies with a combined limit exceeding $1 billion to cover many current and expected claims, losses, and litigation associated with the incident. However, these policies have limits and exclusions.

No, SoCalGas states that the leak is not impacting its ability to safely and reliably provide natural gas to its customers. They continue to withdraw natural gas from the storage facility to serve customer demand.