ALJ/MCK/hkr Date of Issuance 3/3/2008
Decision 08-02-035 February 28, 2008
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application by Lodi Gas Storage, L.L.C. (U-912-G) To Amend Its Certificate of Public Convenience and Necessity for Construction and Operation of Phase II of the Kirby Hills Natural Gas Storage Facility And To Issue A Subsequent Mitigated Negative Declaration.
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Application 07-05-009 (Filed May 8, 2007) |
DECISION GRANTING AMENDED CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY TO CONSTRUCT AND OPERATE PHASE II
OF THE KIRBY HILLS NATURAL GAS STORAGE FACILITY
TABLE OF CONTENTS
Title Page
DECISION GRANTING AMENDED CERTIFICATE
OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT
AND OPERATE PHASE II OF THE KIRBY HILLS
NATURAL GAS STORAGE FACILITY 22
2.1. Responses to the Application 55
2.2. Adequacy of the Proponent's Environmental Assessment 88
3. Issues Raised by the Subsequent MND/IS 1515
3.2. Geology, Soils and Hazardous Materials 1717
3.4. Mandatory Findings of Significance 2121
4. The Pub. Util. Code § 1002(a) Factors Raised by the Application 2222
6. Categorization and Need for Hearing 2929
DECISION GRANTING AMENDED CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT AND OPERATE PHASE II
OF THE KIRBY HILLS NATURAL GAS STORAGE FACILITY
1. Summary
This decision grants an amended certificate of public convenience and necessity (CPCN) to Lodi Gas Storage, L.L.C. (LGS) to construct and operate the second phase of a natural gas storage facility in Solano County, California. In Decision (D.) 06-03-012, we granted a CPCN to construct and operate the first phase of this facility, which is known as the Kirby Hills Natural Gas Storage Facility (Kirby Hills Facility or Facility). LGS now desires to construct the second phase of the Facility, which will be referred to hereinafter as Phase II, because all of the storage capacity that resulted from construction of the first phase is fully subscribed, and according to the application, there is more than enough demand to support the additional storage capacity that would result from Phase II.
Phase II of the Kirby Hills Facility would result in the expansion of two of the three components of the Facility that we described in D.06-03-012. As stated in that decision, the first component is a natural gas storage and withdrawal field, which includes a compressor/dehydration station and a number of wells for injection and withdrawal. (D.06-03-012, pp. 1, 9.) The storage field and compressor station are located in a rural agricultural area of the Montezuma Hills, approximately six miles west of the City of Rio Vista, and 16 miles southeast of the City of Fairfield. In Phase II, LGS proposes to add three new well pad sites that would contain 15 injection and withdrawal wells. These new wells would access an area called the Wagenet Reservoir, which lies more than 2000 feet below the Domengine Sand formation that is now being used by the Kirby Hills Facility for gas storage.1 The new wells would be connected to the existing compressor site by constructing a 12-inch flow line (i.e., pipeline) that would be approximately 3700 feet long. The existing compressor site would also be expanded to house two additional compressors totaling 5900 horsepower (hp). (Application, p. 4.)2
The second component of the Kirby Hills Facility is a 16-inch, 5.9-mile pipeline that runs from the compressor/dehydration station to a remote metering station and interconnection site, where the Facility interconnects with Line 400 owned by Pacific Gas and Electric Company (PG&E). (D.06-03-012, at 1-2.) Phase II would not involve any modifications to this 5.9-mile pipeline. (Application, p. 4.)
The third component of the Kirby Hills Facility is the remote monitoring station and interconnection site near PG&E's Line 400. In Phase II, the capacity of the metering station and the interconnection with PG&E's system would be expanded from 100 MMcf/d to 350 MMcf/d. (Id. at 5.)
As part of its application, LGS has also requested that it be authorized to charge market-based prices for the storage and hub services that will be supplied by Phase II. As we concluded in D.06-03-012, such authority would be consistent with the pricing authority for LGS's other storage facilities near Lodi, California, and also with the policies to promote competitive gas storage facilities that we have followed since D.93-02-013. In keeping with these policies, we will grant the market-based pricing authority that LGS requests.
As part of its application, LGS has also requested that the Commission find that under the California Environmental Quality Act (CEQA), the potentially significant environmental impacts associated with Phase II can be mitigated to less-than-significant levels through the mitigation measures LGS is proposing. Specifically, LGS has proposed that certain mitigation measures set forth in the Mitigation Monitoring Plan contained in Section C of the Final Initial Study/Mitigated Negative Declaration (Final IS/MND) adopted in D.06-03-012 should apply to Phase II. (Application, p. 27.)3
As part of our decision today, we accept and approve the Subsequent Mitigated Negative Declaration and Supporting Initial Study (Subsequent MND/IS) that our staff has prepared in connection with Phase II. Although we agree with LGS that the extension of some of the mitigation measures approved in D.06-03-012 will be sufficient to address a number of the potentially-significant impacts identified in the Subsequent MND/IS , we also agree with the Subsequent MND/IS that additional mitigation measures beyond those proposed by LGS will be required. As a condition of granting the authority sought in the instant application, we will require LGS to implement each of the mitigation measures required by the Subsequent MND/IS and to abide by the Mitigation Monitoring Plan set forth in Section C thereof.
1 According to the application, the Wagenet Reservoir lies under two parcels of land. The first is the Kirby Hills Ranch that LGS now leases from Kirby Hills Associates, LLC (KH Associates). The second is an adjacent area of land known as the Wohn Parcel. The application states that in 2006 and 2007, LGS and its affiliate, Lodi Development, LLC, acquired the necessary rights to conduct gas storage activities under the Wohn Parcel. (Application, pp. 3-4.)
2 The existing Kirby Hills Facility has a total storage capacity of about seven billion cubic feet (Bcf), of which about 5.5 Bcf is working capacity and 1.5 Bcf is cushion gas capacity. The firm injection and withdrawal capacity of the existing Facility is about 50 million cubic feet per day (MMcf/d). The proposed Phase II would have a total working capacity of up to 12 Bcf, with approximately 6 Bcf of cushion gas capacity. The maximum firm injection and withdrawal capacity of Phase II would be approximately 250 MMcf/d.
3 LGS acknowledges, however, that one of the potentially significant impacts requiring mitigation and identified in its Proponent's Environmental Assessment (PEA) was not addressed in the Mitigation and Monitoring Plan in the Final IS/MND adopted in D.06-03-012. That impact is "the re-completion of two existing abandoned wells (W2 and W5) in the Suisun Marsh Primary Management Area (SMPMA) to convert them to observation wells." (Application, p. 27.) LGS points out that this work would result in the placement of fill material into potential waters of the United States, and notes that it has proposed a specific mitigation measure to deal with this potential impact. This mitigation measure, which is known as Applicant-Proposed Measure (APM) B-7, is set forth at page 3.3-20 of the PEA and is discussed further in Sections 2.2 and 3.4 of this decision.
