By Nichola Groom
(Reuters) - The California utility responsible for a massive, 4-month-long gas leak near Los Angeles in 2015 failed to investigate dozens of leaks over decades at the natural gas storage facility, according to a state report released on Friday.
The long-awaited report found that groundwater corroded a 7-inch well casing and made it to rupture, causing the leak. Because Southern (NYSE:SO) California Gas, a unit of Sempra Energy (NYSE:SRE), had failed to investigate and analyze leaks since the 1970s, the consequences of such corrosion were not understood, leading to the 2015 incident, the report found.
The report was commissioned by two state regulatory agencies, the California Public Utilities Commission and the Division of Oil, Gas and Geothermal Resources, and conducted by a third party, Blade Energy Partners.
The agencies said the report would help inform their own investigations, which are expected to be completed this year. Those probes could ultimately result in penalties against the company, according to the CPUC.
More than 60 casing leaks occurred since the 1970s at the Aliso Canyon gas storage facility and were not investigated, the report found. Blade said it found integrity issues in 40 percent of the 124 storage wells it studied for the report.
SoCalGas, as the utility is known, said it was in compliance with natural gas storage regulations in place at the time. Updated well safety regulations since 2015 largely address the causes of the leak, the report said.
"The leak was an industry changing event resulting in the development and implementation of enhanced safety regulations and practices," the utility said in a statement.
Beginning in October 2015, the faulty well spewed more than 4 billion cubic feet of natural gas into the atmosphere until it was sealed 111 days later in February 2016. The leaked gas was enough to supply about 20 million U.S. homes for a day.
The incident sparked outcry and health worries in nearby communities, becoming a public relations nightmare for the utility. More than 8,000 households and two schools were relocated during the leak.
SoCalGas still faces 394 lawsuits including 48,500 plaintiffs.
State regulators limited the amount of gas SoCalGas can inject into the Aliso Canyon facility and said the utility can only withdraw gas when other options are unavailable.
Many residents and government officials want SoCalGas to close the facility.
State Senator Henry Stern, who represents communities surrounding Aliso Canyon, called the company "careless" and the report "alarming."