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Climate and Environment

SoCal Gas To Pay Up To $1.8 Billion In Aliso Canyon Gas Leak Settlement

Image depicts a heavily corroded structure at the site of a natural gas explosion in Aliso Canyon.
This photo, which appears in a report of the Interagency Task Force on Natural Gas Storage Safety, shows the damage to Aliso Canyon gas well SS-25 after the massive leak was plugged.
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Nearly six years after a natural gas well broke open in the foothills above Porter Ranch, attorneys suing Southern California Gas Company have announced a settlement potentially amounting to $1.8 billion.

The gas well cracked open in late October 2015 and was not sealed until mid-Feburary of the following year. During that time, some 8,000 households relocated out of the Porter Ranch and Chatsworth areas to escape the rotten-egg smell of the methane gas and toxic chemicals that left oily black spots on homes, cars, playgrounds and patio furniture.

SoCal Gas Community Service Office in Porter Ranch. (Frederic J. Brown/AFP/Getty Images)

More than 35,000 individuals and businesses filed some 396 lawsuits against SoCal Gas, and most of them are part of this settlement, according to the company's SEC filing. The lawsuits claim personal injuries, wrongful deaths and property losses.

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SoCal Gas, which operates the Aliso Canyon Natural Gas storage field, says it could end up paying up to $1.8 billion to settle the cases.

However, the agreement won’t be final unless 97% of all the plaintiffs agree to it by next June. And it’s unclear how much each plaintiff will receive. That’s subject to a payout formula the court approves.

Why Aliso Canyon Lawsuits Are Settling Now

It’s been six years since the blowout and a representative selection of the plaintiff's cases were close to their trial date. Settlements often come right before cases are set for trial — that’s when the combatants decide they’d rather settle on a figure than leave it to a judge or jury.

An aerial view of the SoCal Gas Company's Aliso Canyon Oil Field and Storage Facility in 2016.
(Maya Sugarman

The Aliso Canyon blowout had already cost the company more than $1.6 billion. That covered relocating households away from the leak, communications with the public and media, paying for many different studies and inquiries, as well as legal work.

This settlement for an additional $1.8 billion gives the company some certainty as it moves forward from an incident that an independent analysis found was caused by a lack of maintenance and some poor decisions.

It's hard to say at this point how the majority of Porter Ranch residents and plaintiffs are responding to the settlement announcement. However, those who had been most active in pushing for the Aliso gas field to be closed say the agreement falls short.

Matt Pakucko of Save Porter Ranch says they can’t put a price on the suffering, illness and deaths experienced since the blowout.

And Issam Najm, a former president of the Porter Ranch Neighborhood Council who was not a plaintiff in any of the lawsuits, says he wants the gas storage field closed and so do his neighbors.

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For its part, the company declined an interview, so information is limited to the company's SEC filing and statements.

But, despite the settlement, the Aliso Canyon morass is not over for SoCal Gas. The company still faces a state Public Utilities Commission review that asks if our region can have enough energy if underground gas storage at Aliso is minimized or ended. The commission is also looking at the company’s overall “safety culture” and the utility could also face state penalties for the leak.

Members of Save Porter Ranch, Food and Water Watch and Consumer Watchdog gathered on Aug. 26, 2016, at a state workshop on energy reliability to call for the Aliso Canyon Natural Gas Storage Facility to be shut down.
(Sharon McNary

In its statement about the settlement, SoCal Gas’ parent company, Sempra, said it is about to close a deal announced in April to sell one-fifth of its company to the investment firm KKR & Co. for $3.4 billion.

Ultimately, the Aliso Canyon gas field blowout is the single biggest event that has sped Los Angeles on its way to ending the use of natural gas.

Before Aliso, SoCal Gas and others in the industry would point to natural gas as a “bridge” fuel to keep the lights on while we worked our way to a future fueled by renewable solar and wind energy. But the Aliso blowout turned a lot of residents and policy makers away from natural gas.