Sempra takes US$1.1 billion hit for worst-ever U.S. gas leak

Sempra takes US$1.1 billion hit for worst-ever U.S. gas leak
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(Sept 28): Sempra Energy is adding US$1.1 billion in after-tax costs this quarter from a settlement of claims for the worst natural gas leak in U.S. history.

Sempra’s Southern California Gas Co. utility said it reached a US$1.8 billion settlement for individual claims for the 2015 leak at the Aliso Canyon storage facility near Los Angeles, according to a statement Monday. The company reached separate agreements to settle property and business claims for about US$40 million.

The leak from a broken well spewed gas for nearly four months, forced thousands of nearby residents to leave their homes and raised concerns in California about the environmental impacts of the use of the heating and cooking fuel. California estimated that the ruptured well spewed the equivalent of a year’s worth of greenhouse-gas emissions from more than 500,000 cars.

Net, after-tax cash outflows for SoCalGas will be up to approximately US$895 million after taking into account insurance coverage and other adjustments, Sempra said. Ratepayers will not have to cover the settlement costs, the company said.

The company’s shares were little changed after the close of regular trading in New York. They fell 0.7% to US$128.87 on Monday.  

Regulators have restricted use of the storage field since the blowout, tightening fuel supplies in Southern California and contributing to frequent power and gas price spikes.

California Governor Gavin Newsom has called for the eventual closure of Aliso Canyon, the largest natural gas storage facility in the state. California regulators are also deciding whether to levy fines or penalties against SoCalGas for the leak.

SoCalGas previously had reached settlements related to the leak with the city and county of Los Angeles, the California Office of the Attorney General and the state’s air resources agency.