519 672 2121
Close mobile menu

Southern California is, at this very moment, in the throes of what is potentially the most prolific gas leak to have ever occurred. The disaster–a methane leak at a natural gas storage facility in Porter Ranch, California–has yet to galvanize the kind of media and popular attention that attended the Deepwater Horizon disaster in 2010. However, particularly from a climate change perspective, the ongoing methane gas leak is unfortunately turning out to be a significant environmental disaster.

The leak’s locus is a tiny pipe buried more than a kilometer underground at the natural gas storage facility, owned by SoCalGas. It began in October and has proven resistant to attempts to contain it. The company hopes to have it contained by sometime in March, 2016.

In the meantime, until it is contained, the leak continues to spew a constant, but unknown, quantity of methane into the air. SoCalGas asserts it does not know how much of the gas is escaping, though it appears to be significant (one estimate puts it at as high as 50 metric tonnes of gas per hour).

Local residents have reported becoming sickened from the gas, and thousands have been relocated. Authorities have also detected dangerously elevated levels of benzene in the area.

Methane is a very potent green house gas. If measured by its “global warming potential,” methane is about 25 times more potent a greenhouse gas than carbon dioxide. In other words, one tonne of methane will cause the equivalent amount of warming as 25 tonnes of CO2.

As a greenhouse gas, methane emissions are subject to California’s cap-and-trade regime. Whether its emissions in the normal course of operations required it to purchase credits prior to the leak, given the massive quantity of methane that has escaped, SoCalGas will very likely now be required to do so.

As one commentator has noted, if SoCalGas is, in fact, required eventually to purchase a large portion of carbon credits, it could create upward pressure on the price of carbon credits. This could, in turn, impact both California and Quebec companies who are subject to the cap-and-trade regime and thus required to purchase credits (Ontario is set to link its cap-and-trade regime up to those of California and Quebec once it is up and running).

It will be interesting to see how, ultimately, the cap-and-trade regime will eventually play into the outcome of the disaster. Unfortunately, in the meantime, the leak continues unabated.

News & Views

Blog

The more you understand, the easier it is to manage well.

View Blog

Dazed and Confused: Five contractual considerations for uncertain times

The year 2020 will not soon be forgotten. Despite the devastation of the COVID-19 pandemic, …

Context is Everything – Miller v FSD Pharma Inc.

In the recent case of Miller v FSD Pharma, Inc.1, the Ontario Superior Court of Justice clar…