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SoCalGas eyes injection of 'renewable natural gas' into pipelines

A $100 million project on track for completion this spring will inject "renewable natural gas" derived from organic waste into Southern California Gas Co.'s pipeline system for the first time. The landmark project is part of the state's push to harness methane emitted at farms and landfills as an alternative to fossil fuels for transportation, heating and power generation.

Waste management company CR&R Environmental, which is funding the project with support from state grants, recently completed construction of what it believes to be the world's largest anaerobic digestion facility, in Perris, Calif. The digester produces biomethane largely from decomposed grass clippings and yard waste collected in Orange and Riverside counties. The company has started using the fuel in its fleet of waste-hauling trucks, CR&R and SoCalGas announced last week. In the project's next phase, targeted for completion this month, the Sempra Energy subsidiary expects to finish a 1.4-mile pipeline to inject CR&R's biogas into its natural gas system, stretching from Central California to the Mexican border.

"We expect to deliver 2 million cubic feet per day. That is our goal," Mike Silva, CR&R's project manager, said in an interview, adding, "We would like to build five to 10 of these in California." The company hopes to produce enough biomethane in the coming years to cover all the fuel it needs for its vehicle fleet, which stands at about 900 trucks.

SNL Image

Workers inspect a pipeline that will inject biomethane into SoCalGas' system.

Source: Southern California Gas

Injection of CR&R's biomethane, which is treated to make it compatible with common pipeline gas, is expected to begin in late May or early June, added George Minter, a SoCalGas vice president, in an interview. "CR&R is a first mover in the landfill space," said Minter, adding that several new laws may help create more momentum for biomethane.

Biomethane game plan

In the wake of a four-month methane leak at SoCalGas' Aliso Canyon natural gas storage reservoir, plugged in February 2016, California lawmakers last session passed a series of measures signed into law by Gov. Jerry Brown to control methane emissions. While some of the legislation dealt specifically with Aliso Canyon and the state's other natural gas storage facilities and pipelines, several bills tackled California's primary sources of methane emissions: agriculture and landfills.

Agriculture alone accounts for 60% of the state's methane emissions, according to the Air Resources Board, mainly in the form of dairy manure. Landfills are responsible for 20%, while pipeline leaks, oil and gas extraction, wastewater and other sources together account for the remaining 20%.

One bill, SB 1383, requires the ARB to develop a strategy to slash emissions of methane and other short-lived but hard-hitting climate pollutants, including a 40% decrease in methane emissions by 2030. As part of the law, landfills must reduce their disposal of organic waste 50% by 2020 and 75% by 2025. "That creates the driver to build these facilities," Minter said.

The bill also requires ARB, the California Energy Commission and the Public Utilities Commission to develop recommendations for how to best use renewable gas — for instance, whether to inject it into pipelines, or to power onsite vehicles or electric generators. A related bill, SB 840, directs the California Council on Science and Technology to complete a "biomethane injection study" on the technical aspects of delivering the natural gas alternative through standard pipelines and using it in transportation, power and other sectors.

With the right policies in place, the Bioenergy Association of California estimates, the state could produce nearly 300 Bcf of renewable gas per year from organic waste, enough to replace an estimated three-quarters of diesel fuel used in California vehicles today or to power 2 million to 3 million homes.

Funding challenge

Another bill, AB 2313, addresses one of the main obstacles for projects like CR&R's: funding the pipelines to connect new sources of biomethane to the existing gas supply network. "The challenge right now is that the customer has to pay for the interconnection," Minter said. The new law doubled the project cap in an existing PUC incentive program to $3 million to cover interconnection costs and allows up to $5 million for a cluster of dairy projects. Previously, with the per-project incentive limited to $1.5 million, the $40 million program received no applications. CR&R has applied for incentives under the new conditions, Silva said.

The law also directs California energy regulators to consider promoting greater use of biomethane by allowing utilities to recover the costs of biomethane interconnection to common gas pipelines in utility rates. In 2015, the PUC determined that biomethane producers, rather than ratepayers, should bear all costs for processing and injection. "When we decided to build more renewables, the utilities built transmission to the renewable plants," said Minter, arguing that such rate-based investments should also help connect biomethane resources to the gas pipeline system. "What we did for renewable energy, we should also do for renewable natural gas."

In another incentive program, the California Department of Food and Agriculture, using funds awarded in one of last year's budget bills, is preparing to offer up to $36 million for dairy-based digester projects. According to the agency's website, applications for grants are due in May, with awards to be announced in August.