Environmental Engineering Reference
In-Depth Information
A depleted reservoir costs $5 million to $6 million per billion cubic feet of
working gas capacity. Another major cost incurred for a new storage facility
is base gas. The amount of base gas in a reservoir may be as high as 80% for
aquifers, making them very unattractive for development when gas prices
are high. Salt caverns require the least base gas. The high cost of base gas
is what drives the expansion of current sites instead of development of new
ones. Expansions do not require much additional base gas. The expected
cash flows from such projects depend on a number of factors such as the
services the facility will provide and the regulatory regime under which it
will operate. Facilities that operate primarily to take advantage of commod-
ity arbitrage opportunities are expected to have different cash flow benefits
from facilities used primarily to ensure seasonal supply reliability. Rules
set by regulators can restrict the profits made by storage facility owners or
conversely guarantee profits, depending on the market model.
EvolutionofStorage
Storage has been and continues to be an important element in the U.S. natu-
ral gas supply portfolio. In the future, the value of storage will be driven by
new market forces and paradigm shifts in the magnitude of short-term and
seasonal gas price volatilities. The relative values of storage components will
change. Seasonal storage capacity will become more valuable (wider mag-
nitude of time spreads). Injection capacity also will become more valuable
(reflecting need to balance large LNG vaporization send-out against vari-
able and seasonal demand). Short-term deliverability may become less valu-
able because of aggregate increases in short-term and peaking deliverability
from new LNG storage/vaporization facilities. Gas storage will be utilized to
maximize unconventional gas recovery—gas production does not see the gas
market. Gas-fired peaking power generation requires instantaneous short
term gas supplies. Gas storage can be utilized to balance loads for variable
renewable energy projects. Production outages will be mitigated via offshore
gas supplies, large gas plants, pipelines, and other advances. As much as
650 Bcf of new working gas capacity may be required by 2020 (see Table 8.1)
(Energy and Environmental Analysis, 2000).
GasStorageTechnologyDevelopment
Gas storage technology development has been conducted continuously since
the evolution of the first storage fields. Better understanding of reservoir
