Skip to main content

The new gas storage epicentre

Hydrocarbon Engineering,


New research from Frost & Sullivan, ‘Global Gas Storage Market’, has found that the total working gas capacity worldwide stood at 381.5 billion m3 last year and estimates this to reach 453.5 billion m3 by 2018 at a compound annual growth rate of 3.5%. In addition to salt cavities, the study also looks at depleted reservoirs, aquifers and LNG storage tanks.

As natural gas is being increasingly used for heat and power generation, the need for gas storage facilities to ensure reliable and secure supply is intensifying. Gas importing regions are now investing in storage facilities to cater to seasonal spikes in demand as well as the strategic need to have backup stocks. For instance, efforts to develop salt cavities will gain pace in order to meet the short term gas demand during peak winters in Europe. Also, gas exporting countries will seek storage assets in regions with rising gas consumption to secure their exports and provide higher stability of supply.

Storage geography

Gas storage facilities have traditionally been concentrated in North America, Europe and countries of the Commonwealth of Independent States (CIS), which includes Russia. However, reducing gas prices, especially in North America, are lowering margins for gas operators and reducing investment in storage capacity. Instead, new storage capacity is coming from emerging markets like China, the Middle East and Latin America. China is most likely to have the highest growth as it begins domestic shale gas production within the next five years.

Ashay Abbhi, Energy and Environmental Analyst at Frost & Sullivan said, ‘converting depleted reservoirs, aquifers or salt caverns into gas storage facilities requires high capital. The situation is exacerbated by the fact that not all of the stored gas can be withdrawn; some of it functions as cushion gas. This constitutes a major portion of facility expenses and the revenues generated from working gas alone are often not enough to compensate for this expenditure.’

Capital costs, such as those above, amidst reducing gas prices and lack of governmental support are anticipated to arrest market expansion in many countries. Getting funding for high cost gas storage projects has proven especially problematic. In fact, this restraint has had a direct negative impact on gas storage market revenues, as it has prevented new facilities from coming up or old ones from expanding. Abbhi said, ‘gas storage operators must invest in R&D of technologies and proper planning of facility development, as this could lower capital costs. For example, if the storage facility is constructed when gas prices are low, the cost of cushion gas can be considerably reduced.’


Edited from press release by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/13112014/gas-storage-epicentre-frost-sullivan/

You might also like

TotalEnergies and SINOPEC join forces to produce SAF

TotalEnergies and China Petroleum and Chemical Corp. (SINOPEC) have signed a Heads of Agreement (HoA) to jointly develop a sustainable aviation fuel (SAF) production unit at a SINOPEC's refinery in China.

 
 

Embed article link: (copy the HTML code below):