With dry gas supplies ballooning, it's probably a good thing that the industry grew demonstrated peak working capacity in underground storage caverns last year, according to the Energy Information Administration (EIA). From April 2011 to April 2012, Lower 48 state capacity increased 3%, or 136 Bcf, to 4,239 Bcf, according to a new EIA report.
Since April, EIA estimated that 7.5 Bcf has been added to working capacity (to make for 4,246.5 Bcf currently), and another 32 Bcf could be added by the end of this year. Demonstrated peak volume is what typically is considered a proxy for full storage. Demonstrated peak capacity is the aggregate peaks for a rolling five-year period of what storage operators actually put in the ground. This differs from design capacity (a larger volume), which is what the nation's storage facilities could physically hold.
"The significance of this report is that it shows the growing role of natural gas in the U.S. energy economy," EIA said. "...[S]torage operators built more storage capacity, and storage holders came up with even greater volumes to put into storage. Concerns expressed early this year that there might not be enough capacity to hold the storage overhang following the warm winter, plus normal summer injections, should be alleviated by EIA's assessment that there is nearly 4,500 Bcf of physical storage [design] capacity for the gas market."
Most of the 136 Bcf increase in demonstrated peak capacity for April 2012 over April 2011 came in the form of more use of traditional storage in the West (56 Bcf) and salt cavern storage in the Producing region (58 Bcf), EIA said. Demonstrated peak capacity in the East increased by only 14 Bcf (less than 1%), but this small increase coincided with the rapid growth of production from the Marcellus Shale in Pennsylvania, EIA said.
Working gas design capacity increased 110 Bcf in the Lower 48 states between April 2011 and April 2012. The largest increases by volume occurred in the Producing region, where design capacity increased 52 Bcf (4%). Capacity additions in the West region posted relatively larger year-on-year increases, rising 48 Bcf (nearly 7%).
Increases in design capacity since April 2011 resulted from the completion of four new storage facilities in addition to about 50 expansion projects. The four new facilities accounted for nearly 38 Bcf of the year-on-year increase in design capacity, and the remaining 72 Bcf increase was provided by expansion projects, EIA said. In the West, two new facilities provided 23 Bcf, with expansions of existing facilities adding 26 Bcf.
Demonstrated peak working gas capacity increased as a percentage of design capacity in each of the regions year over year, meaning that growth in capacity utilization outstripped growth in capacity. This resulted in the 2012 demonstrated peak capacity in the Producing region exceeding the design capacity reported the previous year (see NGI, Sept. 5, 2011) as robust storage volumes found a home in the newly available physical capacity.
Demonstrated peak capacity as a percentage of design capacity is lower in the West than the East and Producing regions for several reasons, EIA said. The West has several still-active fields whose primary role is not seasonal storage. These include fields used for pipeline load balancing and fields that are being drawn down to be taken out of service. Also, some fields in the West have large design capacities but have infrastructure constraints such as limited pipeline and compression capacity that reduce actual storage use and peak capacity.
The status of several previously inactive storage fields has changed since April 2011, which has had differing effects on working gas design capacity, EIA said. The Pecan Station storage field in Texas resumed operations this year, contributing about 1 Bcf to the year-on-year increase in design capacity. Two other previously inactive facilities were removed from the survey because they are no longer being operated as gas storage facilities. The remaining base and native gas volumes in the Brown's Creek and Lake facilities, both in West Virginia, are being withdrawn, so these volumes were reported as natural gas production. The removal of these fields from the survey did not affect working gas design capacity or peak storage estimates in 2011 or 2012.
The Peak Underground Working Natural Gas Storage Capacity Report provides access to an interactive query system that enables analysts to search for storage facilities by various criteria.
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