Natural gas storage operators aren’t being left behind as theindustry prepares for rapid gas demand growth. NGI’s new survey andmap of North America’s gas storage operations shows new storagefields and expansions cropping up all over the continent, andaccording to a new study by the Gas Research Institute this is onlythe beginning of what will be needed as gas demand grows beyond 30Tcf/year.

The millennium edition of NGI’s Natural Gas Storage Facilitiesin the United States and Canada unveiled last week shows that intotal about 430 Bcf of working gas capacity (10% of the currenttotal) is expected to be added to the gas grid with an 11.8 Bcf/dincrease (13.8%) in peak deliverability. A total of 38 new storagefields and 15 expansions of existing fields are either proposed orcould be developed in the near future. And projections in GRI’s newstudy show the potential for a much greater expansion of storageinfrastructure beyond what is currently planned.

NGI’s comprehensive storage survey shows total working gascapacity for the U.S. and Canada stands at 4.1 Tcf, excludingabandoned or out-of-service fields, with the U.S. holding 87% ofthat total, or about 3.6 Tcf. Daily peak deliverability is about85.5 Bcf, including 77.9 Bcf/d in the U.S. and 7.6 Bcf/d in Canada.

Storage operators are planning large increases in working gascapacity in states and provinces all across the continent,including California, Louisiana, Texas, British Columbia, New York,Oklahoma, Pennsylvania, Kentucky and Wyoming. Big additions todeliverability also are widespread.

Depleted oil and gas fields capture the lion’s share of theproposed new storage fields with 24 facilities, followed byaquifers with six, and salt domes and salt beds with four each.Altogether the proposed new fields account for about 329 Bcf inworking gas capacity and 9.7 Bcf/d in peak deliverability. Proposedand potential expansions of existing storage facilities representan increase of about 100.5 Bcf of working gas capacity and 2.1Bcf/d in deliverability.

Many of the proposed new fields, however, have an uncertainfuture. Storage facilities such as the Ten Section Hub in KernCounty, CA, Stephens Production’s Lavaca Deep field in SebastianCounty, AK, three storage facilities in Kentucky proposed byHar-Ken Oil, Blue Dolphin Gas Storage LLC’s Avoca project in NewYork, National Fuel’s Laurel Fields project in New York and severalothers are proposed but have been put on indefinite hold.

Meanwhile, other fields are more certain to be developed. Fieldson the front burner include, among others, Western Hub PropertiesLLC’s Lodi project in San Joaquin County, CA, Totem Gas Storage’sTotem project in Arapahoe County, CO, Hamilton Natural Gas Co.’sBlackhawk field in Vigo County IN, Kiowa Gas Storage’s Kiowaproject in Kansas, Ouachita River Gas Storage Co.’s Ouachitaproject in Louisiana, Market Hub Partners, LP’s Tioga project inNew York and Steuben Gas Storage Co.’s Thomas Corner project in NewYork and the facilities proposed by ProGas in Indiana and Kentucky.Many of the 15 proposed expansions also are likely to go forward.

NGI’s wall map and detailed map PDF of the Natural Gas StorageFacilities in the United States and Canada shows the location, typeand status of all of the jurisdictional (regulated by the FederalEnergy Regulatory Commission) and non-jurisdictional natural gasstorage facilities in the United States and Canada. Theaccompanying storage report provides all the latest details on newfields and expansions at existing fields.

GRI: Storage Will Grow by Leaps and Bounds

The significant changes to storage infrastructure are occurringbecause of regulatory changes, shifting gas flows and increases ingas demand due to economic growth and growth in gas-fired powergeneration.

Based on pure geologic potential, economics of new constructionand projected need, storage capacity should grow 21% over the next15 years, according to a new GRI study titled Natural Gas StorageOverview in a Changing Market Environment. GRI bases itsprojections on its baseline forecast, which includes data from theAmerican Gas Association, the Federal Energy Regulatory Commissionand the Energy Information Administration as well as demandprojections and other statistics.

It’s study estimates lower 48 working gas storage capacity willgrow from 3.8 Tcf in 1998 to 4.6 Tcf in 2015. The added storagecapacity will require a gas industry investment of nearly $5billion (1998 dollars), or about $270 million per year. About 75%of the capacity additions are expected to occur after 2005 as gasdemand grows more rapidly than storage capacity requirements duringthe next five years, GRI said. It projects the nation’s gas demandwill increase 50%, from 21.3 Tcf in 1998 to 32.8 Tcf in 2015.

The study, conducted for GRI by Energy and EnvironmentalAnalysis Inc., Arlington, VA, identifies several trends that willdrive future storage requirements, including the damping impact onseasonal volatility of increasing consumption by power generationand industrial markets, increases in the value of market-areastorage, and the restructuring of pipeline and storage regulations.

GRI sees storage services becoming more efficient as a result oflocal distribution company restructuring. Contrary to the LDCoperators of the past, new storage operators are expected to havemore of a direct profit motive to maximize the value of storage andare likely to offer new services that use existing facilities moreeffectively.

“These trends are already beginning to have a major impact ongas storage operations and will only be magnified in the future,”said John Cochener, GRI project manager and principal analyst —resource evaluation.

Included is an analysis of changes in storage capacity,services, customer usage patterns and costs, as well as proposedstorage projects. LNG and propane-air are covered in addition totraditional types of storage facilities. The study also reviewsfuture storage requirements, costs associated with expandingdifferent types of storage capacity, and the merits of differentstorage locations.

The study also looks at storage capacity under existingcontracts. One finding is that the average length of time untilcontract expiration for firm storage contracts has declined from6.8 years in 1996 to 6.2 years in 1999. More than half of theexisting contracts in spring 1999 will expire by 2004. By 2006, 70%existing contracts will have expired. Further, storage operatorswill generally be replacing storage contracts negotiated by localdistribution companies (with guaranteed rates of return) withcontracts negotiated by the growing ranks of gas marketers, who areunder competitive pressure to hold down costs.

The number of years remaining under existing storage contractsvaries by customer type, according to the study. Currently,cogenerators and independent power producers have the longestremaining contract lengths, followed by pipelines, gas utilitiesand marketers. Electric utilities and industrial customers have theshortest average contract lengths remaining. Listed in the studyare the top 50 storage capacity holders.

For more information on the GRI study call (703) 526-7832 orE-mail: baseline@gri.org.

To get a copy of NGI’s map and storage report contactIntelligence Press, Inc. at (800) 427-5747, visithttps://intelligencepress.com on the web or emailinfo@intelligencepress.com. The PDF of the storage map ishot-linked to the storage report so a reader can click on a storagefacility and get all the latest information on its capacity,expansion plans, pipeline connections and other details, even downto operator contact phone numbers. Furthermore, all of the storageand LNG data also are provided in a spreadsheet on the compactdisk. The storage booklet also contains a glossary of storageterms.

Rocco Canonica

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