Reasons for gas storage construction

Gas storage is principally used to meet seasonal load variations. Gas is injected into storage during periods of low demand and withdrawn from storage during periods of peak demand. It is also used for a variety of secondary purposes, including:

This is performed by mainline transmission pipeline companies to maintain operational integrity of the pipelines, by ensuring that the pipeline pressures are kept within design parameters.

Shippers use stored gas to maintain the volume they deliver to the pipeline system and the volume they withdraw. Without access to such storage facilities, any imbalance situation would result in a hefty penalty.

Producers use storage to store any gas that is not immediately marketable, typically over the summer when demand is low and deliver it when in the winter months the demand is high.

Producers and marketers use gas storage as a speculative tool, storing gas when they believe that prices will increase in the future and then selling it when it does reach those levels.

Gas storage can be used as an insurance that may affect either production or delivery of natural gas. These may include natural factors such as hurricanes, or malfunction in production or distribution systems.

Gas storage ensures to some extent the reliability of gas supply to the end consumer at the lowest cost, which is what the regulatory body is there to ensure. This is a reason why the regulatory body is constantly monitoring storage inventory levels across the board.

Gas storage ensures commodity liquidity at the market centers. This helps contain natural gas price volatility and uncertainty.

Gas storage facilities are gaining more importance due to changes in natural gas demands. First, traditional supplies that were once relied upon to meet the winter peak demand are now unable to keep up. Second, there is a growing summer peak demand on natural gas, due to electric generation via gas-fired power plants.

III. There exist several characteristics of underground storage facilities, which need to be defined and measured. Match each volumetric measure with the corresponding description.

 

	Injection capacity (or rate)	A	It is the maximum volume of natural gas that can be stored at the storage facility. It is determined by several physical factors such as the reservoir volume, and also on the operating procedures and engineering methods used.
	Total gas in storage	B	The amount of gas that becomes permanently embedded in the formation of the storage facility and that can never be extracted back.
	Base gas (also referred to as cushion gas)	C	It is a measure of the amount of gas that can be delivered (withdrawn) from a storage facility on a daily basis. It is also referred to as the deliverability rate, withdrawal rate, or withdrawal capacity and is usually expressed in terms of millions of cubic feet of gas per day (MMcf/day) that can be delivered.
	Working gas	D	It is the total volume of gas in storage at the facility at a particular time.
	Working gas capacity	E	It is the volume of gas that is intended as permanent inventory in a storage reservoir to maintain adequate pressure and deliverability rates throughout the withdrawal season.
	Total gas storage capacity	F	It is the total gas in storage minus the base gas. It is the volume of gas available to the market place at a particular time.
	Cycling rate	G	It is the total gas storage capacity minus the base gas.
	Physically unrecoverable gas	H	It is the average number of times a reservoir’s working gas volume can be turned over during a specific period of time. Typically the period of time used is one year.
	Deliverability	I	It is the amount of gas that can be injected into a storage facility on a daily basis. It can be thought of as the complement of the deliverability. Injection rate is also typically measured in millions of cubic feet of gas that can be delivered per day (MMcf/day).