When the idea for natural gas storage was originally conceived, the fundamental principle was one of getting natural gas as close to the markets to be served as possible to maximize the availability of gas during high demand months. Gas usage historically peaked in the winter when residential and light commercial demand for heating peaked on cold winter days. The first natural gas storage facility in the United States was put into service in New York in 1916 at the Zoar Field (a depleted natural gas reservoir) south of Buffalo, New York. The facility remains in operation today.

With the exception of a few intrastate gas storage projects in the major gas producing states, practically all of the underground natural gas storage facilities developed in the United States since the Zoar Field have been developed under the ownership or control of large pipeline companies or regulated local gas distribution companies (LDCs). Not surprisingly, these facilities have operated on a seasonal basis, usually cycling gas once per year. Five significant marketplace changes driven by the combination of regulatory changes and technology changes have significantly altered how natural gas storage facilities will be used in the future:

  • The 1978 Public Utility Regulatory Act that provided for the creation of non-utility electric power generators, among other regulatory changes
  • The 1990 Clean Air Act Amendment
  • Deregulation and unbundling of the sale and transportation of natural gas starting in the early 1980s and continuing in the 1990s
  • Technological improvements in gas turbine technology starting in the 1980s and continuing today
  • Creation of markets for trading natural gas and electricity as commodities rather than being an extension of regulated gas and electric service

As a result of the five foregoing events, the use of oil, coal, hydro and nuclear energy sources has been seriously disadvantaged, which has established a strong preference for natural gas as the energy source for meeting the country’s future energy needs. The net effect of these changes is that natural gas has become the leading choice for home and light commercial heating appliances and the fuel of choice for most new power generation. The growth in gas-fired electric generation is creating a significant new gas demand peak in the summer, while at the same time winter peak demand for natural gas continues to grow. In addition, the operational needs of new gas-fueled electric power plants has created both day-and-night and weekday-and-weekend swings in demand for natural gas.

What this means for the future of natural gas storage facilities is that storage will not only have to satisfy the traditional demands for fuel supply reliability, but it will also have to satisfy the significant and expanding swings in demand for gas that can only be accommodated by high performance, multiple-cycle natural gas storage facilities.

Common Terms

  • TOTAL CAPACITY is the maximum volume of gas that can be stored in an underground storage facility.
  • BASE GAS (OR CUSHION GAS) is the volume of gas that must remain in the reservoir to maintain adequate pressure to support deliverability in any type of reservoir and to preserve the integrity of the working capacity in salt caverns and aquifers.
  • WORKING GAS CAPACITY in the reservoir is equal to the Total Capacity minus the Base Gas. Working Gas is the volume of gas in the reservoir above the Base Gas requirements at any given time. Working Gas is the gas available to the market.
  • DELIVERABILITY is the capability of the storage facility to withdraw Working Gas from the reservoir for delivery into pipelines to serve the marketplace. Various terms used to refer to deliverability are delivery rate, withdrawal rate, or withdrawal capacity. Deliverability is typically expressed as a flow rate in units of “millions of cubic feet per day” (MMcf/d); “millions of British thermal units per day” (mmBtu/d) or “dekatherms per day” (dth/d). Conversely, the rate at which the facility can inject Working Gas into storage is referred to as the Injection Rate.
  • CYCLING refers to the storage facility’s ability to complete the injection and withdrawal of Working Gas. Traditionally, reservoir storage is designed to complete one cycle in each year. Recent market trends have produced the need for storage facilities capable of completing multiple cycles per year.