The People of America's Oil and Natural Gas Indusry

The Facts About Natural Gas Storage

Marty Durbin

Marty Durbin
Posted February 5, 2016

Our industry’s continuing commitment to safety is underscored in a new federal advisory bulletin on underground natural gas storage facilities that urges field operators to implement industry best practices developed by API and other organizations. The Pipeline and Hazardous Materials Safety Administration (PHMSA):

Operators must adhere to applicable State regulations for the permitting, drilling, completion, and operation of storage wells. In developing, implementing, and updating their safety and integrity programs, we encourage underground gas storage facility operators to … voluntarily implement American Petroleum Institute (API) Recommended Practices (RP) … and Interstate Oil and Gas Compact Commission (IOGCC) standards entitled “Natural Gas Storage in Salt Caverns – A Guide for State Regulators” (IOGCC Guide), as applicable. … API has an accredited process to develop recommended practices and standards that involves industry, manufacturers, engineering firms, construction contractors, the public, academia, and government.

API worked with other trade associations and  PHMSA to develop two recommended practices (RPs) last year – one focused on safe practices for designing, storing and operating natural gas in depleted oil and gas reservoirs, and another detailing how to safely design, store and operate natural gas in salt caverns. Both RPs discuss proper construction methods, materials and maintenance practices to ensure safe operations. API Midstream Group Director Robin Rorick:

“Safety is our industry’s core value and we are committed to zero incidents. … The RPs are the result of the best minds in industry working with regulators to ensure Americans continue to safely get the reliable fuels they need to run their daily lives. The American people expect government and industry to work together towards common goals. It is these types of actions, not regulatory overreach, that serve the best interest of safety and economic growth.”

Ensuring natural gas storage safety is critical to ensuring the safe and efficient use of America’s abundant supply of domestically produced natural gas by allowing operators to manage the seasonal mismatches between natural gas production and demand.

Natural gas is the main heating source in homes, which results in significant demand variations over the course of a year. Demand is highest during winter and lowest during the mild-weather months. This is illustrated in the chart below, based on the U.S. Energy Information Administration’s short-term energy outlook (consumption data does not include net or lease and plant data):

NG_demand

Unlike natural gas consumption, natural gas production is relatively flat over time. While overall production levels can increase or decrease, the movements aren’t weather-driven (except for temporary, catastrophic events), as seen in the chart below, also based on EIA figures:

NG_production

Natural gas storage enables supply to safely match demand on any given day. When production is lower than demand, system operators can withdraw gas from storage to meet customer needs. When production is higher than demand, natural gas can be stored for later use.

More than 80 percent of our nation’s natural gas is stored underground in depleted natural gas reservoirs or salt caverns. These geological formations are a safe and efficient means of storage because they tend to be close to existing energy infrastructure, which ultimately reduces costs to consumers. They tend to be heavily studied structures, with known properties and characteristics that make them a safe long-term storage option. More than 400 natural gas storage facilities nationwide, with a total working gas storage capacity of more than 4,300 billion cubic feet.

This storage capacity also is playing an important role as our nation has become more energy secure.  With more and more of the natural gas consumed in the United States produced here at home, we’re significantly increasing our energy self-sufficiency. According to EIA, U.S. net imports of natural gas dropped by 9 percent in 2014 to their lowest level since 1987. In 2009, 11 percent of the natural gas consumed in the United States came from Canada; in 2014, the latest year for data, it was 7 percent:

NG_imports 

The reliability of supply provided by our nation’s network of storage and distribution facilities has contributed to the increased use of natural gas in many sectors of the U.S. economy, which has led to reductions in air emissions – ranging from criteria pollutants, such as sulfur dioxide and nitrogen oxides, to greenhouse gases.  In 2014, researchers at the National Oceanic and Atmospheric Administration found that the increased use of natural gas combined cycles in power generation has led to 40 percent less nitrogen oxide emissions and 44 percent less sulfur oxides emissions since 1997. Last year EIA determined that increased use of natural gas reduced overall carbon dioxide emissions in the U.S. by 229 million metric tons in 2014 compared to 2005 levels.

Bottom line: Without natural gas storage, fuel reliability would be impossible and these environmental gains would have been impossible. America’s world-class natural gas storage network is the foundation upon which a significant portion of our energy abundance, security and world energy leadership rests.


ABOUT THE AUTHOR

Marty Durbin is executive director for Market Development at API, where he leads efforts to promote the increased demand for and use of our nation’s natural gas resource. Marty returned to API after serving for nearly three years as president and CEO of America’s Natural Gas Alliance (ANGA), ultimately guiding ANGA’s combination into API to better achieve the mission of both organizations. Prior to leading ANGA, he served as executive vice president of Government Affairs at API, and as vice president of Federal Relations at the American Chemistry Council. Marty also serves as chairman of the board for A Wider Circle, a grassroots nonprofit organization that seeks to end poverty for one individual and one family after another, providing beds, furniture, basic need items and comprehensive support.