Underground Natural Gas Storage
Overview | Regional Breakdowns

Overview

Underground natural gas storage provides pipelines, local distribution companies, producers, and pipeline shippers with an inventory management tool, seasonal supply backup, and access to natural gas needed to avoid imbalances between receipts and deliveries on a pipeline network.

There are three principal types of underground storage sites used in the United States today. They are:

    ·   depleted natural gas or oil fields,
    ·   aquifers, or
    ·   salt caverns.

In a few cases mine caverns have been used. Most underground storage facilities, 82 percent at the beginning of 2008, were created from reservoirs located in depleted natural gas production fields that were relatively easy to convert to storage service, and that were often close to consumption centers and existing natural gas pipeline systems.

In some regions, such as the Midwestern United States, suitable natural aquifers have also been converted for use as natural gas storage facilities. An aquifer is usable for natural gas storage if the water-bearing sedimentary rock formation is overlaid with an impermeable cap rock. While the geology of aquifers is similar to that of depleted production fields, their use in gas storage usually requires more base (cushion) gas and greater monitoring of withdrawal and injection performance.

Since the 1980s, the number of salt cavern storage sites developed in the United States has grown steadily, principally because of its unique capabilities and high cycling rate (inventory turnover). The large majority of salt cavern storage facilities have been developed in salt dome formations located in the Gulf Coast States. Salt caverns leached from bedded salt formations in Northeastern, Midwestern, and Western States have also been developed but the number has been limited due to a lack of suitable geology. Cavern construction is more costly than depleted field conversion when measured on the basis of dollars per thousand cubic feet of working gas capacity, but the ability to perform several withdrawal and injection cycles each year reduces the per-unit cost of each thousand cubic feet of gas injected and withdrawn.

At the close of 2007, 399 underground natural gas storage sites were operational in the United States. During the year, four  new storage sites were added, one in Michigan, Mississippi, Pennsylvania, and West Virginia, while 18 existing storage fields underwent expansions, and two storage fields were abandoned (ceased operations). Consequently, working gas capacity in the U.S. increased by 39 Bcf, to 4,098 Bcf (4,059 Bcf in 2006) while deliverability rates rose to 88.5 Bcf/d (85.1 Bcf/d in 2006).  The largest expansion of working gas capacity (9.3Bcf) occurred at the Midland natural gas storage site in Kentucky, a depleted-reservoir facility. Depleted-reservoir storage accounted for about 89 percent of the 41 Bcf of new working gas capacity added in 2007.

The number, type, and profile of underground natural gas storage varies by region. Below is a brief overview for each of the six regions in the lower-48 States.

Central (50)   |    Midwest (121)   |    Northeast  (109)     |    Southeast (34)     |    Southwest (64)     |    Western (21)     |    Overall (399)

Central Region

Underground natural gas storage in the Central Region is notable for several reasons. First, many of the 50 storage facilities located in the region are used to store excess production rather than to serve as a supply source for local markets. Production is stored to allow a stable flow rate despite temporary demand fluctuations.

Second, the region has the Nation's largest storage site, the Baker/Cedar Creek Field in Montana, with a total capacity of 287 billion cubic feet (Bcf) and a working gas capacity of 164 Bcf. The total regional working gas storage capacity (approximately 559 billion cubic feet) is 14 percent of the U.S. total, while daily deliverability from storage is only 6.4 billion cubic feet per day, or 7 percent of the U.S. total.

The Baker/Cedar Creek Field, owned and operated by the Williston Basin Interstate Pipeline Company, serves as support infrastructure for the natural gas that is produced in association with oil production in the area. With an estimated peak-day withdrawal rate of about 134 million cubic feet per day, the flow from this storage field is directed primarily to interconnections with the Northern Border Pipeline Company system between North and South Dakota. In recent years, however, the Baker field has not been heavily utilized due to a decrease in production from nearby associated-gas fields.

Storage facilities in Kansas, specifically in the southeastern portion of the region, provide service to the interstate pipeline systems that move natural gas to the Midwest Region, but they are also integral to regional requirements. For instance, about 35 percent of the State's working gas storage capacity of approximately 118 billion cubic feet is owned and operated by Southern Star Central Gas Pipeline Company, which is primarily a regional interstate pipeline.

About 96 percent of the storage capacity in Kansas is available to customers and shippers on other interstate trunklines, while the remaining 4 percent is devoted to local distribution and production field service. About 40 percent of the daily peak-day storage deliverability in the State, or 968 million cubic feet per day, is available to the two interstate pipeline companies traversing the region, Northern Natural Gas Company and Panhandle Eastern Pipe Line Company.

Storage facilities in the rest of the region serve primarily as seasonal supply sources for local markets. Storage fields in Utah provide service to shippers on the Questar Pipeline Company system as well as to customers within the Salt Lake City area. The storage fields in Colorado and portions of Wyoming service the Denver area through the Colorado Interstate Gas Company system. The local distribution companies serving these markets account for about 16 percent of the total storage deliverability in the region.

Midwest Region 

Many of the pipelines serving the region also provide their shipper/customers with access to a large amount of underground storage capacity located in Illinois, Indiana, Michigan, and Ohio. The Midwest Region has 121 sites, the largest number in the country.

Of all six regions, this region has the largest volume of underground (working gas) storage capacity (almost 1.2 trillion cubic feet (Tcf)) and daily deliverability (26.3 Bcf/d) from storage. These levels account for about 30 percent of the U.S. total in each category. Regional intrastate pipelines and/or local distribution companies, such as Northern Illinois Gas Company (NICOR), control about 61 percent of daily deliverability from storage in this region.

Northeast Region

The States of Pennsylvania and New York are the key transit areas for gas deliveries within the region and include the major service territories of Dominion Transmission Company and Columbia Gas Transmission Company systems. These States, along with West Virginia, also have the largest underground storage capacity in the region. Storage is essential as a supply backup and for balancing gas supplies on the pipelines operating in the region. More pipeline capacity exits these States than enters, reflecting their storage capability as a seasonal supply source for the States to the north and east.

Southeast Region

The Texas Gas Transmission Company is the only long-haul natural gas pipeline system that retains a large portion of its deliverability for regional service, primarily in Kentucky. Slightly over 50 percent of its deliverability is within the region. This pipeline company also provides its shippers access to five company-owned underground storage facilities with a working gas capacity of more than 80 Bcf, or about 66 percent of the total working gas capacity in the State of Kentucky (and 45 percent of the regional total).

That level of storage service is equivalent to about 80 percent of the total daily capacity of Texas Gas Transmission Company’s lines moving north into Indiana. These storage facilities are also in close proximity to the ANR Pipeline Company system, which traverses the State of Kentucky to Indiana and Michigan. Combined, Texas Gas Transmission Company and ANR Pipeline Company have the capacity to move 3.0 Bcf per day north into Indiana.

In addition to the conventional underground storage facilities located in the northern portion of the region, a number of high-deliverability (salt cavern) storage sites have been built during the past decade in the southern portion to better serve a restructured U.S. natural gas pipeline industry. Four such sites are now located in Mississippi (three) and Alabama (one), with several more planned. The availability of these sites has made these two States a prime market for the type of storage services needed by shippers with high upstream demand swings and local load balancing requirements. These sites are used by customers and shippers doing business on Florida Gas Transmission Company, Gulf South Pipeline Company, Tennessee Gas Pipeline Company, Transcontinental Gas Pipeline Company, and Southern Natural Pipeline Company systems.

Southwest

Underground natural gas storage plays a vital role in the efficient export and transmission of natural gas from the Southwest to other regions, as well as in supplementing regional needs. Its 64 underground storage facilities represent 1,030 Bcf of working gas capacity and an estimated daily deliverability level of 24.5 million cubic feet.

Only the Midwest Region has more working gas capacity and daily deliverability from storage. A large portion of regional storage is near production fields and is used to balance production flows with fluctuating market demand.

In recent years, however, an increasing amount of the area’s storage capacity is being developed and used to support regional natural gas market center/hub operations. It is also being used as high-deliverability storage (from salt-caverns) to serve the growing number of variable-load customers, such as gas-fired power plants, that are emerging in the region and which have a need for rapid access to stored natural gas working gas.

The States of Louisiana and Texas have more salt-cavern natural gas storage facilities (19) than anywhere else in the United States, of which almost half are owned/operated by independent storage operators. In fact, one-fifth of the working gas capacity and one-third of the daily deliverability available in the region is operated by independents.

About 35 percent of the region's daily storage deliverability remains with interstate pipeline companies, while the rest is operated by LDCs (33 percent) or intrastate pipeline companies (32 percent).

All of the interstate pipeline-owned storage and most of the independently-owned storage is open access, that is, working gas storage capacity that is available to shippers/customers on a first-come, first-served basis at nondiscriminatory rates. The remainder is reserved for system or pipeline use, such as load balancing operations.

While only about a third of the region's storage capacity is owned by LDCs and used exclusively for local service, regional distributors also have access to and use interstate and independent storage facilities. Most of the LDC-owned storage is near major industrial and population centers and has little impact upon the interstate pipeline network in the area. In Texas and Oklahoma, approximately 40 percent of underground storage capacity is at facilities operated by LDCs or intrastate pipeline companies, whereas in Arkansas all of the storage capacity is controlled by local operators.

Western Region

Underground natural gas storage facilities are found in only half of the states in the region, California, Oregon, and Washington. Moreover, approximately 88 percent of the region’s working gas capacity is located in California’s 13 underground natural gas storage sites, all but two of which are owned by the two principal gas distributors in the State, Southern California Gas Company (SoCal) and Pacific Gas and Electric Company (PG&E). Most of their storage capacity is used for system balancing and as a way of maintaining a steady and high-utilization of pipeline capacity directed from Canada and the Southwest.

The two independent storage facilities in California are used primarily as depositories for gas produced within the State that is not immediately marketable. In addition, these sites are connected to, and deliver their withdrawals to, the Southern California Gas Company and/or Pacific Gas and Electric Company systems.

Overall

Total U.S. working gas capacity and daily deliverability at the beginning of 2008 reached 4.1 Tcf and 88.5 Bcf per day, respectively. Three-hundred and ninety-nine underground natural gas storage facilities were operational in the lower 48 States although 39 were marginal operations that reported little or no activity during 2007. The number of operational underground natural gas storage facilities peaked in 2001 at 418.

In almost all operational aspects, the underground natural gas storage profile of the Midwest Region is larger than that of any of the other five regions. The prevailing cold winters, large population centers, large natural gas pipeline systems, and available geology, have all contributed to major storage development in the region over the past century. The Southwest Region, on the other hand, with its large natural gas production levels and the presence of many large salt-formations, is the second largest source of working gas capacity and daily deliverability in the lower 48 States.