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Why Gas Storage

Today, as natural gas supply/demand fundamentals have tightened and the price of natural gas fluctuates dramatically, many customers look to storage to protect against extreme price shocks. This coupled with improvements in operational reliability, transportation efficiencies, and numerous arbitrage opportunities that can arise greatly increases the overall value of employing natural gas storage.

Production Area Storage for example, is used to optimize gas field development and avoid shutting in production or selling at lower prices in order to keep upstream assets fully loaded. Gas storage also plays an insurance function by helping producers meet their sales requirements and keep transportation fully utilized. By utilizing gas storage, even in poor markets producers can maintain production, and sell more of their production on average at peak season prices.

On the downstream or market side, gas storage is often the only peak supply available that ensures the market can get gas during the highest demand periods. Gas storage also optimizes transportation from supply areas during low demand periods by enabling pipeline transportation to run at 100 percent load, reducing transportation costs. As a result, gas storage provides for a more stable gas market through out the year.

Benefits of Gas Storage

As the American Gas Association points out in a 2002 Issue Summary, “The ability to store and retrieve natural gas adds an important dimension to reliability of gas service. Access to storage allows individual gas buyers to acquire low-cost supplies on the spot market during off-peak periods, such as the summer months, and to store the gas in locations near to end-users during periods of peak demand.”

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