November 2020, Vol. 247, No. 11


Gas Storage’s Impact on Pipelines

By Nicholas Newman, Contributing Editor

The concept of gas storage is not new. Invented in England, the Soho Coal gasification plant was established in Birmingham in 1798, but it was not until the 1850s that gas storage devices, such as gas holders or gasometers, became ubiquitous in many major cities and towns in Europe, the U.S. and Canada. 

An aboveground storage facility.

However, the arrival of natural gas in Europe in the 1960s spelled the end for local gasometers and ensured the advent of large regional gas storage solutions designed to meet multiple needs. 

Today, gas storage systems balance and stabilize flows of gas to meet demand, smooth price fluctuations and, in the longer term, ensure energy security. An overview of the tasks that gas storage is designed to meet for various stakeholders can be seen below: 

• Balance flows: Balancing pipeline systems flows to ensure pipeline pressures are within specifications is carried out by the pipeline transmission operators.

• Ensure contractual balance. Energy traders store gas to ensure that the pipeline network has sufficient supplies to meet market demand. Storage prevents any short-term gas shortage in the pipeline system and saves energy traders from incurring financial penalties.

• Stabilize output: Gas producers routinely use storage facilities to hold gas surplus to market demand. For example, in summer, gas is stored in readiness for the winter months when demand is high. In fact, many of the key storage facilities along America’s Gulf Coast are used for this purpose. According to the U.S. Energy Information Administration (EIA), the volume of gas in storage in the U.S. varies between as little as 1.2 Tcf (34 Bcm) in the winter to as much as 3.6 Tcf (102 Bcm) in the summer. 

• Market speculation: Both producers and energy traders buy and store gas in the summer months, when its price is low, and sell in the winter, when both demand and prices are higher. For instance, according to Reuters, the Henry Hub natural gas spot price (dollars per MMBtu) in January was $2.02 but by June this had fallen to a low of $1.63.

• Protection against interruptions: Gas storage provides a reserve against interruptions in supply from gas production fields or pipeline transmission networks. For example, many of the gas storage facilities located near major demand centers in Europe are used to protect against supply interruptions and in the U.S. against hurricanes, which cause temporary shutdowns of both on and offshore production in the Gulf of Mexico. 

• Ensure supply and smooth fluctuations: Gas storage systems meet regulatory requirements designed to ensure sufficient supply and reduce fluctuations in gas prices to customers. And lastly, storage at major gas hubs smooths wholesale gas prices.

Types of Storage

Natural gas is stored in two main ways. First, let us consider aboveground facilities.

Among those, liquefied natural gas (LNG) facilities are ideal for providing rapid delivery capacity during peak periods when market demand exceeds pipeline deliverability.

Free of geology, LNG facilities can be located close to the center of demand with the added advantage of gas stored as a liquid at around -163 degrees C (-260 degrees F).

This uses about 600 times less space than underground storage, and re-gasified LNG can be delivered to off-grid customers. For example, customers beyond the New England gas pipeline grid receive LNG by truck from gas supply companies like Edge LNG, Gaz Metro and NG Advantage.

Similarly, gas from shore-based LNG plants, such as Shell’s GATE facility in Rotterdam, supplies LNG fueling services to ships and barges as well as provides gas for delivery via barge to customers located alongside Europe’s extensive river and canal network.

Another method of storage is used when energy traders temporarily store natural gas in pipeline networks by injecting more gas under pressure than is normal, a process known as line packing. This practice is usually carried out during the night, when demand is low, in anticipation of demand exceeding inputted supply the next day.

A third method involves gas holders, which are mainly used to achieve short-term gas balancing to maintain district pressure. The U.K.’s National Grid still has about 900 gas holders in service, a relic from the ending of coal gasification and its replacement with a nationwide natural gas pipeline gas network. 

In addition to above-ground facilities, there are three main belowground gas storage solutions used around the world, namely, depleted gas reservoirs, which are the most common form, aquifer reservoirs and salt cavern reservoirs. Each enjoys specific locational, operational and market advantages for the operator. 

The United States leads other nations with about 415 underground gas reservoirs, while Russia’s Gazprom has about 25 underground storage facilities. 

Depleted gas reservoirs are found in redundant gas producing fields and as such can be expected to rise in number in the coming decades. These facilities are operated on a single annual cycle: gas is injected during the off-peak summer months and withdrawn during the winter months of peak demand. Typically, about 50% of the natural gas reservoir capacity must be kept as cushion gas to ensure energy security.

Aquifers also provide storage locations and are underground, porous, permeable rock formations that act as natural water reservoirs. Like their counterparts in gas-depleted reservoirs, they are operated on a single annual cycle, but in this case, up to 80% of the total volume of gas is held as cushion gas. 

In fact, most such aquifer storage solutions were developed at a time when natural gas prices were low, meaning this amount of cushion gas was inexpensive to sacrifice. Aquifer reservoirs are more expensive to develop since much of the associated infrastructure is not in place as compared to a depleted gas reservoir.

Additionally, many salt caverns are used for gas storage around the world, including the OMV Storage facility in northwest Germany, which has a working gas volume of about 5 terawatt hours. (TWh).

A salt cavern is created by fresh water being pumped down a borehole into the salt, resulting in some of the salt dissolving, leaving an empty space and salty water. Water is pumped out and this process is repeated until the required space is achieved. 

The key advantage of salt cavern gas storage is flexibility in terms of deliverability, and the cushion gas accounts for just 33% of total gas capacity. Despite being more costly to build than depleted gas reservoirs, the ability to inject and withdraw gas several times throughout the year helps reduce the effective cost. 


The International Energy Agency (IEA) expects gas consumption will rise due to its low cost, abundance and relatively lower emissions than oil and coal. This has already increased demand for additional storage. 

Potential new gas storage solutions on the horizon include the use of existing hard rock granite formations and the more innovative possibility of exploiting chloral hydrate, which is natural gas frozen in water. This has the crucial advantage of allowing as much as 181 standard cubic feet (scf) of natural gas to be stored in a single cubic foot of hydrate. 

However, low gas prices mean that new gas storage facilities in Europe will need major government subsidies. In the case of North America, new underground storage and LNG facilities can be expected to come online in the not too distant future.



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