Storing Natural Gas

Storage for natural gas is needed largely because much more gas is burned in winter than in summer. Were producing areas located close to consuming areas this would entail no difficulty, but typically they are far apart. Most of the gas marketed in the Northeast, for example, is produced from geological formations in the Southwest. In order to spread fixed costs per unit, gas firms try to operate their pipeline transmission facilities at near capacity levels throughout the year. Therefore, they have found it economical to store gas obtained in excess of consumption during summer months, in order to sell it during the winter.

Several storage methods are available to them. Perhaps the most obvious is storage in the enormous metal tanks that dot the periphery of most cities, but this method requires such expensive land and construction that it can be used only for short-term storage. An alternative under development involves in-ground tanks to store gas in liquefied rather than gaseous form. In 1966, the first full-scale tank for liquefied natural gas in this country was built near New York City; it is capable of storing the equivalent of one billion standard cubic feet (scf) of natural gas. Others are under construction here and in England. In the United States the cost of tank storage reportedly has ranged up-ward from $0.01 per scf. Most of the cost is required to construct the liquefying plant itself.

Underground storage of natural gas is the main alternative to tank storage. Underground capacity has increased from about 3 trillion cubic feet in 1961 to more than 4 trillion cubic feet today. This capacity has been found largely in "natural" sites, such as depleted oil and gas reservoirs, though in a few cases storage has been created by mining or by leaching salt formations. The reservoirs hold gas in pores just as they held the original oil and gas before it was pumped out.

As to costs, one estimate indicates that for natural reservoirs they run from under 5 cents to about 20 cents per thousand scf of turnover. (Turnover includes the annual amount put in and taken out of a reservoir but excludes the "cushion gas" which is lost to adsorption or used to maintain pressure.)

Despite its relative cheapness, underground storage in natural reservoirs has certain disadvantages: the needed capacity compared with the rate that can be expected from a nuclear-created cavern, which has a roughly cylindrical shape. That is why, among the applications of nuclear explosives under study by AEC's Operation Plowshare, the use of nuclear explosives to create underground storage caverns is being considered.

One set of published estimates shows a range in the investment cost for nuclear storage of from $0.0043 per scf for a 27-kiloton shot to create about 200 million scf of storage capacity, down to $0.0016 per scf for a 125-kiloton shot. An unofficial estimate for the annual costs of such a cavern indicates that they might become competitive as natural storage costs approach 20 cents per thousand scf of turnover.

Based on current costs, gas age caverns created by nuclear explosives cannot compete with natural reservoirs if the latter are available in convenient locations. However, at some point it becomes uneconomic to ship gas to and a remote storage reservoir question is whether nuclear cavern can be so placed as to reduce transport costs enough to offset the apparent advantage of natural sites. If an area closer to existing market and pipelines can be found where it is nevertheless feasible to set off a nuclear device of moderate size, nuclear caverns may become economic. Thus, economic feasibility will depend upon how close to urban areas it is possible to use nuclear explosives, and also upon developments in competing technologies such as storage of liquefied gas and coal gasification. (The latter, a manufacturing process, would avoid the need for large-scale storage.)