Iran, Fifth in Underground Gas Storage
One may ask why gas-rich countries keep storing gas while they have thousands of kilometers of high-pressure pipelines and tens of gas pressure booster stations.
The main reason for this issue may be quantitative and qualitative fluctuations in the energy consumption under different weather conditions.
For example in Iran, which holds more than 34 tcm of gas, gas consumption rises seven-fold in winter. Despite all-out development, there is no guarantee for winter gas supply. Moreover, due to incomplete chain of energy-consumption industries in the vicinity of gas production centers, it would be illogical to develop underground gas storage facilities and maximize production based on peak consumption in winter.
To that effect, gas storage in underground facilities built near major consumption centers is the best option for both gas producers and consumers. Many countries known as gas giants are also stocking their surplus gas.
Cedigaz, in the fifth edition of its reference report on underground gas storage, expects global gas storage capacity to increase from 377 bcm at the beginning of 2013 to 557-631 bcm by 2030. The incremental growth, 180-254 bcm by 2030, requires sustained investment throughout the period, amounting to a total €120 billion by 2030.
In 2030, according to Cedigaz, storage will represent 11.6% to 13.1% of global gas demand, compared with 11.3% in 2013.
New gas storage markets (Asia and the Middle East) account for about 60% of incremental capacity through 2030. Strong growth is expected in rapidly emerging gas markets, particularly China. In these markets, storage infrastructure has to be built almost from scratch, Cedigaz announced. Investment in China focuses on creating large volumes of storage capacity as well as peak deliverability to cope with rising imports and growing city and power demand, according to the report.
There were 688 underground gas storage facilities in operation in the world at the beginning of 2013, according to Cedigaz, representing working gas capacity of 377 bcm. More than two thirds of the sites are in North America, with 414 in the US, and 59 in Canada, and a combined working capacity of 152 bcm (40% of the global total). There are 144 storage locations in Europe (99 bcm), and 51 sites in the CIS with 51 facilities (115.5 bcm). Asia-Oceania has 18 sites (9.3 bcm of working capacity). There is one site in Argentina and one in Iran, all according to Cedigaz data.
Europe Share
In mature markets (US, most of Europe, and the Commonwealth of Independent States), growth in storage capacity is limited. The focus is on increasing peak deliverability rather than storage volumes. In developed and liberalized markets, the gas industry has undergone massive changes, largely impacting storage activity which increasingly performs new functions in addition to its traditional operational ones.
New storage needs are linked to development of trading activity and natural gas use to back-up intermittent renewable energy sources in electricity generation. These two trends favor flexible storage (salt caverns). Security of supply is also a major driver of additional storage needs in Europe, where import dependence is increasing.
Cedigaz explained that competition from other sources of flexibility has forced the storage industry to regularly develop techniques to meet market demand for performance, flexibility, and economic efficiency. In recent years, trends have been towards expansion of existing capacities, improvement of efficiency and performance, and development of larger flexible storage (mega-size caverns).
Storage capacity has increased more than 35 bcm since 2010, mainly due to Europe which added almost 14 bcm, Cedigaz’ report says. There are 95 projects under construction globally, adding 68 bcm of working capacity. Most of this capacity will be completed by 2020-25. There are also 141 identified projects at different stages of planning. These projects would add another 85 bcm of working capacity if fully implemented, according to Cedigaz. Europe ranks first in all of Cedigaz’ expansion categories: number of projects, additions to working gas capacity, projects under construction and planned projects.
Gas Storage in Iran
According to standard formulae, each country has to store 14 percent equivalent of its annual gas consumption. Therefore, if we consider Iran’s annual gas consumption at round 107 bcm, the country has to store at least 14 bcm a year. Therefore, Iran is at the beginning of the way and it currently ranks the fifth in terms of underground gas storage.
Natural gas storage for Iran, which owns the world’s largest gas reserves, is a significant and vital issue. Given this important necessity, valuable steps have been taken in recent years.
In Iran, Sarajeh gas storage facility near the central city of Qom is the first one in the Middle East. The facility became operational in 2012. The second phase of the facility started work last January. The current capacity of Sarajeh gas storage facility stands at 10 mcm/d. So far, 1.3 bcm of gas has been stored in this facility. This volume of stored gas would be injected into gas trunklines across the country if it is needed. Every year, around 300 mcm of gas is transferred from Sajareh facility to gas trunklines following treatment. Gas withdrawal from Shourijeh and Sarajeh facilities is expected to reach 15 mcm/d this winter.
After Sarajeh, Shourijeh is Iran’s major gas storage facility which was launched this year. The gas storage capacity in Shourijeh stands at 4.6 bcm and in the first phase, 2.4 bcm of gas could be stored in the facility.
By March next year, Iran is forecasted to have the storage capacity of 14 bcm, 130 mcm of which could be withdrawn per day.
Based on exploration activities conducted in recent years on 200 storage facilities, only two were picked as appropriate for gas storage. The pair in Ilam province in western Iran can store 32 bcm of gas. Another storage facility has been identified in Kohguiluyeh Boyer Ahmad province with a capacity of 6 bcm of natural gas and a daily supply of 40 to 50 mcm. These three facilities are currently in the stage of post-exploration studies (2D and 3D seismic testing and cost estimate for installation) and no special investment has been made in the trio. Storage is topping the agenda of Iran’s gas industry, but investment is key to studies on the infrastructure.
Growing gas consumption, depletion of aging wells and natural disasters like floods and earthquake in gas refining facilities constitute the main reasons behind the construction of natural gas storage facilities in Iran. Every year, Iran is spending on average $8 billion to $10 billion on the expansion of gas transmission networks, while gas storage facilities can save money and further serve the gas industry.
Gas may be the most inexpensive fuel in the world, but that’s a double-edge sword. Today, we are assured of the huge volumes of gas in the world and we only want to consume it without considering storage of this colorless gold. It has to be noted that shale gases produced by some countries and concomitant drop in natural gas consumption may have provided a golden opportunity for consumer countries to store gas.