Underground Storage of Natural Gas and its Economic Aspects

Abstract

After oil and coal, natural gas is the third source of energy for the world economy and is widely used. Stable natural gas supplies continue to rely primarily on underground storage. The aim of this paper is to provide a basic quantitative analysis and basic economic view on the three most common methods of underground storage of natural gas, namely in depleted oil and gas fields, in aquifers and in salt caverns. The analysis focused on the capacity utilization of the selected storage types as well as on the calculation of the cash-flow and internal rate of return of the projects. Based on the results obtained, we can conclude that underground reservoirs created from aquifers are the most costly. The most lucrative variant are reservoirs created from depleted gas and oil fields, as the initial investment is the lowest compared to the other types. For fluctuations in consumption, reservoirs created from salt caverns are the most important, as they have the characteristic of a short delivery time and can react the fastest to market fluctuations.