Smoky and The Salt Caverns - A Saga of NGL Storage: RBN's Greatest Hits

Over the next five years, production of natural gas liquids (NGL’s) from gas processing plants will increase by at least one million barrels per day, or about 40% over 2012.  Perhaps more.  That’s good news for natural gas producers, processors and end-use markets.  But there is a catch.  The rate of production does not match up with demand.  While production is a steady, “ratable” volume, demand is anything but ratable.  Demand swings with petchem feedstock economics, the gasoline blending season, weather and a myriad of other factors.  The flywheel that balances supply and demand on any given day is storage.  But not just any storage.  For NGLs, storage of large volumes means salt caverns.  Huge caverns thousands of feet below the surface.  In this NGL storage blog series starting today, we’ll look at the history of NGL salt storage, where it exists, how it is used, and where more of it is needed.  In this first installment we’ll go all the way back to the origin of NGL salt storage. All the way back to Smoky Billue.

It’s relatively common along the U.S. Gulf Coast to use underground salt domes to store crude oil, natural gas, mixed NGLs and so-called NGL “purity products” like ethane and propane. There are also a handful of salt cavern storage facilities in Kansas, Michigan, New York and Virginia. But in the Rockies and the West Coast states they’re rare as hen’s teeth, one of the few examples being Sawtooth Caverns, a one-of-a-kind facility in Utah that not only stores propane and butanes but also gasoline and diesel. In today’s RBN blog, we discuss Sawtooth Caverns and its increasing role in the sprawling region’s NGL and refined products markets. 

We’ve talked a lot here about NGL storage in Mont Belvieu and Conway.  Those are the big underground storage caverns washed out of salt formations thousands of feet below the surface.  But those are not the only places where NGLs are stored in underground salt caverns.  Two important facilities, especially for West Coast NGL markets are located in the seemingly unlikely locations of Bumstead, AZ and Adamana, AZ.  Today and in a later follow up we’ll look at why these facilities are in Arizona, how they got there, and the unique niche they fill in the NGL marketplace.