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Storage has long been a critically important balancing mechanism in the Lower 48 natural gas market. After languishing for much of the Shale Era, storage values have been coming out of the doldrums the past couple of years. The key driver behind this change is that, unlike in the old days, when the storage market was driven primarily by the intrinsic value of capacity — i.e., the need to sock away gas in the lower-demand summer months for use in the peak winter months — the value of storage is being driven mostly by extrinsic economics — i.e., how flexible and responsive capacity allows market participants to manage supply and demand during short-term market swings.
In this report, we will discuss the basic types of gas storage facilities — depleted gas fields or reservoirs, aquifers and salt caverns — provide a brief history of how gas-storage markets have evolved since the 1980s and examine ongoing plans by nine companies to add new storage capacity in the Gulf Coast region. Their projects aren’t the only ones being planned, but they are a representative sample that shows just how active this midstream space has become.
Key takeaways from the report include:
- Gas storage helps balance gas supply and demand both seasonally and — increasingly — day to day and even intraday.
- LNG export facilities, the ups and downs of renewable power output and other factors are driving demand for incremental storage.
- The Gulf Coast is the epicenter of new salt-cavern and depleted-reservoir projects.
- Nine companies cited in this report are together planning more than 150 Bcf of new storage in the region.
“Ready to Let Go” is included in RBN Energy’s 2024 Drill Down report series, a suite of reports covering many of the key issues expected to impact the markets for crude oil, natural gas and natural gas liquids. Drill Down reports are part of RBN Backstage Pass™ premium resources that also include Blog Archive Access, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. By subscribing to RBN’s Backstage Pass™ Premium Services, you plug into our network and get direct access to our premium resources.
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