Underground Gas Storage in Oil and Gas Reservoirs
Authors: Goodman J. V. 
Published: May 2021

Underground storage for natural gas has different meanings to different segments of the industry. Essentially, however, it is storage of gas in an underground container. Gas in storage has been transferred from its original location to an underground reservoir for several purposes, the most important of which is the most efficient use of pipeline capacity all year and the most effective delivery to markets, particularly during peak-demand periods when demand cannot be met through normal transmission facilities and supply must be augmented. By this means, a continuous adequate supply to the consumer is assured at a lower unit cost.

Natural-gas storage is a fifth segment of America's sixth largest industry and evolved from the development of production, transmission, distribution, and utilization. Underground storage of natural gas leads to the conservation of both oil and gas and availability of natural gas in large quantities to meet peak demands.

The first recorded successful underground gas-storage venture, in Wellen County, Ontario, began in 1915. The first successful storage project in the United States was by Iroquois Gas Corp., which began its Zoar storage, near Buffalo, New York, in 1916. For the next 14 years through 1929, only, eight underground gas-storage reservoirs were developed; five of these are still in operation. Construction of underground gas-storage reservoirs then accelerated, and the greatest activity began in about 1936. By the end of 1962, a total of 279 underground gas-storage reservoirs had been activated within the United States, 259 of which were in use.

Underground storage of natural gas solves many operating problems. Storage allows an economically dependable service to the consumer, who is assured of a dependable supply of natural gas without the interruptions which characterized the early history of gas distribution. Underground natural-gas storage equalizes demand and supply, and allows complete utilization of the facilities of the gas industry. Underground natural-gas storage also reduces waste of casinghead gas by flaring during the warmer months when gas demand is low.

Underground gas-storage reservoirs may be in mined-out areas of coal, salt, or other minerals. Depleted oil and gas reservoirs are the most generally used natural reservoirs. However, increasing use is being made of underground structural traps which have not yielded oil or gas (aquifer storage). All types of traps are used in rocks of all geologic ages and in rocks with many types of reservoir characteristics. The primary requisite for all underground gas-storage reservoirs is the same as that for reservoirs containing hydrocarbons—there must be a trap.

Conditions for a successful underground gas-storage project are both fixed and variable. Most important of the fixed conditions, fixed by nature, is trapping. The factors of porosity and permeability, which control deliverability, are also of prime importance.

Variable factors include number and size of compressors, methods of acquiring storage rights, etc. They are related directly to development and operation of the storage and are determined on the basis of experience.

The development of a satisfactory underground natural-gas storage project depends upon a combination of geologic and engineering experience. Costs vary widely.

Gas-storage rights are acquired both in fee and by lease, and payments may vary considerably. The courts have given increasing recognition to the general public interest in underground natural- gas storage development. Thirteen states in which almost 80 per cent of stored gas capacity is located have statutes granting storage companies the right of eminent domain, insofar as underground gas storage is concerned.

Capital investment in underground natural-gas storage facilities, including physical properties and cushion gas, was estimated to be more than $1 billion in 1962. Approximately $325 million was represented in the cost of current inventories of natural gas to be retained in storage temporarily. The expense of maintaining current inventories creates unusual financial problems. A welcome bonus to underground natural-gas storage may result from secondary recovery of crude oil, condensates, or enriched gases from depleted oil or condensate reservoirs. Revenue from secondary recovery may reduce or pay cost of the storage development and its operation, with the reservoir carcass still avail-