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Methane Gas in Coal Mining SAJune 18 – 21, 2012

Natural Gas Storage Strategies

Barry Stevens, Ph.D.PresidentTBD America, a Technology Business Development consulting group

@ 2011 TBD America

2@ 2011 TBD America

NATURAL GAS

“Low natural gas prices are lifting the U.S. economy even as many people are

asking questions about its environmental impact.”

 

"Natural gas is revitalizing America's steel industry, reinvigorating its

petrochemical industry and benefiting heavy-equipment makers.”

…. Keith Hutton, CEO, XTO Energy

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WHY STORAGE

Reliability

Meet Load Variations

Efficiency

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SECONDARY PURPOSES

Operational Integrity

Maintaining Contractual BalanceUnforeseen Accidents &

DisastersRegulatory Obligations

Reducing Price Volatility

Market Speculations

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THE INDUSTRY

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THE MARKETRegulated Market

Deregulated Market

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OPERATING CHARACTERISTICSTotal Gas Storage Capacity

Base / Cushion Gas

Working / Top Gas

Deliverability

Injection Capacity / Rate

Cycling

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HOW THEY WORK

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UNDERGROUND

Depleted Gas Reservoirs

Aquifer Reservoirs

Salt Caverns

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Disadvantages

• Low Deliverability & Injection Rates

• One Yearly Injection/Withdrawal Cycle

• High Base Gas Requirement

• Costly Reconstruction & Maintenance

DEPLETED GAS RESERVOIRSAdvantages

• Lowest Cost

• Existing Pipeline Connections

• Existing Wells & Surface Facilities

• Well Characterized Geology

• Utilization of Indigenous Gas

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AdvantagesEnables gas storage

development in locations where hydrocarbon reservoirs

are not readily available or suitable for natural gas

storage

Disadvantages• Highest Capital Cost• High Cushion Gas

Requirement (50% to 80%)

• Maintaining Integrity of Gas/Water Interface

• Infrastructure Not Developed

• Poor Retention Capabilities

• Environmental Restrictions

AQUIFERS

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SALT CAVERNSDisadvantages• High Capital Cost

• Environmental Issues - Brine Disposal

• Volume of Each Cavern has Practical & Geological Limitations

• Periodic Service Disruptions - Government Mandated Inspections

• High Operating Cost Due To Corrosive Environment

Advantages

• Very Low Base Gas Requirements

• Highest Deliverability• Highest Injection Rates• High Cycling

Characteristics• Multiple Cycles Reduces

Unit Cost of Gas Injected & Withdrawn

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ABOVE GROUND

Liquefied Natural Gas(LNG)

Tank Farms

Line Packing

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High Volumetric Efficiency

Costs Going Down

Supports Stranded Gas Deposits

LNG

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DEVELOPMENT COSTS

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CHALLENGES

Management & Control

Industry & Market Demands

Regulatory Hurdles

Location Constraints

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FUTURE

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SUMMARYEfficiency & Reliability

Needs

Capacity & Deliverability Driven

Geographic & Economic Dependency

Commodity Price Management

19@ 2011 TBD America

Barry Stevens, PhDPresident

TBD America, Inc.www.tbdamericainc.com

THANK YOU