GAS STORAGE IN THE MIDWEST - 1966 REVIJW

CARL G. NELSOJ
STORAGE ENGINEER
NORTHERN ILLINOIS GAS COMPANY

BE FORE

EASTERN REGIONAL MEETING

SOCIETY Ol?PETROLEUM ENGINEERS
AMERICAN INSTITUTE OF MINING &
METALLURGICAL ENGINEERS
COLUMBUS, OHIO

NOVEMBER 10, 1966

I - INTRODUCTION
In the spring of 196f+I reported on the status of
ltGASSTO~GE lN T~ MIDWESTItat an A.P.I. meeting in Evansville

Indiana. Your program chairman asked me to review this paper

for you and to bring it up to date.

My talk today will compare storage volumes, operations,

and fields in 1966 vs 1962 in the five state area of Indiana,

Illinois, Iowa, Kentucky, and Missouri; it will discuss the
economics of gas storage; it will discuss differences between
depleted gas field storage and aquifer type storage.
II - STATUS OF STORAGE IN THE MIDWEST
Xn my last talk on this subject, the data gathered
=howed that the five (S) state area covered had e~Perienced
a steady growth in the volume of gas in storage and the number
of storage fields during the five (S) year period 1958-1962.
Review of this matter shows that this upward trend is still
present. Slide 1, shows the gas storage volumes for the var50us
states - 1958-1965. These figures were obtained from yearly

reports prepared by the Committee on UNDERGROUND STORAGE of the

AMERICAN GAS ASSOCIATION.l The state with the rnoetgas in

storage is Illinois with 175.3 billion cubic feet in storage.

This Incidentally is.,
something less than one half’of the total

storage volume of Ohio, which had 428 billion in storage in 1965. “

It is interesting to note that Kentucky, which had a leveling
off of stored gas in 1961-63, has again started increasing its
storage gas volume. Talking with various operators in this area

reveals that their inorease in storage volume is connected with

the conversion of recently found gas fieldain Kentuoky to
storage fields.
 ●

11 - STATUS OF STORAGE IN THE MID-T (CONT~D)

Slide 2 shows the number of operational storage
fields that have been added to the various states since 1962~
Indiana has had the greatest inarease in this category with
an increase of seven (7) f~eldsc Since it has not had a large

increase in storage volume during this same period, it probably

means that these are small volume fields - at least in part.
M summary then the data gathered in 1965 indicates that the
five (5) ~tate Midwestern area covered in this report is still
experiencing a steady growth in gas storage volumes and facilities.
It is nob the giant that the Ohio (428 billion), Michigan (~10
billion), Pennsylvania (509 billion), West Virginia (354 billion)
area is, and as you can see would need considerable expansion
to approach this area.
A Good question for some of our crystal ball departments
might be.- *at will the storage volumes be in these states in
the year 2000?
111 - ECONOMICS OF STORAGE
In 1964 X showed in this section of my talk how the
underground storage of natural gas was definitely beneficial
to the gas Industry in the Midwest. M-Y quotes were made
showing how this process helped eliminate restrictions on gas
space h~ating, how it allowed companies to overcome supply-
demand discords, and how it allowed companies to spend much
less per year for ita gas than if at did not have storage.
In May X966, C.J. Gauthier, of Northern Tllinois Gas

I
Company gave a paper at the A.G.A. Transmission conference on
the ‘Economics of Gas Storage Operations to a Natural Gas Dis-

tribution Companyn2. If anyone would like to go deeper into the

i f t th Z l t t d I ld t
 a

111 - ECONOMICS OF STORAGE (CONTSD)

you read this paper.
I would like to highlight some of the facts which are
brought out by Mr. Gauthiqr. He states that underground Btorage

costs can be viewed fFoIMthe aspects of investment per unit of

—. daily deliverability and investment per unit of’seasonal deliver-

—
ability. Figures are given in the report which show the total
investment at the Troy Grove Aquifer of Northern Illinois Gas
Company and dail~ deliverability and seasonal deliverability
capabilities,

In the table below I have compared these costs with costs

developed by Peter S. Panes in his article ‘Comparative Economics
of LNG Faollitiesn3.
COST 0$?STORAGE TABLE
LNG TROY GROVE AQUIFER

Total Investment $5,500,000 $21,500,000

Max. day delivery 100 MM 650 MM
Seasonal Storage lMMM 28 FMM
Investment/MCF - daily delivery $55 / MCF $33 /McF’
Investment/MCF - annual delivery $5.50 / MCF $0.77 / MCF
This table vividly illustrates that LN(3storage is in

line, cost wise, on a peak day delivery basis (being only twice
as much) but costs many times more to satisfy annual peak shaving
requirements. ‘E&a St oan readily be seen that LNG storage is best
suited to hourly or daily peak shaving requirements. LNG storage
oould oomplement~ but not oompeteB with pore volume storage.
——
Another point brought out rather nicely in this paper
Is the fact that-the inteneity of use has a great impaot on

atwage cmstw.
●

11X - ECONOMICS OF STORAGE (CONT~D)

As shown is this report, recent Federal Power Commission
figures show tha~ as a result of increasing ktora~e use 7M,
the oost of’storing gas had dipped about 12%. This shows the

need f’orstorage operators to use their facilities as heavily

as they reasonably mm if they want to have good cost performances.
A third cost fact that I would like to bring forth iss

that generally speaking, depleted oil & gas fields are more
economical for storage use than aquiferss 1964 F.P.C. cost
f@ures show that the cost of gas storage in oil & gas fields
was 16#/MCF of gas withdrawn with aquifers at 23.2#/MCF of gas
withdrawn.
In the next section of my talk I will discuss the differences
between gas storage in aquifers and depleted oil & gas fields.
This comparison will help show why this cost difference exists.
IV - DIFFERENCES BETWEEN DEPLETED OIL & GAS FIELD STORAGE &
AQUIFER STORAGE
.
‘lobegin my discussion on the differences between depleted
field storage and aquifer storage, I will begin with historical
differences.
The first storage field in this country was placed in
service in 1916 in Erie County, N.Y. It was a depleted gas
field. The first aquifer storage field started in 1946, in
Doe Run, Ky., almost 30 years later. Maybe thinsfact in itself
is enough reason for the cost of this type of storage to be greater
than depleted gas & oil fields. I dontt feel this is why aquifers
are more expensive~ but would have to admit it is possible.

Looking at the F.P.C. figures on storage costs it can be

seen that the major cost difference between depleted fields and
aquifers is attributable to tl echarges made to investment
xv - DIFFERENCES BETWEEN DEPLETED OIL & GAS FIELD STORAGE
AND AQUIFER STORAGE (CONT~D)

In other words, more money is spent on building aquifers than

depleted tields. The next logioal question is - - why?
One reason 5s that aquifers have never had gas in them
and for this reason no one knows-whether or not they will leak.
Many extra dollars are spent in developing & testing an aquifer
beoause of’this f’aat. Many wells are cored to determine the

nature of the oap rook. Extensive water pumping tests are con-
ducted to test the integrity of the cap rock. Observation wells
are developed at various levels in the field to check for accumu-

lationa of’gas above the storage horizonss X don’t think 1 need

to tell anyone in this poom that all of these things mean additional
investment costs.
Another reason that aquifers cost more is that due to the
high water movement rates in these fields, you lose flexibility

in field operations. Aquifers generally need more cushion gas

than a depleted field. In many cases extensive water handling
facilities must be installed at aquifers to get required well
production. To work aquif’ersin an optimum manner, the gas
produced from the reservoir must be put back in rapidly so that
the water return does not cause your bubble to shrink excess5.vely.
To do this you must return the gas at high rates in the spring-
time after a hard winter pull. This results in greater than
nozmal supply line facilities and compressors, than if you could
inject at uniform ~atea over the enti~e in~ection season.
These are some of the reasons aquifers are more costly
than depleted storage fields to own and operate. As a person
actively working in the field of aquifer development, I see this ‘
aa a real challenge - to bring the oost et aquifers closer & closer
N - DIFFERENCES BETWEEN DEPLETED OXL & GAS FIELD STORAGE
MD AQUIFER STORAGE (CONTrD~
If you are in a position to determine what means or gas peak
shaving should be uaed~ don’t overlook aquifers. They may
be more expensive than depleted fields, but they are not that
much more expensive, and in sosueoases there Are aquifers that
are oheaper than some of the more expensive depleted gas fields.

(1) Gas storage in the Midwest has shown a steady

growth during the period 1958-1965. All in-
dications are that this growth will continue
for many years to come,

(2) The economics of gas storage are sound. TO

quote Gauthier, “The Savings Outlined from
storage operations have contributed heavily
to our (Northern Illinois Gas Company~s)
ability to reduce rates regularly, placing
us in a better ~ompetitive positions causing
additional market growth, and providing security
in existing markets’!

(3) Aquifers are g6nerally more expensive to “build”

than depleted gas fields. This is due to greater
testing and initial development coats, greater
cushion gas requirements, and greater equipment
needs because of excess water production and in-
flexible operating techniques.
REFERENCES
1. The Underground Storage of Gas in the United States (1958-1965);
American Gaa Association, New york 17, New York.
2, Gauthier, C.J. : Economics of Gas Storage Operations to a
Natural Gas Distribution Company: American Gas Association,
New York 17, New York.
3* Panoa, Peter S. : Comparative EC0nOdC8 of LI?GFacilities:
Pipe Line Industry, August 1966.

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A FIELDS ADDED SINCE 1962

GAS STORAGE FIELDS IN MIDWEST— 1965