Storage is an essential part of the natural gas market, since energy demands can fluctuate significantly during peak and off-peak season. Storing gas during the off-peak season for use during peak times helps reduce the demand and supply gap and increases supply reliability.
Generally, natural gas storage can be categorized as either above or underground storage.
Depleted Reservoirs
This is the most common form of underground gas storage. Depleted gas fields are used to store natural gas, which is injected externally into porous underground rocks. Distribution network and suitable changes can easily take place in depleted reservoirs, which significantly reduces the initial cost.
Aquifers
Aquifers are natural water reservoirs that have absorbent and penetrable underground rock formation, which are capable of storing gas for an indefinite period of time.
Salt Caverns
Salt caverns provide high injection and withdrawal rates, but these caverns are more expensive than depleted gas fields.
Liquefied Natural Gas (LNG)
LNG is a type of hydrocarbon, primarily composed of methane, which has been converted to a liquid form for easy storage. LNG is a clean source of energy with lower carbon content, however it has a relatively high cost of production and has to be stored in expensive cryogenic tanks.
Pipelines, Gasholders and Storage Tanks
Aboveground gas storage involves the accumulation of natural gas mainly in pipelines, gasholders, and storage tanks, for a definite period of time. The market for aboveground gas storage is growing compared with underground storage because it is better suited for balancing the current demand with supply at peak times.
Concerns over ensuring energy security will keep the Global Natural Gas Storage Market growing at a moderate pace, posting a CAGR of 5.7 percent from 2014-2018.
Three major trends that are expected to impact the market over the projected period are:
- Growing Need for Energy Security
- Depletion of Conventional Gas Reserves
- Gas Price Volatility
Growing Need for Energy Security
The need for energy security is one of the major drivers in the Global Natural Gas Storage market. Many governments worldwide procure and store natural gas to ensure stable energy supply in their country and reduce dependency on other conventional fuels. The demand for natural gas is also increasing worldwide because of growing populations, and economies, as well as rapid industrialization and urbanization. Many governments have shifted their focus towards using natural gas as an alternative fuel in various end-user sectors, which has forced them to also invest in storage solutions to meet future demand.
Depletion of Conventional Gas Reserves
Depletion of conventional gas sources has resulted in a major shift towards reliance on natural gas. Demand for natural gas is rapidly growing worldwide because of its low carbon footprint, and its availability. Therefore, several countries are expected to invest in natural gas storage to avoid the demand-supply gap situation.
Gas Price Volatility
The lack of price stability is expected to have both positive and negative impacts on the Global Natural Gas Storage Market over the next few years. With an increase in gas prices, operators can earn more revenue by selling gas at higher prices, whereas the lack of storage facilities during the off-peak seasons can force operators to sell gas at lower prices, which will decrease their profit margins. Additionally, a reduction in natural gas prices will not only reduce the revenue for vendors but also increase their credit and market debt.
Future growth in this market is heavily dependent on the development of cost-effective and technologically advanced solutions for gas storage. Governments are expected to invest significantly in R&D activities to develop enhanced technology to store gas for a longer period of time, in order to maintain reserves to guarantee consistent energy supply, to keep pace with ever-increasing energy demands.
