US natural gas storage capacity seen growing 5% by 2008: EIA

US natural gas storage capacity seen growing 5% by 2008: EIA

Washington (Platts)--17Oct2006

Assuming all 38 US natural gas storage projects currently approved by
regulators are completed, the nation's gas storage capacity should increase
by 197 Bcf, or 5%, by the end of 2008, the Energy Information Administration
said Tuesday.

EIA said 15 approved projects are new storage facilities and 23 are
expansions of existing facilities.

The agency said the nation's total design working gas storage capacity
stood at 4.1 Tcf as of the end of 2005, with a practical capacity of 3.6 Tcf,
as reported by the 123 companies that operate the 394 storage facilities.

Salt cavern storage facilities are the preferred choice for new
construction, accounting for the bulk of the projects being built from the
scratch, EIA said. "The rapid cycling (inventory turnover) capability of salt
cavern, coupled with its ability to respond to daily, even hourly, variations
in customer needs, has made it an increasingly attractive choice when
developing new storage sites," EIA said.

Because of the increasing use of salt cavern storage, the EIA projects
daily deliverability of gas will increase 11% by 2008.

Eleven of the 15 new storage facilities approved by regulators are salt
caverns, as are nine approved expansions, with salt caverns accounting for 55%
of the increase in total capacity and 85% of the increase in daily
deliverability, EIA added.

The Midwest and Southwest (including Texas and Louisiana) regions of the
country have the most storage capacity, because of their
proximity, respectively, to end users and producers, the agency said. At the
end of 2005, the Midwest had 121 faciliti4es with 1.2 Tcf of working gas
capacity, while the Southwest had 66 facilities with 1.1 Tcf of capacity. The
far West region of coastal Pacific states had the fewest facilities, 18, and
the least amount of storage capacity, 301 Bcf.

More than half the storage projects approved for completion in the next
three years are located in the Southwest producing region, EIA said.
Currently 16 of the US' 38 proposed projects are scheduled to be built in the
Southwest, adding 106.5 Bcf of working gas capacity, more than half the new
working gas storage scheduled to be built.

The biggest roadblocks to new storage projects are environmental
considerations, public opposition, and customer creditworthiness, the EIA
said. "Even faced with such obstacles, however, a substantial number of
new-site storage projects, with proposed in-service dates between 2006 and
2008, or later, remain viable," EIA added.

--Bill Holland, bill_holland@platts.com

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