20 January 2012

Invention as the Mother of Necessity

Natural gas prices have plummeted, due to an oversupply, and because gas is a also by-product of other commodities, the supply keeps growing, setting up a situation where concerns have been expressed about our ability to store all that gas. The figure above shows US storage of natural gas approaching capacity (data from the US EIA).
Weak demand for heating has raised the prospect that underground storage facilities will bulge with record stocks by the end of winter. Bentek Energy, a market analysis group, last week warned that some swollen storage facilities might be forced to let out gas to maintain operational integrity, causing “extreme downward pressure on prices in March”.

Even a hot summer that would force electric power plants to burn more gas may not keep inventories from straining proved storage capacity of 4.1tn cu ft when the gas “injection season” ends in October or November.

Drillers have endured low prices, pushing output above 60bn cu ft per day, because many wells also pump higher-value liquids and petroleum. “It’s like a guy mining for silver and he keeps running into gold,” said Vikas Dwivedi, energy analyst at Macquarie.
I don't know what it means to "let gas out to maintain operational integrity" but it sounds like both a bad idea and a big opportunity -- environmentally, economically, technologically and politically.  A reader points to this link on the basics of storage.