ABSTRACT

The deregulation of the US gas transmission industry has been an on-going process since 1984 culminating with Order 636. Deregulation in general and Order 636 in particular have ended the role of interstate pipeline companies as merchants of natural gas forcing them to segregate (unbundle) their interstate gas transportation services and fees, and opened interstate transmission capacity to access by qualified shippers on firm or interruptible basis. Given the general requirement to operate pipelines on a higher level of efficiency as well as the requirement to provide contractual guarantees of gas supply to end clients, the capability to store gas in reservoirs along the pipeline routes is highly attractive. This practice is gaining rapid acceptance in the industry thus causing an extension of the technology of pipeline modeling into the realm of reservoir simulation. Reservoir simulation, in its own right, has evolved over some time with a more recent focus being seen on the numerical modeling of gas storage reservoirs. This paper will present the general aspects of gas storage reservoir simulation with an emphasis on the behavior of reservoirs under such conditions as dictated by the current gas transmission industry environment. The discussion will then focus on the utilization and management of gas storage via the presentation of simulation case studies.

BACKGROUND

The availability of cost-effective gas storage to the pipeline operator has historically enabled him to manage the system on a high load factor basis. As a result, transmission facility design was highly optimized and the unit cost of transmission was correspondingly then as low as practicable. Furthermore, the availability of cost-effective gas storage to the gas distributor has enabled him to optimize his purchase pattern from the pipeline supplies thereby keeping overall gas acquisition costs as low as possible. The importance of cost-effective gas storage has never been more exemplified in the United States than it is today within the post Rule 636 climate. The gas pipeline industry has been transformed from being a gas merchandiser with monopoly on markets under total government regulation, to becoming deregulated and a provider of gas transportation services to any markets that can be competitively served. Additionally, today any category of gas user, including end-users, can now deal directly with producers for gas supplies, bypassing their traditional pipeline or distribution supplier. This new opportunity by the pipelines to provide transportation services to any new markets they can access has fostered significant competition within the pipeline industry. To be competitive, pipelines must ensure that their unit transportation costs are as low as practicable. Hence the importance of operating the pipelines at high load factor rates. As a result, pipelines employing the most cost-effective gas storage retain an advantageous position over the long term in their ability to offer low cost transportation services.

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