Natural gas will emerge as the premier fuel of the world economy for two primary reasons: a surfeit of new and massive discoveries and substantial environmental benefits. Because of new and proliferating modes of transportation, natural gas will become fungible. This is likely to reduce large seasonal price fluctuations and especially it will eliminate price disparities, currently observed throughout the world.
Natural gas underground storage, mostly a North American practice, using depleted oil/gas reservoirs, water aquifers, or salt domes, will have to be expanded and enlisted almost everywhere.
We present here a series of new models for the physical management of gas storage facilities and the indicated injection and withdrawal schedules. Connected to the physical models are economic models that take into account natural gas price fluctuations. Optimum injection and/or withdrawal rates are determined weekly.
The model implementation starts at any time in the life of a storage reservoir with any amount of gas in storage. Then, taking into account gas price fluctuations, an injection/withdrawal schedule is determined to maximize profit and eliminate loss. The possible natural gas rates are not arbitrary but will be related to average rates already experienced in the field that are based on material balance, reservoir pressure and at the extremes, the abandonment pressure and the maximum allowable injection pressure.
We apply the models to entire US storage industry for two significant years, 2008 and 2012, compare and critique actual past injection and withdrawal history with the would-be optimum injection and withdrawal schedule that should be based upon gas price history. We show the disparity between the optimum schedules and what was actually followed. We also show considerable improvement in storage economics, compared to the actual history, if only the previous weekly prices were to be used as the gauge for injection/withdrawal.