Economic Feasibility of Inert Cushions in Underground Gas Storage

摘要

The physical properties of storage reservoirs and the economics of three major processes for generating inert gases (cryogenic nitrogen, engine exhaust gas and boiler flue gases) have been investigated and compared to the current practice of using natural gas as the cushion. Also studied are the effects of rising gas prices and potential changes in Federal policy (tax credit and income tax) on industry's decision to use inert cushions. The analysis indicated that the site is the most important factor in the decision to use inert gas as the cushion: the reservoir should minimize mixing between inert and natural gas; and the reservoir should be located close to an alternate use for the products of the inert gas generator. Under these conditions, cryogenic nitrogen would be preferred over natural gas for the cushion and could be implemented at gas prices from $2.60 to $3.40/Mcf. If mixing could not be prevented, gas prices from $3.20 to $4.40 would be required. If an alternate use could not be found, the exhaust gas case would be preferred at prices from $3.50 to $6.50/Mcf, in aquifer storage; and in depleted fields, prices range from $4.50 to $7.90. Extensive revision in the tax code would reduce these threshold prices by approximately $1.00/Mcf but would not alter the basic choices: mixing and alternative use would continue to dominate the decision. (ERA citation 06:031653)