Non-OECD Asia, especially China and India, will slowly but surely join the club of countries with underground gas storage facilities as gas demand grows and security of supply becomes imperative, a senior executive with Storengy, GDF Suez's storage subsidiary, said Tuesday.
Speaking to delegates at the Asia Oil and Gas Conference in Kuala Lumpur, Georges Liens, Storengy's senior executive vice president, called underground gas storage a "must-have" for Asia, as it is for other mature gas markets.
Gas storage capacity as a proportion of gas demand is around 20% in most of Europe and North America. But India has no gas storage, and China is only just starting to build some facilities.
According to Liens, having gas storage can help countries better match supply and demand, guarantee supply security in case of supply disruption and/or exceptionally high demand, and optimize gas infrastructure and production.
Gas demand in non-OECD Asia is estimated to grow 4% per year between 2010 and 2035, Liens said, quoting figures from the International Energy Agency.
"Non-OECD Asia consumed around 400 billion cu m/year in 2010 and is forecast to consume around 1,000 Bcm/year in 2035," he said, adding that China and India's import dependency is forecast to rise to 42% and 46% respectively by 2035.
"This fast-growing import dependency raises the fundamental issue of security of supply, to which UGS development is particularly relevant," Liens told delegates.
INKS DEAL WITH CHINA
Storengy is looking to develop underground gas storage projects in Asia, with deals already signed in China and India, Liens said on the sidelines of the conference.
The company inked a deal with state-owned PetroChina two months ago to assess the feasibility of developing underground gas storage at six sites.
"The study is due to be finished at the end of the year. ... We are working with PetroChina on [gas storage through injection into] depleted oilfields," he said.
China has a strong requirement for underground gas storage to cope with gas market development and modulation needs, given high peak demand that can be 10 times more than off-peak demand, he said.
According to Liens, China currently has 38 underground gas storage projects, including 11 in the northeast, 10 in the Bohai Bay, seven in the central area and five in the Yangtze Delta.
Of these, PetroChina currently owns and operates four underground gas storage projects, with total capacity of less than 3 Bcm. He said the company is developing and constructing a further 11 projects, while rival Sinopec is eyeing three facilities.
This is expected to help the country meet its target of having 35 Bcm of underground gas storage capacity by the end of the 12th Five-Year Plan in 2015, and 60 Bcm by 2030.
WORKING WITH GSPC TO DEVELOP STORAGE IN INDIA
In India, Storengy announced a deal in January with Gujarat State Petroleum Corp. for similar underground gas storage development.
"It's an old oilfield where we can enhance the recovery of oil reserves in order to maintain production, but at the same time [which can be utilized] as storage," Liens said.
Storengy is also in talks with state-owned gas utility GAIL and Oil and Natural Gas Corp. -- as part of a joint venture -- on other potential projects, he added. Of these, at least five fields are being considered at the moment.
India has strong geological potential for underground gas storage with some promising spots such as the depleted fields in the Cambay Basin in the west and the Nagaur-Ganganagar salt basin in the north where salt caverns for storage can be created, Liens said.
"India is one of the fast-growing markets, but the market is highly dependent on imports," he said.
According to Liens, India could have between 3 Bcm and 9 Bcm of gas storage capacity by 2030 to address security of supply, flexibility and security for power generation, and also to allow for arbitrage and the development of the market.
Other non-OECD Asian markets such as Taiwan, Pakistan and Vietnam are looking at developing their own storage facilities in the future to balance seasonal demand and meet peak winter demand, Liens told delegates.
Taiwan currently has one such facility in the onshore TCS depleted field, 140 km (86.8 miles) south of Taipei.
Pakistan, meanwhile, has had plans to develop underground gas storage on the drawing board since 2004, but they have yet to materialize.
