India explores developing strategic gas stockpile as hedge against volatility

India already has strategic crude oil reserves with a capacity to hold 5.33 million tonnes of oil in underground caverns, fit to meet around 9.5 days of the country’s oil demand. The capacity is being expanded by another 6.5 million tonnes in the second phase of the project. The country, however, has no strategic natural gas storage facilities even as its gas consumption is expected to grow significantly over the next few years.

On being asked if the government is looking at setting up the strategic gas storages itself or with participation from the private sector, Jain said such modalities will be decided later and that currently the focus is on examining the feasibility and technical viability of having such storage facilities. According to Jain, there are a number of options available to develop strategic gas storages, which include storing natural gas in abandoned gas wells, as well as developing underground storage in different types of subsurface formations.

India is a net importer of natural gas and depends on imports to meet around half of its requirement. The government considers natural gas as a key transition fuel and is pushing for increasing its consumption in the country. India has set a target to increase the share of natural gas in its primary energy mix to 15 per cent by 2030 from a little over 6 per cent at present. As one of the major importers of liquefied natural gas (LNG), India was adversely impacted by the tightening global supply and surging gas prices last year in the aftermath of Russia’s invasion of Ukraine.

Natural gas can be stored underground in depleted reservoirs in oil and gas fields, and in natural aquifers and salt caverns. It can also be stored in the gaseous state as well as in the form of LNG in large over-ground tanks. In the United States, most existing natural gas storages are in depleted oil and gas fields that are close to gas consumption centres, according to the US Energy Information Administration (EIA).

Apart from the US, various European countries, Canada, and China, among others, have gas storage facilities. As per information available on the European Council website, most European Union (EU) member states have gas storage facilities on their territory. Storage capacities in five EU member countries–Germany, Italy, France, the Netherlands, and Austria—account for two-thirds of the EU’s total gas storage capacity. Fearing a major energy crisis in the winter of 2022 due to the war in Ukraine, the EU member countries stocked up natural gas, filling their gas storage facilities to 90 per cent capacity on average by October 2022.

As reported earlier by The Indian Express, government-owned engineering consultancy firm Engineers India (EIL) is already studying the prospects and feasibility of developing salt cavern-based strategic oil reserves in Rajasthan. According to experts, such caverns can easily be utilised for storing natural gas as well. No Indian company, including EIL, currently has the requite technical knowhow so far to build salt cavern-based strategic hydrocarbon storage. EIL’s recent partnership with Germany’s DEEP.KBB GmbH is aimed at getting access to the required technology. The German company specialises in cavern storage and solution mining technology.