Historically, storage was used to respond to the peak needs of cold winter days. Natural gas demand used to be at its highest in winter, primarily due to home heating requirements. This is when pipelines would typically move large quantities of natural gas for their customers. In the past, summer demand for natural gas was lower, so pipeline deliveries were lower. In recent years, however, mostly due to increased demand from natural gas fired power plants, demand has become less seasonal. Because of this shift, well-placed natural gas storage has become even more important to natural gas operations.
Today, North American natural gas storage plays a key role in balancing supply and demand, particularly consumption during peak-demand periods.
- Storage can reduce the need for both swing natural gas production deliverability and pipeline capacity by allowing production and pipeline throughput to remain relatively constant.
- Customers may use storage to reduce pipeline demand charges, to hedge against natural gas price increase, or to arbitrage gas price differences.
- Pipelines and LDCs use storage for operation flexibility and reliability, providing an outlet for unconsumed gas supplies or a source of gas to meet unexpected gas demand.
- Storage at market trading hubs often provides balancing, parking, and loan services.
- In the future, additional conventional storage will be needed to meet growing seasonal demands and high deliverability storage will be required to serve fluctuating daily and hourly power plant loads.
Most gas storage fields are depleted gas reservoirs, but some storage fields have been created by leaching underground caverns in salt domes. Both types of gas storage fields are extremely safe. In either case, the pipeline company injects natural gas into the storage field when demand is low and withdraws it from the storage field during times of high demand.