Gas/Electric Partnership Gas/Electric Partnership WorkshopWorkshop

February 8 February 8 –– 9, 20079, 2007

Trends in Gas Storage & Requirements for Compression

Randall SchorrePB Energy Storage Services, Inc.

Trends in Gas Storage & Trends in Gas Storage & Requirements for CompressionRequirements for Compression

Gas storage venuesGas storage venues

Gas storage operations (Pre and Post Order 636)Gas storage operations (Pre and Post Order 636)

Controlling storage capacityControlling storage capacity

Gas storage projects (existing and proposed)Gas storage projects (existing and proposed)

Trends in gas storageTrends in gas storage

Compression requirementsCompression requirements

Life cycle cost analysisLife cycle cost analysis

ConclusionsConclusions

PBPB ESS Industry PerspectiveESS Industry Perspective

Design, drill and evaluate reservoir storage (gas)Design, drill and evaluate reservoir storage (gas) Design, drill and leach cavern storage (gas and liquids)Design, drill and leach cavern storage (gas and liquids) Design, drill fresh water wells and brine disposal wellsDesign, drill fresh water wells and brine disposal wells Design, procure and construct surface facilitiesDesign, procure and construct surface facilities

•• Leach plant / fresh water supplies / brine disposal systemLeach plant / fresh water supplies / brine disposal system•• Compressor stationsCompressor stations•• Pump stationsPump stations•• Pipelines (gas and liquids)Pipelines (gas and liquids)

Contract O&MContract O&M•• Leach plant / fresh water supplies / brine disposal systemLeach plant / fresh water supplies / brine disposal system•• Compressor stationsCompressor stations•• Pump stationsPump stations•• Pipelines (gas, hazardous liquids, brine)Pipelines (gas, hazardous liquids, brine)

Gas Storage VenuesGas Storage Venues

AquiferAquifer

Depleted reservoirsDepleted reservoirs

Leached cavernsLeached caverns•• DomalDomal saltsalt

•• Bedded saltBedded salt

AquiferAquiferWater Well

Well MonitoringWater Level Storage I­O Well

Gathering System

Shallow Water Supply

Spill Observation Well

Ground Level

Water Bearing Zone

Gas Finger

Gas Reservoir

Upper Caprock

Possible Spill Area

Permeable Monitoring Zone

Caprock  for S

torage Area

Boundary Storage Zone

AGA GEOP Series, Book  S–1, Underground Storage, 1990

Depleted ReservoirDepleted Reservoir

DomalDomal SaltSalt

DomalDomal SaltSalt

Capacity• 6.4 Bcf (181.228 MM m3)

Depth to Cavern Roof• 4120 ft (1255.78 m)

Actual Cavern Dimension• 625 ft (190.5 m) Depth• 290 ft (88.38 m) Diameter

Bedded SaltBedded Salt

Bedded SaltBedded Salt

Important Characteristics of Important Characteristics of Each VenueEach Venue

Up to 10%Up to 10%Up to 10%Up to 10%1.0%1.0%0.5%0.5%Daily Withdrawal Rates Daily Withdrawal Rates

(% of total capacity)(% of total capacity)

Time to DevelopTime to Develop

Highly Highly variablevariable

12 12 -- 252510 10 -- 202010 10 -- 1515Cost to Develop Greenfield Project Cost to Develop Greenfield Project ($MM/($MM/BcfBcf of working gas)of working gas)

Up to 12Up to 12Up to 12Up to 121 to 21 to 211Annual TurnsAnnual Turns

Highly Highly variablevariable

20 20 -- 30 /30 /

80 80 -- 707050 / 5050 / 5065 / 3565 / 35Base Gas / Working GasBase Gas / Working Gas

.2 .2 –– 1.0 / 1.0 / caverncavern

2 2 -- 8 / 8 / caverncavern

10 10 -- 14014010 10 -- 155155Size (Size (BcfBcf Total)Total)

Bedded Bedded SaltSalt

DomalDomalSaltSalt

Depleted Depleted ReservoirReservoir

AquiferAquifer

Gas Storage Operation Gas Storage Operation ––Pre FERC Order 636Pre FERC Order 636

Storage Held by PipelinesStorage Held by Pipelines

Peak day commitments Peak day commitments vsvs average day average day capacitycapacity

Supply security / suretySupply security / surety•• HurricanesHurricanes

•• Pipeline / processing freeze offsPipeline / processing freeze offs

•• Deliverability limitationsDeliverability limitations

Gas Storage Operation Gas Storage Operation ––Pre FERC Order 636Pre FERC Order 636

Storage Held by Markets / MarketersStorage Held by Markets / Marketers

Peak day commitments Peak day commitments vsvs average day average day commitmentscommitments

Supply security / suretySupply security / surety Managing gas supply costs (weighted average Managing gas supply costs (weighted average

cost of gas)cost of gas) Pipeline system balancing Pipeline system balancing –– avoiding balancing avoiding balancing

penaltiespenalties LNG supply buffer between terminal and LNG supply buffer between terminal and

marketsmarkets

Controlling Gas Storage Capacity Controlling Gas Storage Capacity ––Ownership and/or ContractOwnership and/or Contract

OriginallyOriginally•• PipelinesPipelines

TodayToday•• PipelinesPipelines•• LDCsLDCs•• Power producersPower producers•• Large commercial customersLarge commercial customers•• MarketersMarketers•• Independent storage developers / venture capitalistsIndependent storage developers / venture capitalists•• Producers / suppliersProducers / suppliers

Underground Natural Underground Natural Gas Storage Gas Storage -- 20052005

13,37613,3761741743030SaltSalt

Source: EIA, Underground Natural Gas Storage DatabaseSource: EIA, Underground Natural Gas Storage Database

83,63283,6324,0104,010394394TotalTotal

61,93061,9303,4373,437320320Depleted ReservoirDepleted Reservoir

8,3268,3263993994444AquiferAquifer

Withdrawal Withdrawal Capacity (MMcfd)Capacity (MMcfd)

Working Gas Working Gas Capacity (Capacity (BcfBcf))

SitesSitesVenueVenue

FERC Status of Gas FERC Status of Gas Storage ProjectsStorage Projects

January 2007January 2007

1414Storage Projects on the HorizonStorage Projects on the Horizon

Source: FERC, Natural Gas Storage PublicationSource: FERC, Natural Gas Storage Publication

1010Pending Storage ProjectsPending Storage Projects

5454Certificated Storage Projects Since 2000Certificated Storage Projects Since 2000

# of Projects# of ProjectsStatusStatus

Trends in Gas StorageTrends in Gas Storage

Strong demand for incremental storage Strong demand for incremental storage capacity and associated injection / delivery capacity and associated injection / delivery capacitycapacity•• Driven by daily / seasonal markets (power Driven by daily / seasonal markets (power

generation log)generation log)•• Driven by daily / seasonal supplies (LNG Driven by daily / seasonal supplies (LNG

imports)imports)

Evidenced by proposed storage projects Evidenced by proposed storage projects and storage projects under constructionand storage projects under construction

Compression RequirementsCompression RequirementsGas Storage ApplicationGas Storage Application

Injection / withdrawal volume volatilityInjection / withdrawal volume volatility

Injection / withdrawal pressure rangeInjection / withdrawal pressure range

Wide range of volume / ratio operating Wide range of volume / ratio operating pointspoints

Fast response timeFast response time

Selecting Optimum Compression Selecting Optimum Compression EquipmentEquipment

Existing InstallationsExisting Installations

ElectricElectric

GasGas

CentrifugalCentrifugalReciprocatingReciprocating

Selecting Optimum Compression Selecting Optimum Compression EquipmentEquipment

Existing InstallationsExisting Installations

ElectricElectric

GasGas

CentrifugalCentrifugalReciprocatingReciprocating

Moving Beyond the Technology Moving Beyond the Technology Preference to the Business DecisionPreference to the Business Decision

Which equipment produces the lowest life Which equipment produces the lowest life cycle cost?cycle cost?

Life Cycle CostLife Cycle Cost

Initial capital outlayInitial capital outlay•• EquipmentEquipment•• Facilities to support operationFacilities to support operation

Ongoing O&M expensesOngoing O&M expenses•• Labor / supervisionLabor / supervision•• ConsumablesConsumables•• Repairs (scheduled / unscheduled)Repairs (scheduled / unscheduled)

Fuel / power costFuel / power cost•• Function of commodity cost Function of commodity cost andand equipment efficiencyequipment efficiency

Life Cycle CostLife Cycle CostFuel / Power Cost Calculation MethodologyFuel / Power Cost Calculation Methodology

Determine Hp / MMcfd for each compressor / driver set Determine Hp / MMcfd for each compressor / driver set and each operation point (Q=100 MMcfd, Suction and each operation point (Q=100 MMcfd, Suction P=800, P=800, DischDisch P=2,100, Hp/MMcfd=?)P=2,100, Hp/MMcfd=?)

Determine (estimate) percent of time operated at each Determine (estimate) percent of time operated at each identified operation point identified operation point

Calculate annual shaft HpCalculate annual shaft Hp--HrsHrs Determine heat rate for reciprocating engine, gas turbine Determine heat rate for reciprocating engine, gas turbine

and / or electric motor for and / or electric motor for eacheach operating pointoperating point Calculate annual Calculate annual MMBtuMMBtu or or KwKw--Hr consumedHr consumed Calculate annual fuel / power costCalculate annual fuel / power cost Complete life cycle cost calculationComplete life cycle cost calculation Recommend Monte Carlo simulationRecommend Monte Carlo simulation

Trends in Gas Storage & Trends in Gas Storage & Requirements for CompressionRequirements for Compression

What does this mean for:What does this mean for:•• Asset owners / project developers?Asset owners / project developers?

•• Equipment suppliers / engineering service Equipment suppliers / engineering service providers / power providers?providers / power providers?