Underground Natural Gas Storage:
A study of the potential of the depleted fields of the Reconcavo Basin
Master Student: Camilo Guimarães Lima
Supervisor: Professor Amílcar de Oliveira Soares
Abstract
This work aimed to study the potential of the depleted fields of Reconcavo Basin, located in the state
of Bahia in Northeast from Brazil, to be transformed into the Underground Natural Gas Storage. The
study analysed the geological and technical aspects of these reservoirs, and it created the initial
theoretical bases for the evaluation of these fields. The research included a quantitative and
qualitative analysis of reserves, production, consumption and main natural gas markets of the world
(United States of America, Canada, Russia, Germany, Italy and France). This approach had the
intention to understand the dynamics of these mature markets and capture the contribution of these
features that most resembled and adapted to the immature natural gas market in Brazil. It was
concluded that the Brazilian market requires the installation of a unit of Underground Natural Gas
Storage close to the consumer and industrial centers and that it becomes increasingly important to
ensure the continuous supply of natural gas to existing power plants, besides increasing the efficiency
of the pipeline network and also organizing the production, the transport and the processing, in
addition to balancing supply and demand for natural gas. The study also found that despite the lack of
a framework for the geological storage of natural gas in Brazilian territory, the regulatory framework
already exists for the development of activity in Brazil.
Keywords: Underground Storage; Natural Gas; Depleted Fields; Reconcavo Basin.
1
1. Natural Gas
The natural gas is the source of fossil energy that registers the highest growth in the world. The
interest in natural gas is directly related to the search for alternatives to oil and less aggressive
environmental sources. This behaviour led to the intensification of exploration and exploitation
activities, particularly among countries in development. The result was not only the increase in
volume, but also the geographical expansion of proven reserves, which approached the consumer
markets, expanding the transport and marketing, as this was one of the greatest obstacles to its
spread, in view of the heavy investments to create the infrastructure for its processing.
The great feature of the natural gas market is the heated international trade. If, on the one hand,
it favors the expansion of consumption, on the other hand, the buyer country remains subordinated to
the foreign policy and to the purveyance of supplier country, which causes some uncertainty about of
the gas supply. The natural gas is an important agent for reducing pollution and maintaining a clean
and healthy environment energy source. Its use can provide a sufficient number of environmental
benefits over other sources of energy, particularly fossil fuels. Its importance is getting bigger and
bigger in the generation of electricity in many countries as well as being extremely efficient. Its
application allows an improvement in the rate of emissions of pollutants from the electrical industry.
Furthermore, its combustion gases do not require special treatment.
In the chemical industry, several products can be obtained from natural gas. For example, it can
be used in the production of methanol (CH4O), which is used for the production of formaldehyde
(CH2O) to obtain resins and polymer films, and a wide variety of solvents. Since natural gas is rich in
methane, it is possible to obtain synthesis gas. In the fertilizer industry, the ammonia (NH3) and the
urea (CH4N2O) are obtained from the natural gas.
1.1 Reserves, Production and Consumption
The next three charts show the main natural gas’ reserves, production and consumption, in
2012, over the main countries around the world.
Natural Gas’ production in 2012
Country
bcm
%
1°
USA
681,39
20,26
2°
Russia
592,27
17,61
3°
Iran
160,50
4,77
4°
Qatar
157,05
4,67
5°
Canada
156,55
4,65
6°
Norway
114,92
3,42
7°
China
107,22
3,19
8°
Saudi Arabia
102,80
3,06
9°
Algeria
81,50
2,42
10°
Indonesia
71,07
2,11
32°
Brazil
17,40
0,52
Table 1 – Natural Gas’ production in 2012. (BP Global, 2013).
2
Natural Gas’ consumption in 2012
Country
bcm
%
1°
USA
722,14
21,79
2°
Russia
416,24
12,56
3°
Iran
156,09
4,71
4°
China
143,84
4,34
5°
Japan
116,74
3,52
6°
Saudi Arabia
102,80
3,10
7°
Canada
100,71
3,04
8°
Mexico
83,66
2,52
9°
United Kingdom
78,28
2,36
10°
German
75,24
2,27
31°
Brazil
29,17
0,88
Table 2 – Natural Gas’ consumption in 2012. (BP Global, 2013).
Figure 1 – Natural Gas’ reserves (tcm) (Fonte: BP Global, 2013).
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2. Security of Natural Gas Supply
The gas supply chain can be obscure and it may be a complicate system for people who
depend on their products and services. These systems need to have a model that provides a simple
visual description of its major components, clients and services which are dependent on this energy.
Recognizing the critical components and their locations provides the context for understanding the
diversity of the supply chain, and helping with issues that may affect the various stages of this
development as well as the stage of production and distribution.
The natural gas is an important energetic source for homes, offices, shopping malls and bars.
This energy is also extremely important for the industries of manufacturing, electricity generation and
transport energy and it is getting more relevant to modern life. Every nation, where the gas
consumption is crucial to its economy, must shield itself to the lack of this, either by increasing the
number of suppliers (not being dependent on only one or two) and these nations need to look for a
substitute sources of energy instead of using only natural gas. The supply chain is characterized by
need a large infrastructure for distribution and requires huge investments for the implementation of a
gas pipeline, which is not built, in the short term, to meet a momentary lack of market supply. If a
country has the natural gas supply stopped for political or economic issues, this may lead to high risks
and it could stop the economic activities.
However, the coexistence of natural gas and its drainage infrastructure are necessary, but not
sufficient to guarantee the supply of this energy, because in despite of gas contracts signed and an
efficient transportation network, there may be disruption in supply, caused by political and economic
aspects among the countries which are enrolled in this chain. Some alternatives to increase the
security and the continuity of supply of natural gas are: diversification of suppliers; integration of gas
transport; use of Liquefied Natural Gas (LNG) and Underground Natural Gas Storage.
4
3. Underground Natural Gas Storage
The concept of storing natural gas underground in geologic formations comes from the need to
supply gas to consumers during periods of high seasonal demand. The storage of natural gas is also
an insurance policy against accidents and natural disasters. There are several types of underground
storage used for natural gas with the three prominent types being depleted gas reservoirs, aquifers,
and mined salt caverns, but there are two others types: the lined rock cavern and coal mine.
Each type of underground storage is characterized by its specific and inherent characteristics:
physical, economic and financial. The main physical characteristics are porosity, permeability, fluid
retention capacity, gas delivery rates and cycles of operation. About the economic and financial
characteristic, it could be quoted the cost enrolled in the installation, operation and maintenance of
the structure. It is necessary that these properties are satisfied to lead the interest of the sustainability
of these facilities, reinforcing the idea of its purpose: to satisfy the seasonal demands and the peak in
the gas consumption. Therefore, the storage capacity is a key-point, whose major variables are
volume and time, which interfere in the whole process. Another criterion used to distinguish each type
of storage is the gas delivery rate.
The underground natural gas storage is a vital component of the natural gas chain. It is initially
developed to balance gas supply and demand, optimize the transmission network size and
management, and provide security of supply in case of interruption in gas supplies. As markets
developed and liberalized, market hubs emerge, and spot markets evolve along with these trading
hubs. Storage acquires an additional commercial role as a supporting tool to trading (CEDIGAZ).
Two important concepts are entered in this section: Base Gas and Working Gas. The Base Gas
is the volume of gas in the geological storage required to maintain the internal pressure and be able
to perform the operations of injecting and withdrawing gas. The Base Gas volume remains within the
storage and the greater is its volume, the greater the pressure in the storage and the greater the gas
delivery rate. The Working Gas is the volume which is stored in the unit, then, it is temporarily stored
in order to be drawn later.
The depleted fields are the principal type of storage around the world, and it is showed by the
predominance in the underground gas storage by type of storage. This is easy to understand,
because this type allows storing large volumes of Working Gas and are mainly used to balance
seasonal swing in gas demand and constitute strategic reserves. The depleted field storage is one of
the cheapest types to project and conceive, requiring a low quantity of Base Gas.
The underground gas storage has been developed mainly in four regions: North America,
Europe, Commonwealth of Independent States (CIS) and Asia-Oceania. North America concentrates
more than 67% of all facilities in the world, with 414 in the United States and 59 in Canada, with a
working gas capacity of 152 bcm (40% of total volume). The Europe is the second in rank in terms of
number of facilities with 144 (99 bcm), followed by the CIS which has 51 facilities, but it is in the
second place in terms of working gas capacity (115.5 bcm). The Asia-Oceania has only 18 facilities
with 9.3 bcm of working gas capacity. In the rest of the world, there are only two other facilities, one in
Argentina and another in Iran.
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4. Underground Natural Gas Storage: Brazilian case
In despite of what happens in many countries in the world, the Brazil has a high content of
renewable energy in its energy and electricity matrix. Therefore, hydroelectric plant plays a
fundamental role in the generation of electricity, being largely responsible for the electrical supply with
70.1%. However, the storages could be used to optimize the supply of natural gas for the
thermoelectric plant during the months which the level of the reservoirs of hydroelectric plants is more
critical (September and January). It would allow the addition of a power in the Brazilian electric
system, giving optimum performance and reducing the risks of electricity blackout in the regions of
Brazil. In drier regions, where rainfall rate is low, it could be a way to overcome energy crisis.
The Brazilian government should seek an integrated view between natural gas and electricity
industry and tries to make a convergence between them, where it strives to create the best conditions
for predictability of the thermoelectric acts and its demands for natural gas, whence it might be
possible to create the conditions for competitiveness and sustainability in the implementation of these
flexibility mechanisms, like a underground gas natural storage.
However, the design of an underground storage facility would bring many other benefits for the
Brazilian natural gas market, since it would increase the supply security, as allowing less vulnerability
to interruptions of supply from imports. The storage also improves the operational of the pipelines,
because it could be used to vent gas pipelines during pressure spikes, removing the gas from the
lines and injecting them into the storages. The gas would only be removed from the storages when
the pressure returned to normal levels in the pipelines. The underground stocks also increase the
deliverability of gas in the market during peak demand, in addition to greater efficiency. It would have
more access to market centers, not only from thermoelectric plants, but the refineries and the
residential market. It also would provide greater power to negotiate transportation contracts in the
natural gas market.
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5. Case Study: Potential of Depleted Field of Reconcavo Basin
The purpose of this study is to reveal the potential of depleted fields in the Reconcavo Basin
to be transformed into the underground natural gas storage. The aim is to show the geological and
technical aspects of these reservoirs and create the theoretical basis to evaluate them. The study will
analyze whether their characteristics and properties allow following researching in this area and
whether deep studies could be developed to conceive storages. Some relevant aspects can
determine if a reservoir is a good candidate for storing natural gas. Therefore, the following criteria
must be met: porosity over than 10%; permeability greater than 10 mD; capacity of keeping gas
(trapping); ability to store a large volume of gas; cycles capacity (at least 1 cycle / year); high delivery
rate; limited presence of fluids and it could not interfere in the permeability; absence of hydrogen
sulphide and possibility of drilling and completing additional wells.
5.1 Fazenda Azevedo Oeste
The presence in a single well and the lenticular feature of these reservoirs would not ensure
good control of the limits and the thicknesses of accumulation. These observations, coupled with the
low quality of permeability and porosity, give high uncertainty and risk to the accumulation. The
remaining oil would affect the effectiveness of the storage, increasing the friction between the fluids
and reducing the capacity of the gas to flow. It would not be a good choice to be an underground
storage.
5.2 Fazenda Gameleira
There are two reservoirs in the field: the Cambuqui and Imbe sandstones. The first one is not
good to be an underground storage, because of the low permeability and the second one has a
potential to be an underground storage. The restrained gas in the Imbe zone can be used as Base
Gas, reducing installation costs of the unit. Considering the average value traded by the pipeline
network of Bahiagas of 3.74 mcm, this reservoir would supply natural gas up to 14.4 days.
5.3 Beija-Flor
The presence in a single well and the lenticular feature of these reservoirs would not ensure
good control of the limits and the thicknesses of accumulation. These observations, coupled with the
low quality of permeability and porosity, give high uncertainty and risk to the accumulation. The
permeability is not sufficient to allow injection and production flow in the levels along the periods of
supply and demand peaks. The big accumulation of oil is not so depleted and the remaining oil would
increase the friction between the fluids, reducing the permeability. The accumulation of gas is
depleted, but it is very small and it is not appropriated to be an underground storage.
7
5.4 Caracatu
The permeability and porosity are not appropriate for the purposes of this research, they give
high uncertainty and risk to the accumulation. The permeability is too low which is not sufficient to
allow gas injection and gas withdrawal in the levels of outflow during the periods of high consumption
of natural gas. The oil accumulation is not much depleted and the remaining oil would increase the
friction between the fluids, decreasing the permeability. The gas accumulation is depleted, but it is
very small and it is not adequate to be storage. This field is not a good option to be a gas storage.
5.5 Lagoa Verde
The field has a high potential to be an underground storage. The restrained gas in the reservoir
can be used as Base Gas, reducing installation costs of the unit. Considering the average value
traded by pipeline network of Bahiagas of 3.74 mcm, this reservoir would supply natural gas up to 16
days.
5.6 Vale do Quirico
The field has a big potential to be an underground storage, but the reservoir was a little bit
explored, more or less 12%. The restrained oil in the reservoir can mix up with the stored gas and
reduce the capable of the gas to flow in the reservoir. Perhaps, it is more interesting to apply
secondary methods of production to try recovering more oil in this field.
5.7 Miranga Leste
The field has a big potential to be an underground natural gas storage, but the reservoir limits is
not easy to determine, because of the narrow porosity thickness and the reservoir is deltaic. The
restrained oil in the reservoir can mix up with the stored gas and reduce the capable of the gas to flow
in the reservoir. Perhaps, it is more interesting to apply secondary methods of production to try
recovering more oil in this field. This is not a good option to turn into storage unit.
5.8 Fazenda Azevedo Oeste
The presence in a single well and the lenticular feature of these reservoirs would not ensure
good control of the limits and the thicknesses of accumulation. These observations, coupled with the
low quality of permeability and porosity, give high uncertainty and risk to the accumulation. The
remaining oil would affect the effectiveness of the storage, increasing the friction between the fluids
and reducing the capacity of the gas to flow. It would not be a good choice to be a storage unit.
8
6. Conclusion
In many regions across the nation geologic formations are being used to store natural gas
underground. Natural gas is stored to meet seasonal demands and to protect against accidents and
natural disasters that could cause a disruption in supply. Storage of natural gas is used to meet both
base load and peak load requirements. Storage options are dictated by the regional geology and the
operational need.
The development of the natural gas chain requires the conception and the development of
underground natural gas storage. The storage has extreme importance for the balance of supply and
natural gas demand in the market and it plays an additional commercial role, just as a support tool for
trading. This mechanism of facilities increases the reliability and credibility of the natural gas network
trade, and it improves the nation’s energy security. The continuity of this study could be made by
asking more documents for the responsible organization (ANP) in Brazil. Well logs, data from seismic
surveys, geological data and others documents can be requested for ANP, but these documents have
to be paid to have access for them.
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