Underground Gas Storage in the World – Part 2: Storage projects

Highlights from the latest update of Cedigaz’ Worldwide UGS Database.

Only 25 bcm of working capacity is under construction

The capacity currently under construction is limited. At worldwide level, there are 48 storage projects[1] under construction adding 25 bcm of working capacity. This includes only 15 new storage sites (12 bcm) and 33 expansions (13 bcm). Again, this is lower than last year’s report (58 projects adding 36 bcm of working capacity) and previous ones. This is partly due to the commissioning of storage facilities in 2016, but also to cancellations of projects. Most of the projects under construction will be completed by 2020/25. All regions, but Central and South America, participate in the additions to storage capacity currently under construction. It is worth noting that Europe ranks first, but capacity under construction is concentrated in Italy, where the storage regulation is much more favorable than in other European countries. The CIS ranks second with expansions and new facilities built in Russia. The Middle East and Asia-Oceania account for 23% and 18% of the world additions. The shift of storage investment to new emerging and growing gas consuming countries started at the beginning of the 2010s and is expected to dominate the next 20 years. The additions to withdrawal capacity are dominated by Europe reflecting the focus towards highly flexible storage in the region.

Underground Gas Storage in the World – Part 1: Current capacity

Highlights from the latest update of Cedigaz’ Worldwide UGS Database.

No significant changes compared with 2015, except in Europe

As of end 2016, there were 672 underground gas storage (UGS) facilities[1] in operation in the world, representing a working gas capacity of 424 billion cubic meters (bcm), or 12% of 2016 world gas consumption. The number of storage facilities has decreased (680 UGS in 2015), mainly due to closure/mothballing of UGS in the United States and Europe. However, the global working capacity has slightly increased (+11 bcm) driven by expansions in the Commonwealth of Independent States (CIS), the Middle East and China. In Europe, storage capacity has continued its decline. Working gas capacity decreased by 5.8 bcm due to the closure of storage facilities in Germany, Ireland and the UK. The temporary closure of the Rough depleted field was confirmed as a permanent one in June 2017. This sharply reduces the UK storage capacity, and especially its seasonal storage capacity.

The First Estimates of the International Gas Association CEDIGAZ show a moderate growth of 1.6% in global natural gas demand in 2016

Natural gas consumption grew 1.6% to 3528 bcm in 2016, according to CEDIGAZ, driven by multiple structural and temporary factors. This positive growth is similar to the previous year’s and also in line with Cedigaz short and medium-term natural gas demand forecasts.

These recent developments in natural gas demand illustrate the influence of mixed drivers. More affordable natural gas prices in 2016 have given a boost to natural gas and LNG demand in both industrialized (Europe) and emerging markets. In addition, colder than usual temperatures in the final months of 2016 in the main consuming markets had a strong upward effect on domestic gas sales. Reversely, moderate global economic activity, the decline in energy intensity, weak electricity demand in OECD markets and the strong expansion of renewables are still weakening gas demand growth. If we set climate effects aside, it can be noted that the expansion of natural gas demand has remained below the historical average. In the first three quarters of 2016, it increased at an estimated rate of only 0.5%, relative to the same period of the previous year.