SA Storage Presentationenergymining.sa.gov.au/__data/assets/pdf_file/0009/... · 2017-12-11 · SA...
Transcript of SA Storage Presentationenergymining.sa.gov.au/__data/assets/pdf_file/0009/... · 2017-12-11 · SA...
SA Roundtable for Oil amp GasUnderground Gas Storage 101
November 30 2017By Glen Gill
Managing Director of Innovative Energy Consulting Pty LtdDirector of Australia Gas Storage Ventures Pty Ltd
Director amp Public Officer of Encana International Australia Pty Ltd (Encana Corporation)
Innovative Energy Consulting Pty Ltd 1
Myth 1Gas Storage is a Relatively New
Concept
Innovative Energy Consulting Pty Ltd 2
Gas Storage ErarsquosThe ldquoHorse amp Buggyrdquo Era
Outdated Gas HoldersManufactured Gas Application
The ldquoModel Trdquo (1916-50rsquos)Underground Gas Storage Facility
Utilising Depleted Reservoirs
Innovative Energy Consulting Pty Ltd 3
Gas Storage ErarsquosThe ldquoMustangrdquo
UGS utilising Pinnacle Reefs (1960rsquos in Michigan US UGS utilising high Quality Sandstones amp Horizontal
Wells (Alberta Canada mid 1980rsquos)
The ldquoFerrarirdquo Underground Gas Storage Facility
Utilising Salt Caverns (Germany amp US Gulf Coast)
Innovative Energy Consulting Pty Ltd 4
Myth 2Depleted Reservoirs are the Best
Tool for UGS
Innovative Energy Consulting Pty Ltd 5
Subsurface (Underground) Gas Storage
Pore Space Storage bull Naturally occurring reservoirsbull Porosity permeability closure drive
mechanism depth amp size are all important variables
bull Generally longer cycle less responsive storage facilities
bull 1 to 3 cycles per yearbull Max daily withdrawal rate is at best
2 of working gas inventorybull Traditional gas storagebull Originated in Ontario Canada in 2015
Man Made Cavernsbull Utilising either salt beds or salt domes (NaCl
rock salt or halite)bull Salt depth thickness purity amp areal extent
are all important variablesbull Short cycle very responsive storage facility
(many times per year)bull Max daily withdrawal rate is 10 of working
gas inventory bull State of the art gas storage bull Originated in Michigan US in 1961 (46 years
after reservoir storage)bull Liquid hydrocarbon storage in salt caverns
preceded gas by a decade
Innovative Energy Consulting Pty Ltd 6
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 1Gas Storage is a Relatively New
Concept
Innovative Energy Consulting Pty Ltd 2
Gas Storage ErarsquosThe ldquoHorse amp Buggyrdquo Era
Outdated Gas HoldersManufactured Gas Application
The ldquoModel Trdquo (1916-50rsquos)Underground Gas Storage Facility
Utilising Depleted Reservoirs
Innovative Energy Consulting Pty Ltd 3
Gas Storage ErarsquosThe ldquoMustangrdquo
UGS utilising Pinnacle Reefs (1960rsquos in Michigan US UGS utilising high Quality Sandstones amp Horizontal
Wells (Alberta Canada mid 1980rsquos)
The ldquoFerrarirdquo Underground Gas Storage Facility
Utilising Salt Caverns (Germany amp US Gulf Coast)
Innovative Energy Consulting Pty Ltd 4
Myth 2Depleted Reservoirs are the Best
Tool for UGS
Innovative Energy Consulting Pty Ltd 5
Subsurface (Underground) Gas Storage
Pore Space Storage bull Naturally occurring reservoirsbull Porosity permeability closure drive
mechanism depth amp size are all important variables
bull Generally longer cycle less responsive storage facilities
bull 1 to 3 cycles per yearbull Max daily withdrawal rate is at best
2 of working gas inventorybull Traditional gas storagebull Originated in Ontario Canada in 2015
Man Made Cavernsbull Utilising either salt beds or salt domes (NaCl
rock salt or halite)bull Salt depth thickness purity amp areal extent
are all important variablesbull Short cycle very responsive storage facility
(many times per year)bull Max daily withdrawal rate is 10 of working
gas inventory bull State of the art gas storage bull Originated in Michigan US in 1961 (46 years
after reservoir storage)bull Liquid hydrocarbon storage in salt caverns
preceded gas by a decade
Innovative Energy Consulting Pty Ltd 6
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Gas Storage ErarsquosThe ldquoHorse amp Buggyrdquo Era
Outdated Gas HoldersManufactured Gas Application
The ldquoModel Trdquo (1916-50rsquos)Underground Gas Storage Facility
Utilising Depleted Reservoirs
Innovative Energy Consulting Pty Ltd 3
Gas Storage ErarsquosThe ldquoMustangrdquo
UGS utilising Pinnacle Reefs (1960rsquos in Michigan US UGS utilising high Quality Sandstones amp Horizontal
Wells (Alberta Canada mid 1980rsquos)
The ldquoFerrarirdquo Underground Gas Storage Facility
Utilising Salt Caverns (Germany amp US Gulf Coast)
Innovative Energy Consulting Pty Ltd 4
Myth 2Depleted Reservoirs are the Best
Tool for UGS
Innovative Energy Consulting Pty Ltd 5
Subsurface (Underground) Gas Storage
Pore Space Storage bull Naturally occurring reservoirsbull Porosity permeability closure drive
mechanism depth amp size are all important variables
bull Generally longer cycle less responsive storage facilities
bull 1 to 3 cycles per yearbull Max daily withdrawal rate is at best
2 of working gas inventorybull Traditional gas storagebull Originated in Ontario Canada in 2015
Man Made Cavernsbull Utilising either salt beds or salt domes (NaCl
rock salt or halite)bull Salt depth thickness purity amp areal extent
are all important variablesbull Short cycle very responsive storage facility
(many times per year)bull Max daily withdrawal rate is 10 of working
gas inventory bull State of the art gas storage bull Originated in Michigan US in 1961 (46 years
after reservoir storage)bull Liquid hydrocarbon storage in salt caverns
preceded gas by a decade
Innovative Energy Consulting Pty Ltd 6
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Gas Storage ErarsquosThe ldquoMustangrdquo
UGS utilising Pinnacle Reefs (1960rsquos in Michigan US UGS utilising high Quality Sandstones amp Horizontal
Wells (Alberta Canada mid 1980rsquos)
The ldquoFerrarirdquo Underground Gas Storage Facility
Utilising Salt Caverns (Germany amp US Gulf Coast)
Innovative Energy Consulting Pty Ltd 4
Myth 2Depleted Reservoirs are the Best
Tool for UGS
Innovative Energy Consulting Pty Ltd 5
Subsurface (Underground) Gas Storage
Pore Space Storage bull Naturally occurring reservoirsbull Porosity permeability closure drive
mechanism depth amp size are all important variables
bull Generally longer cycle less responsive storage facilities
bull 1 to 3 cycles per yearbull Max daily withdrawal rate is at best
2 of working gas inventorybull Traditional gas storagebull Originated in Ontario Canada in 2015
Man Made Cavernsbull Utilising either salt beds or salt domes (NaCl
rock salt or halite)bull Salt depth thickness purity amp areal extent
are all important variablesbull Short cycle very responsive storage facility
(many times per year)bull Max daily withdrawal rate is 10 of working
gas inventory bull State of the art gas storage bull Originated in Michigan US in 1961 (46 years
after reservoir storage)bull Liquid hydrocarbon storage in salt caverns
preceded gas by a decade
Innovative Energy Consulting Pty Ltd 6
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 2Depleted Reservoirs are the Best
Tool for UGS
Innovative Energy Consulting Pty Ltd 5
Subsurface (Underground) Gas Storage
Pore Space Storage bull Naturally occurring reservoirsbull Porosity permeability closure drive
mechanism depth amp size are all important variables
bull Generally longer cycle less responsive storage facilities
bull 1 to 3 cycles per yearbull Max daily withdrawal rate is at best
2 of working gas inventorybull Traditional gas storagebull Originated in Ontario Canada in 2015
Man Made Cavernsbull Utilising either salt beds or salt domes (NaCl
rock salt or halite)bull Salt depth thickness purity amp areal extent
are all important variablesbull Short cycle very responsive storage facility
(many times per year)bull Max daily withdrawal rate is 10 of working
gas inventory bull State of the art gas storage bull Originated in Michigan US in 1961 (46 years
after reservoir storage)bull Liquid hydrocarbon storage in salt caverns
preceded gas by a decade
Innovative Energy Consulting Pty Ltd 6
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Subsurface (Underground) Gas Storage
Pore Space Storage bull Naturally occurring reservoirsbull Porosity permeability closure drive
mechanism depth amp size are all important variables
bull Generally longer cycle less responsive storage facilities
bull 1 to 3 cycles per yearbull Max daily withdrawal rate is at best
2 of working gas inventorybull Traditional gas storagebull Originated in Ontario Canada in 2015
Man Made Cavernsbull Utilising either salt beds or salt domes (NaCl
rock salt or halite)bull Salt depth thickness purity amp areal extent
are all important variablesbull Short cycle very responsive storage facility
(many times per year)bull Max daily withdrawal rate is 10 of working
gas inventory bull State of the art gas storage bull Originated in Michigan US in 1961 (46 years
after reservoir storage)bull Liquid hydrocarbon storage in salt caverns
preceded gas by a decade
Innovative Energy Consulting Pty Ltd 6
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Salt Cavern Storagebull Over 2000 salt caverns used for hydrocarbon storage in
North Americabull Europe has over 1000 salt cavernsbull Excellent low-cost high performance storage containers for
natural gas amp liquid hydrocarbonsbull Impermeable material high pressure vessel amp unimpeded
flow of gas to and from the IW wellsbull Salt domes work best bedded salt is inferior host
Innovative Energy Consulting Pty Ltd 7
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 3Gas Storage is Only Used for Meeting
Seasonal Gas Demand in Cold Climates
Innovative Energy Consulting Pty Ltd 8
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Application EvolutionOriginal Application (1950rsquos amp 60rsquos)
Gas Market RegionGas Supply Region (post 1980rsquos)
bull Driven by introduction of intense gas to gas competition
bull Efficiency improvementbull Minimise capital bull Maximise utilisation rates amp profit
marginsbull Western Canada Gulf of Mexico
region amp Russiabull Crown owners support this as
royalties increase Eastern Canada Northern US Europe amp Russia
Innovative Energy Consulting Pty Ltd 9
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Primary Margin Optimisation Opportunities
Upstream
bull Just in time well deliverability replacement bull Minimise gas production capacity levelbull Just in time reserve additions to offset gas sales (RP ratio)bull Maximise annual utilisation rate of gas production facilities
Midstream
bull Much more lsquoline packrsquo available to quickly resolve imbalances bull Access quick cycle gas storage capacitybull Increases market liquidity
Downstream
bull Maximise annual utilisation rate of LNG trainsbull Lower cost of gas to domestic end usersbull Reshape gas supply curve to meet fluctuating gas demand
Innovative Energy Consulting Pty Ltd 10
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 4Any Depleted Reservoir Will Do
Innovative Energy Consulting Pty Ltd 11
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Depleted Reservoirs UGS Candidates
bull Vigorous screening process ndash lots of criteriaparametersbull Cannot force a reservoir to cycle gas at high ratesbull Most depleted reservoirs are not commercially amp technically viablebull Orders of magnitude more complicated than simply producing gas
from the original discoverybull Many smaller reservoirs preferable to one large one
Innovative Energy Consulting Pty Ltd 12
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 5Water Drive works Best
Innovative Energy Consulting Pty Ltd 13
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 6Large Reservoirs work Best
Innovative Energy Consulting Pty Ltd 14
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 7We need to Explore for Storage
Reservoirs
Innovative Energy Consulting Pty Ltd 15
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
How to Find Storage Locations
bull Salt (halite) deposits show up on seismic amp are confirmed by wellsbull Thickness amp depth are key factorsbull High performance reservoir traps are found by screening depleted amp
producing reservoirsbull Production history is vitalbull The SA Gas Storage Exploration Licence procedure may fit CO2
Sequestration development projects but does not fit hydrocarbon storage development projects
Innovative Energy Consulting Pty Ltd 16
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 8There are Bona Fide Gas Storage
DevelopersOperators in Australia
Innovative Energy Consulting Pty Ltd 17
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Gas Storage Evolution in Australia
Gas Cycling amp Upstream
Optimisation
bull Bass Strait Timor Sea Moomba amp Ballera (1960rsquos +)bull Liquids rich gas andor load leveling gas plantsbull JV operation to enhance profitability bull Gas Producer driven
Depleted Reservoir
bull Iona amp Mondarra facilities (1990rsquos +) in Victoria amp WA respectivelybull US companies TXU amp CMS built these facilities (not gas producers)bull Both facilities have recently been expandedbull Silver Springs (AGL) amp RUGS (GLNG JV) developed in Surat Basin Qld over past 5 years
Salt Cavern
bull Yet to be utilised in Australiabull World class salt deposits in SE QLD NT amp WAbull High performance in terms of both gas cycling and containmentbull Lowest cost deliverability available to gas industry (gas plant outages price arbitrage etc)
18Innovative Energy Consulting Pty Ltd
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Benchmarking ndash Mondarra UGS Facility in WA
bull Reservoir produced 26 PJrsquos from 1972-94
bull Converted to UGS in 1994 by US based company
bull Acquired by APA in 2004bull 18 PJrsquos of stated working gas
capacitybull Max injection = 70 TJdbull Max withdrawal = 150 TJd
Innovative Energy Consulting Pty Ltd 19
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
UGS Facility in Alberta developed by Encana bull 1st reservoir converted to UGS in
1988bull Followed by many expansions over
the next 15 yearsbull 7 depleted gas reservoirsbull 70600 HP provided by 22
compressorsbull 68 vertical IW wellsbull 50 horizontal IW wellsbull Commercial open access facility
Innovative Energy Consulting Pty Ltd 20
AECO Gas Storage Facility Current Rating Comments
Working Gas Capacity
1350 PJ8X Mondarra
Nearly 150 of the cumulative gas prod from the 7 reservoirs
involved
Peak Withdrawal Rate
3500 TJd23X Mondarra
(gt40 X max Prod Rate during gas
production stage)
Peak Injection Rate2400 TJd
48X Mondarra
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
The Gap is Huge amp GrowingNorth America
bull UGS utilising depleted reservoirs pioneered in Canada (1915) followed by the US in 1916
bull gt1000 reservoirs used (up to 23 per storage facility)
bull UGS utilising salt caverns pioneered in in Canada (1963)
bull gt 500 salt caverns used for UGS (twice that for hydrocarbon storage)
bull gt12000 IW wells in US alone amp up to 170 IW wells per UGS facility
Australiabull Producer storage commenced in
1960rsquosbull UGS commenced in the 1990rsquos using
depleted reservoirsbull Very small capacity relative to gas
production rates when benchmarked to Russia Canada or the US
bull Old technology amp relatively poor facility performance
bull lt50 IW wells in lt20 reservoirs
Innovative Energy Consulting Pty Ltd 21
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 9UGS Development Just Happens
Innovative Energy Consulting Pty Ltd 22
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
In Realitybull Upstream petroleum companies own less than 5 of the worldrsquos gas
storage facilities (non-core business)bull Australiarsquos installed UGS capacity is extremely small compared to
other gas rich OECD countriesbull Both Iona amp Moomba exist because of past government interventionbull Access to gas pipelines is terrible in Australiabull No mechanism to obtain quality reservoirs (hoarding issue)bull Only rudimentary regulations for reservoir storage no regulations for
salt cavern storage
Innovative Energy Consulting Pty Ltd 23
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
UGS Development
Technical Viabilitybull Reservoirs ndash Recovery Factor
Drive mechanism porosity permeability reservoir shape cap rock integrity hydraulic integrity size clusters
bull Salt ndash thickness depth purity areal extent bedded or domal availability of water supply for leaching
Commercial Viabilitybull Distance to major gas
pipelinestrading hubsbull Pipeline tariff ratesbull Access to uncongested capacitybull Proximity to gas hubbull Price signalsbull Diversity of customersbull Capex amp OC of facility
Innovative Energy Consulting Pty Ltd 24
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
How to Attract Investment to UGS Sector
Gas Market Structurebull Summerwinter price spreadbull Liquid transparent gas market
with price volatility amp meaningful trading volume
bull Many market participants with access to transportation services
bull Ideally a gas futures market
Transmission bull Pipeline tariffs that are absent
market power amp non-discriminatory
bull Distance based forward haul tariffsbull Backhaul tariffs that are but a small
fraction of forward haul ratesbull Access to unused capacity on a low
price interruptible basis (uncongested pipelines)
Innovative Energy Consulting Pty Ltd 25
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
How to Attract Investment to UGS Sector
Government Policybull Promote the sector amp encourage
independent storage operators over vertically integrated companies
bull Clear amp comprehensive regulations for reservoir amp salt cavern storage dev amp operations
bull Access to high quality depleted reservoirs amp salt deposits (currently hoarding is acceptable)
bull Possibly a market power test to determine if economic regulation is required
Social Licence bull Public education ndash national
interestbull Adopt amp ensure best in class
health amp safety standards bull Proper reporting of UGS
operationsbull Adopt amp ensure best in class
technical standards for UGS development amp operations
Innovative Energy Consulting Pty Ltd 26
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Myth 10Australia has sufficient UGS capacity
Innovative Energy Consulting Pty Ltd 27
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Canadarsquos Open Access UGS Capacity (2014) Bcf WGV470 Bcf in W Canada240 Bcf in E Canada820 Bcf Total
Bcf
2016 Canadian Average Gas Production 152 Bcfd2017 Eastern Australia Average Gas Production 56 Bcfd (37 of Canada)
Current Level of open access UGS Capacity in E Australia (5 of Canadarsquos WGV capacity amp only 2 of its max storage deliverability)
Innovative Energy Consulting Pty Ltd 28
USA has 49X Cdn Storage Capacity Europe has 64X Russia has 30X amp Australia has 008X
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
29
Alberta Canadarsquos Explosive UGS Growth
01234567
1988 1994 2005 2008 2010
Deliverability (Bcfd)
Alberta gas production peaked in 2002 at 14 Bcfd but gas storage capacity continued to grow driven by larger share of unconventional production and less prolific conventional wells Gas storage max deliverability now exceeds 50 of the peak day production capacity of 140000 producing gas wells Throughout the period from 1988 to 2010 Alberta gas supplied essentially flat gas demand ndash the Alberta industrial market amp base load pipeline exports to US amp E Canada
050
100150200250300350400
1988 1994 2005 2008 2010
Working Gas (Bcf)
E Australia UGS capacity level (2017)
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Innovative Energy Consulting Pty Ltd 30
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-
Innovative Energy Consulting Pty Ltd
Innovative Energy Consulting Pty Ltd ABN 81 122 373 719Australian Gas Storage Ventures ACN 610 582 253gleninnovativeenergycomau wwwinnovativeenergycomau
Mobile 0400772512 Tel +61 (7) 5435-8288 PO Box 1008 Maleny Qld Australia 4552
Glen W GillGlen has 35+ years of gas industry experience across the value chain from primarily North Americaand Australia Glen commenced his career as a petroleum engineer and then moved into thecommercial side of the gas business marketing trading business development and MampA Hethen moved into middle and senior management positions and his experience includes executivepositions with a number of world leaders in the gas industry and many years providing consultingservices to major end users of gas gas producers industry associations Government andmidstream infrastructure ownersoperators His underground gas storage experience spans 30years and he initiated amp led the pioneering of the first non-regulated gas storage facility in Canadawhich grew to become the largest natural gas storage facility and largest gas trading hub inCanada Glen has been involved in the development of both the Iona and the RUGS storagefacilities in Australia and he has been promoting the Boree Salt gas storage development projectin SE Qld for the past nine years Glen is also a co-founder of Australian Gas Storage Ventureswhich was established in early 2016 to provide a variety of storage services to Australiarsquos growinggas storage sector
- SA Roundtable for Oil amp GasUnderground Gas Storage 101
- Myth 1Gas Storage is a Relatively New Concept
- Gas Storage Erarsquos
- Gas Storage Erarsquos
- Myth 2Depleted Reservoirs are the Best Tool for UGS
- Subsurface (Underground) Gas Storage
- Salt Cavern Storage
- Myth 3Gas Storage is Only Used for Meeting Seasonal Gas Demand in Cold Climates
- Application Evolution
- Primary Margin Optimisation Opportunities
- Myth 4Any Depleted Reservoir Will Do
- Depleted Reservoirs UGS Candidates
- Myth 5Water Drive works Best
- Myth 6Large Reservoirs work Best
- Myth 7We need to Explore for Storage Reservoirs
- How to Find Storage Locations
- Myth 8There are Bona Fide Gas Storage DevelopersOperators in Australia
- Gas Storage Evolution in Australia
- Benchmarking ndash Mondarra UGS Facility in WA
- UGS Facility in Alberta developed by Encana
- The Gap is Huge amp Growing
- Myth 9UGS Development Just Happens
- In Reality
- UGS Development
- How to Attract Investment to UGS Sector
- How to Attract Investment to UGS Sector
- Myth 10Australia has sufficient UGS capacity
- Canadarsquos Open Access UGS Capacity (2014) Bcf WGV
- Alberta Canadarsquos Explosive UGS Growth
- Slide Number 30
- Slide Number 31
-