STRATEGIC STORAGE OF OIL & GAS

Presented by
P K Sahoo(34) Deepak Joseph(17)

| 26 Aug 2012|

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Import Dependency of India

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Content
Introduction Why? Strategic Stocks Vs. Commercial Stocks Strategic Storage for Gas
Storage Type Global Scenario Domestic Scenario

Strategic Storage for Oil

Storage Type Global Scenario Domestic Scenario

Benefits of Strategic Storage Conclusion

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Introduction
Strategic Storage

a storage of a commodity or items

held back from normal use by governments, organizations or business

in pursuance of a particular strategy or to cope with Energy Crisis.

Which Commodity ???

Crude Oil & Natural Gas

Ref:(http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves)

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Energy Crisis
Examples of energy crises and their causes Oil crises
- 1973, Arab-Israeli war, oil embargo - 1980/81, Iranian revolution & Iran/Iraq war - 2005, Hurricane Katrina - Strike by oil delivery drivers (UK)

Gas crises
- 2005/2006 Ukraine - 2006/2007 Belarus - 2008/2009 Ukraine some EU countries without gas (supply interruption)

Ref: Union of European Petroleum Independents outlook 2010

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Why ?
To take active precautions against crisis situations we need a crisis management system for oil and gas storage. Need of economic and national security during an energy crisis

Strategic Stocks Vs. Commercial Stocks

Strategic Stock Commercial Stock

Meant to deal with extraordinary situations, like war

Meant for commercial use in plants, Transportation held by private companies or final consumers
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Strategic Storage for Gas

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Storage Type
Depleted Gas Reservoirs / Exhausted Gas Reservoirs Aquifers

Salt Caverns
Others

LNG Pipeline capacity Gasholders

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Depleted Gas Reservoirs

Aquifers

Salt Caverns

Reuse of previous natural gas field with suitable modification High permeability and porosity Geological and physical properties are already known Less initial investment

Underground natural water reservoirs They are porous, permeable rock formations No initial knowledge of geological characteristics High initial investment

Formed by casting of underground salt domes by a process called solution mining Involves drilling a well into a salt formation, then injecting massive amounts of fresh water and dissolved salts are removed as brine and disposed

Ref: http://www.naturalgas.org/naturalgas/storage.asp
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Global Scenario

Notes: Data from 2005 to Italy and from 2004 for the other countries Ref: http://www.igu.org/html/wgc2009/papers/docs/wgcFinal00707.pdf
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Domestic Scenario
ONGC & GAIL India are conducting feasibility study of creating storage facilities for natural gas in Gujarat, Krishna Godavari Basin and Cauvery Basin. Consultant: French consultants Gaz de France (GDF)

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Strategic Storage for Crude Oil

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Facilities Available in India

Sl. No. 1. SITES Visakapatnam, Andra Pradesh TYPE OF STORAGE underground rock caverns MAINLY CATERING TO IOCL refineries (HALDIA & BARAUNI), HPCLVIZAG, CPCL and BRPl BPCL, HPCL (Mumbai), MRPL CAPACITY 7.48 million barrels (1,189,000 m3). 11.22 million barrels (1,784,000 m3).

2.

Mangalore, Karnataka

underground rock caverns

3.

Padur, Karnataka

underground rock caverns

IQCL Refineries at KOYALI, MATHURA & PANIPAT and Ril, ESSAR AND eORl

18.7 million barrels (2,970,000 m3).

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Benefits of Strategic Storage

High security of Uninterrupted Supply Greater price stability in crisis situations

Optionality is achieved with storage

Strategic storage creates independence, thereby avoiding a tendency to political blackmail Strategic storage has a positive impact on neutrality of competition (equal treatment of all market players, liberalization, free market)

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Conclusion
In the interests of effectiveness and neutral impact on competition, a single emergency management system for supply disruptions is important in India.

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