The Global Underground Natural Gas Storage Market is projected to be 597.603 Bcm by 2030, registering a CAGR of 3.59% during the forecast period (2022–2030).
Natural gas storage facilities are primarily used to meet seasonal demand. The gas is stored during periods of low demand and withdrawn from storage during peak/high demand periods. Natural gas is stored underground in large storage reservoirs. The three types of underground natural gas storage facilities are depleted gas reservoirs, aquifer reservoirs, and salt caverns.
COVID-19 Impact on the Global Underground Natural Gas Storage Market:
The COVID-19 outbreak has had detrimental effects on the global economy as many industries have been affected by the current circumstances, and operations of various sectors have come to a standstill. In the oil & gas industry, companies are dealing with several challenges due to a decline in prices amid the COVID-19 outbreak. Due to the pandemic and containment measures taken by governments globally, travel has almost come to a halt, resulting in declining oil demand. The decline in prices began with the COVID-19 outbreak in China, one of the world's largest markets.
The prices associated with underground natural gas storage are expected to remain constant once the oil & gas industry stabilizes in the forthcoming months. However, if international trade does not resume, prices of raw materials will increase, leading to an increase in the final costs of natural gas storage construction. Furthermore, if countries raise taxes on manufactured goods to increase revenue, the prices of raw materials used for underground natural gas storage will increase.
Underground Natural Gas Storage Market Dynamics
The demand and production of natural gas are rising rapidly, mainly due to its growing applications in power generation and transport industries. Natural gas can be easily stored for an indefinite time. Natural gas is not always needed right away, and so it is stored in underground storage facilities. Moreover, the US Department of Energy (DoE) and industry partners have checked the feasibility of storing chilled natural gas in mined, hard-rock facilities. The concept of chilling gas before storage, if applied to planned or existing bedded salt storage caverns, could significantly increase the storage capacity in the existing volume of natural gas. However, due to the lack of demand in the last few months due to the ongoing pandemic, many countries are facing gas storage problems.
The global underground natural gas storage industry is facing a storage crunch, and storage tanks are filing fast at a rapid rate, despite the increasing lease cost for the storing space. Millions of barrels of underground natural gas have been stored while the oil and gas manufacturers are facing the uncertain struggle to find buyers among industrial users. Moreover, fuel storage rates also doubled in March and April in a few onshore hubs in countries in Europe and the US, as traders rushed to secure tanks in the hope of selling their products at a higher price once the outbreak eases and demand recovers. The limited storage space and increased rates are likely to affect the global market negatively. Thus, the high storage cost is expected to restrict the growth of the global underground natural gas storage market during the forecast period.
Exploration of Unconventional Reservoirs
Many conventional reservoirs around the globe are depleting rapidly. The exploration and production companies are looking forward to tapping unconventional resources located in difficult terrains, such as offshore and mountain areas. The extraction of fossil fuels in such regions is a complex procedure, and natural gas providers depend on reservoir analysis techniques to determine the feasibility of the exploration and production of well sites. Offshore underground gas fossil fuel production is expected to increase at a steady rate during the study period, primarily due to the increasing need for fossil fuels. Additionally, shale production techniques such as fracking are witnessing an increased demand from countries across the globe.
Underground Natural Gas Storage Market Supply Chain Analysis
Raw material supply is the first stage, where the natural gas operators obtain the natural gas through the upstream process. After that, the process of processing, storing, and transporting natural gas is done within the midstream process. The natural gas operators or companies procure gas and store them until they are sent to refineries and natural gas distribution companies for further process. Natural gas companies play an important role in the supply chain as they add maximum value to crude and raw gas. This stage involves various operations, including material handling, import or export facilities, and the distribution of refined energy products from the points of origin to end users.
The integration process for natural gas includes automated systems for dehydrating and processing produced gases, including waste gas handling, natural gas separation from oil, wastewater handling, measurement, storage, handling, and refining. Prime integrators are vital in the supply chain for natural gas storage. The end users of natural gas are primarily the utilities and power generation companies that utilize the stored natural gas for various purposes whenever required. The primary end users for natural gas include power generation companies, utilities, and the industrial sector.
Underground Natural Gas Storage Market Segmentation
Based on Type:
Depleted Gas Reservoir, Aquifer Reservoir and Salt Caverns are the segments based on the application of the Global Underground Natural Gas Storage Market. The Depleted Gas Reservoir segment is expected to have the highest CAGR and dominate the market share during the forecast period. Depleted fields are generally used for seasonal storage instead of peak shaving storage. Depleted reservoirs are among the oldest and most popular forms of natural gas storage. While the working natural gas storage capacity of depleted fields tends to be larger than that of other types of storage facilities, deliverability rates, and injection are typically low relative to size. To maintain pressure in depleted natural gas reservoirs, about 50% of the gas must be reserved as cushion gas. Gas storage is mainly used to meet the seasonal energy demand; it is stored during low demand and withdrawn from storage during peak/high demand periods.
Underground Natural Gas Storage Market Regional Analysis
The regions are classified as North America, Europe, Asia-Pacific, Rest of the World. North America is estimated to hold the highest revenue market share throughout the forecast period. North America covers the US, Canada, and Mexico. This region is anticipated to be the largest contributor of natural gas storage for underground storage facilities to the underground natural gas storage market. The key factor driving the regional market's growth is the demand for oil & gas storage is the urgent need for storage space for strategic petroleum reservoirs of the underground natural gas storage market in this region. Furthermore, favorable government regulations for low carbon content fuels compared to other fossil fuels are also expected to contribute to the rise in demand for natural gas. In addition, technological advancements and increasing awareness regarding natural gas being a clean fuel will increase the market demand.
Europe region covers the UK, Germany, France, Italy, and the Rest of Europe. The underground natural gas storage market in this region is expected to register a high growth rate as the dependence of European countries on natural gas is increasing and the requirement for natural gas storage infrastructure is rising to ensure the availability of power, irrespective of the season. As of 2018, Europe had 113 billion cubic meters of underground storage capacity, and therefore the total storage capacity accounts for nearly 21% of the annual gas consumption in Europe. In the coming years, gas storage is likely to be a backup service for electricity generation, boosting the regional market's growth. In Europe, there is a 43 bcm UGS plant in southern Russia and a 130 bcm rough field offshore in the UK.
Underground Natural Gas Storage Market Competitive Landscape
The global underground natural gas storage market consists of various global and regional service providers who are continuously evolving to enhance their market position. Economic growth, urbanization, and low-carbon development are the key factors that are contributing to the market growth. However, high storage costs are expected to limit the growth of the market during the forecast period. The underground natural gas storage companies compete based on technology, efficiency, and reliability of services to sustain in the market. It is vital for underground natural gas storage manufacturers to provide solutions according to the need of the industry and customers’ needs and advanced technology to maintain their market position and gain a competitive advantage. Vendors in the underground natural gas storage market are focusing on improving their technologies and upgrading solutions and expanding into the developing economies.
List of Key Companies covered in the report:
Underground Natural Gas Storage Market Report Overview:
The Global Underground Natural Gas Storage Market is segmented based on type and Region in this report. The report is focused on various analytical aspects such as market dynamics, Supply chain analysis, Porter’s five forces, competitive landscape, recent developments, and company profiles. The insights in this report, comprise, discuss views, and predict the emerging and fast-growing segments, regions, and countries with potential for development in the Global Underground Natural Gas Storage Market.
Objectives of the Study
|Market Size||2030: 597.603 Bcm|
|Historical Data||2019 & 2020|
|Forecast Units||Value (Bcm)|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, and Trends|
|Segments Covered||Type and Region|
|Geographies Covered||North America, Europe, Asia-Pacific, Rest of the World|
|Key Vendors||McDermott (US), NAFTA a. s. (Slovakia), TC Energy Corporation (Aberta), Royal Vopak (Netherlands), Chart Industries (Georgia), Uniper SE (Germany), ENBRIDGE Inc (Canada)|
|Key Market Opportunities||Exploration of Unconventional Reservoirs|
|Key Market Drivers||Increasing demand for natural gas storage systems|
The Global Underground Natural Gas Storage Market would register a growth of ~3.59% during the forecast period.
High Storage Cost is a key restraining factor for the Global Underground Natural Gas Storage Market
North America would enjoy the upper hand in the Global Underground Natural Gas Storage Market