Underground Gas Storage Market to Grow by USD 10.2 Billion from 2024-2028, Driven by Rising Energy Demand and AI's Impact on Market Trends - Technavio

NEW YORK, Nov. 6, 2024 /PRNewswire/ -- Report on how AI is redefining market landscape - The global underground gas storage market size is estimated to grow by USD 10.2 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 5.34%  during the forecast period. Growing energy demand is driving market growth, with a trend towards advancements in drilling techniques, seismic imaging, and reservoir management technologies. However, challenges associated with the construction of underground storage facilities for gas  poses a challenge.Key market players include AtkinsRealis Group Inc, Cardinal Gas Storage, Centrica Plc, China National Petroleum Corp., Chiyoda Corp., Costain Group Plc, EARTHWORKS, Enbridge Inc., ENGIE SA, HOT Engineering GmbH, Japan Petroleum Exploration Co. Ltd., KAPPA Engineering, Koninklijke Vopak NV, Mitsubishi Heavy Industries Ltd., NAFTA as, Samsung Electronics Co. Ltd., SGS SA, TC Energy, Tetra Tech Inc., and Uniper SE.

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Market Driver

The Underground Gas Storage (UGS) market is experiencing significant growth due to advancements in drilling techniques, seismic imaging, and reservoir management technologies. These improvements increase the effectiveness and adaptability of gas storage facilities. For instance, enhanced seismic imaging offers more accurate subsurface mapping for optimal well placement, while horizontal drilling improves reservoir access and maximizes capacity. Real-time monitoring and predictive analytics for reservoir management ensure optimal performance and safe, economical operations. These advancements make UGS a crucial component of energy storage and security strategies worldwide, enabling operators to respond quickly to market fluctuations, manage injection and withdrawal rates, and maintain a consistent gas supply to meet demand. Consequently, these technological developments will fuel the expansion of the global UGS market throughout the forecast period. 

The Underground Gas Storage (UGS) market is a significant segment of the natural gas industry, with over a billion cubic meters of capacity in various storage facilities worldwide. UGS utilizes depleted gas reservoirs, such as salt caverns and aquifer reservoirs, for storing natural gas. Industrialization and increasing natural gas consumption have led to the expansion of this market. Hydrogen storage is also gaining attention, with UGS facilities being repurposed for hydrogen. Price volatility and seasonal demand, particularly during winter, drive the need for UGS as an energy source and resource backup. Carbon dioxide and other industrial gases can also be stored in suitable geologic formations. Government regulation plays a crucial role in the UGS industry, with a focus on eco-friendliness and safety. UGS facilities are used for inventory management, energy security, and continuous supply, with applications ranging from natural gas liquids and crude oil to hydrogen-powered vehicles and pipeline networks. Pressure storage in impermeable rock caps ensures efficient and secure storage. 

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 Market Challenges

• Underground gas storage construction presents unique challenges due to geological issues that are beyond human control. These issues include increased circulating pressure, tubing blockages, high completion risks, and salt cavern deformation. These problems can arise in various types of underground gas storage, such as deep salt formations and caverns. Another challenge is the selection of optimal storage sites, which should ideally be near consumption centers for seasonal demand and peak shaving in power generation. However, this is not always feasible, as in China where most consumers are in the Eastern regions, while natural gas reservoirs are located in central and Western areas. The high cost of transporting gas from distant storage points to consumption centers negatively impacts the global underground gas storage market during the forecast period.
• The Underground Gas Storage (UGS) market faces several challenges. Government regulation is a significant hurdle, with stringent safety and environmental standards. UGS relies on various geological formations like aquifers, natural water reservoirs, and salt deposits for storage. Proven reserves are essential for business viability, with domestic demand and seasonal fluctuations, particularly during winter, impacting inventory management. UGS plays a crucial role as an energy source and backup for pipeline networks, oil and gas industries, and energy distribution. Eco-friendliness is a growing concern, with hydrogen-powered vehicles and natural gas liquids offering potential solutions. Technology transfer and pressure storage are key to expanding capacity. Salt dome formations and porous rocks provide ample storage capacity. Safety measures, such as an impermeable rock cap and injection and withdrawal techniques, are essential. UGS is a cleaner energy source, contributing to energy security and stable supply, especially during fossil fuel reserve depletion and energy fuel shortages.

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Segment Overview 

This underground gas storage market report extensively covers market segmentation by  

1. Type 
• 1.1 Depleted fields
• 1.2 Aquifer reservoir
• 1.3 Salt caverns
2. Product 
• 2.1 Natural gas
• 2.2 Hydrogen
• 2.3 Others
3. Geography 
• 3.1 Europe
• 3.2 North America
• 3.3 APAC
• 3.4 Middle East and Africa
• 3.5 South America

1.1 Depleted fields-  Depleted oil and gas reserves offer an ideal solution for underground gas storage. After the extraction of oil and gas, these fields can be repurposed to store natural gas. Geographic and geological factors play a crucial role in determining the suitability of a depleted field for gas storage. Proximity to consumption regions facilitates transportation and distribution, while porosity and permeability determine the reservoir's capacity and flow rate. Using depleted fields for gas storage presents several advantages. It minimizes environmental damage by reusing existing drilling sites. Access to multiple points and geological knowledge of the formations simplifies storage. The low exploration and drilling costs, along with the reuse of installed equipment, reduce operational expenses. Infrequent inspections further add to the cost savings. Given these benefits, the adoption of depleted fields for underground gas storage is anticipated to expand, thereby fueling market growth throughout the forecast period.

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Research Analysis

Underground gas storage (UGS) is a vital component of the natural gas infrastructure, providing a stable supply during peak demand periods and ensuring energy security. UGS facilities store excess natural gas in depleted gas reservoirs, salt caverns, and aquifer reservoirs. With the increasing industrialization and the transition towards cleaner energy sources, the UGS market is witnessing significant growth. The storage capacity is measured in Billion Cubic Meters (BCM), with active facilities holding over 300 BCM worldwide. UGS plays a crucial role in winter season demand management and acts as an energy resource backup during price volatility. The technology transfer from oil and gas industry is driving innovation in UGS, with the potential to store hydrogen and carbon dioxide in geologic formations. The UGS industry is essential for inventory management, groundwater utilization, and natural gas distribution, making it a vital contributor to the energy sector. The storage of natural gas in depleted oil and gas fields and natural gas fields ensures a stable supply, addressing energy security concerns.

Market Research Overview

Underground gas storage refers to the process of storing natural gas in geologic formations, such as depleted gas reservoirs, salt caverns, and aquifer reservoirs. This energy source provides continuous supply during periods of high demand, like winter seasons, and acts as a backup for fossil fuel reserves. The industry has seen significant growth due to industrialization, hydrogen storage, and the increasing demand for cleaner energy sources. Storage facilities come in various forms, including pressure storage in porous rocks and injection and withdrawal in salt dome formations. Capacities range from Billion Cubic Meters, with active facilities found in natural gas fields and depleted oil fields. Natural gas consumption, price volatility, and energy security concerns have driven the growth of the underground gas storage market. The use of hydrogen as a storage medium and hydrogen-powered vehicles is a growing trend. Carbon dioxide storage in underground formations is also a potential application. Government regulation plays a crucial role in the industry, with regulations governing the use of aquifers as natural water reservoirs and the utilization of groundwater. Technology transfer and pipeline networks are essential for the efficient operation of gas storage facilities. The storage industry's eco-friendliness and role as a stable energy supply make it an attractive energy resource backup for oil and gas distribution. The market's future looks promising, with ongoing research and development in hydrogen storage, carbon capture, and other technologies.

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Type
• Depleted Fields
• Aquifer Reservoir
• Salt Caverns
• Product
• Natural Gas
• Hydrogen
• Others
• Geography
• Europe
• North America
• APAC
• Middle East And Africa
• South America

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

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