Economic Considerations Concerning the Use of Salt Caverns for Natural Gas Storage by an Integrated Natural Gas Transmission and Distribution System

The system under discussion, that of the Saskatchewan Power Corporation, transmits and distributes natural gas to customers whose numbers are small inrelation to the transmission distances involved. The severe continental climate coupled with the long transmission distances make the expense of meeting the peak demands imposed on the system particularly onerous. Although the systemhas available depleted gas fields that are satisfactory for storage, both in adeveloped and in a potential state, none of these reservoirs are close enoughto the load centers to alleviate the demand on major transmission systems. Much of southern Saskatchewan is underlain by the Prairie Evaporite formation, which consists mainly of potassium and sodium chlorides. This formation occurs in thicknesses of up to 600 feet, and at depths ranging from 2,500 to 7,000 feet. The Corporation has undertaken to develop natural gas storage in caverns that have been washed from the Prairie Evaporite formation by a solution mining process. Two of these caverns are presently in operation, and a third is in theprocess of being washed out. The economic considerations for developing these caverns are quite different from the considerations governing the development of a conventional storage field. The differences in these considerations arise, first, from the fact that the size of the reservoir is controllable and, secondly, because this type of reservoir has a relatively limited total volume compared to its delivery capability. This paper will outline the techniques bywhich the Corporation has attempted to analyse the relationship between pipe-line capacity arid cavern storage volume in order to fulfill the system requirements at minimum cost. The Corporation's System The Saskatchewan Power Corporation's natural gas transmission system extends throughout the populated area of Saskatchewan. With service to all of Saskatchewan's cities and most towns, the total number of customers served at year-end 1964 was 105,251.