Underground Gas Storage in CSG Supply ChainCSG Supply ChainAlex Goiye | Senior Reservoir Engineer | AGL Upstream GasQUPEX Event - Brisbane | 22 May 2012 | AGL External

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Technical aspects of underground gas storage (UGS)(UGS)

» Presentation Title

» February 2008

» AGL Internal

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UGS around the world

Various types:

80 d l d il/› 480+ depleted oil/gas fields

› 88 aquifersq

› 66 salt caverns

› 3 others.

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Criteria for UGS – depleted oil/gas field

Good reservoir quality is the key to developing UGS:

p /g

Reservoir Properties ValuesPorosity >12%

b lPermeability >100mDNet to gross >60%Reservoir thickness >5mReservoir thickness >5mResidual Water Saturation (Swr) <40%Residual Gas Saturation (Sgr) <30%Original Gas Water Contact (OGWC) Well defined OGWCInitial reservoir pressure Known

l kSeal Competent cap rockReservoir drive mechanism Vary (water drive to depletion)

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Facilities for a typical depleted field

› Pipelines/flowlines

› Compressors

yp p

› Compressors

› Gas metering (volume & quality)

› Ordourant dosing unitsg

› Gas hydration units

› Condensate handling^Compression facility Silver Springs UGS

› MEG regenerations unit

› Produced water handling

› Injection/withdrawal wells

^Compression facility Silver Springs UGS

› Injection/withdrawal wells

› Monitoring wells

› Produced water disposal

› Separators.

^Compression facility Silver Springs UGS

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UGS setup for depleted oil/gas fieldp p /g

Injection Withdrawal

Observation Well

WellInjection Withdrawal

Well

Observation Well Gathering

SystemCompression &

Dehydration

Main Sales Line

Upper Aquifer

Gas

Water

Water Impermeable Rock

Porous Rock

Gas Reservoir

Water

Water

Impermeable Cap Rock

Porous Rock

Impermeable Rock

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UGS setup for depleted oil/gas field (cont)

Definition of gas volumes in UGS reservoir.

p p /g ( )

reservoir.› Attic Gas:

» Structurally high gas

» Inaccessible gas after gas water contact » Inaccessible gas after gas-water contact reaches highest perforations.

› Working Gas Capacity:

» Reservoir volume available to market.

Attic GasAttic GasAttic Gas

» Reservoir volume available to market.

› Base Gas (Cushion Gas):

» Permanent gas inventory reservoir

» Maintain adequate reservoir pressure

Working Gas capacity

Base gas

OGWCSpill Point Safety Margin (SPSM)

Working Gas capacity

Base gas

OGWCSpill Point Safety Margin (SPSM)

Working Gas capacity

Base gas

Working Gas capacity

Base gas

OGWCSpill Point Safety Margin (SPSM)» Maintain adequate reservoir pressure

» Support deliverability requirements

» Minimise water encroachment .

› Spill Point Safety Margin (SPSM):

ˆ Source: Goiye, Alex; ‘Gas Storage Presentation – OtwayBasin, Victoria, Truenergy, SPE/PESA, April 2009.

› Spill Point Safety Margin (SPSM):

» Volume filled by water above OGWC

» Prevent gas spills below the OGWC.

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» 22 May 2012

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Importance of gas storage in CSG to LNG supply chainchain

» Presentation Title

» February 2008

» AGL Internal

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The CSG to LNG chain

Where is gas storage needed in the CSG to LNG supply chain?

Coal seam wells

Field gas processing

plant

LNG plant

LNG export

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The CSG to LNG chain

Why is gas storage needed in this CSG to LNG supply chain?

Coal seam wells

Field gas processing

plant

LNG plant

LNG export

plant

Underground Gas Storage

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» 22 May 2012

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Gas storage in the CSG to LNG chain

Manages production assurance risks associated with CSG reservoirs:

S d i

g

› Stores gas during:

» Dewatering stages and early start-ups

M i t th h t d f LNG l t» Maintenance or other emergency shut downs of LNG plant

» Maintenance or shut-down of facilities along pipeline route.

› Supplies gas during:› Supplies gas during:

» Ramp-up period for LNG plant before full field production to LNG

» Plant shut-downs or emergencies causing field production shortfalls

d d i i d i f ll d i h» Unexpected reduction in production from wells during the CSG field’s mid-lifecycle.

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CSG reservoir production issues

› CSG reservoir more complex than conventional

il d i h i i d d

p

› Detailed reservoir characterisation needed

› Gas contents and isotherm data used for resources/reserves estimates

› CSG companies have booked reserves but dynamic data is lacking (Poro-perm-stress, rock mechanics, fluid/rock, SCAL)

» Full field reservoir simulation models need field specific dynamic data

› Production pilots modelled and history-matched with › Production pilots modelled and history-matched with unmeasured/unguided variables may give rise to large uncertainty ranges in production forecasts

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CSG reservoir production issues (cont)

› Well interventions may reduce/increase production for

p ( )

reduce/increase production for extended periods.

› Well production management t tstrategy.

› Water production/handling issues.

Therefore gas storage is essential in smoothing out the deliverability

^Not forgetting Natural disasters in the region.

Therefore gas storage is essential in smoothing out the deliverability requirements of the CSG-LNG supply chain.

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CSG to LNG in QLD

» Presentation Title

» February 2008

» AGL Internal

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CSG-LNG projects in QLDp j Q

› QCLNG (BG Group/CNOOC/Tokyo Gas) – 8.5 Group/CNOOC/Tokyo Gas) 8.5 Mtpa (FID)

› GLNG (Santos/Petronas/Total/ Kogas) – 8 0 Mtpa (FID)Kogas) 8.0 Mtpa (FID)

› APLNG (Origin/ConocoPhilips/Sinopec) –9 Mtpa (FID/Planned)9 Mtpa (FID/Planned)

› Arrow LNG (Shell/PetroChina)

› 4 other smaller merchant plants.› 4 other smaller merchant plants.

Will all proposed CSG-LNG projects above have some supply levelling mechanism such as gas storage?

Source: Blueprint for Queensland’s LNG Industry, Queensland Govt.

^CSG fields supplying gas to LNG Plants in Gladstone.

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» 22 May 2012

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QLD UGS facilities in the CSG to LNG chain

› Silver Springs/RenlimUGS:

Q

UGS:

» AGL for QCLNG (Curtis Island-C i l St Commercial Storage - Third Party Access)

› Roma UGS:

» Santos for GLNG

› Other UGS:

» For private use and no third party no third party access

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17Silver Springs/Renlim Gas Storage Reservoir

› 90 BCF › 90 BCF removed from SSR

› Started production in 1977

› Depleted 20102010

› Gas storage Sept 2011p

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Value of gas storage in changing market

» Presentation Title

» February 2008

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Value of UGS

UGS service providers can capture additional value opportunities apart from CSG to LNG, depending on their UGS physical limitations and contractual , p g p yagreements:

› Stores gas during low demand period by injecting into UGS

› Supplies gas to the market to meet peak demands

› Mitigates short-term supply risks

› Allows arbitrage between high and low demand thus levelling production capacity to customers

› Customers use gas storage to manage MHQ or MDQ› Customers use gas storage to manage MHQ or MDQ

› Backup energy security

› When CSG dominates supply of gas to East Australian markets UGS › When CSG dominates supply of gas to East Australian markets – UGS will play a critical role.

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Existing commercial UGS Eastern Australia

› Iona UGS – in operation since 2001

g

2001

› Silver Springs UGS –Construction started in A t 2010 d l t d

Roma UGS

August 2010 and completed in August 2011. Commence operation in September 2011

Silver Springs UGS

2011.

› Roma UGS

› Other proposed UGS sites –Iona UGS

› Other proposed UGS sites –yet to be developed.

Source: AEMO.

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Conclusion

UGS:

ll bli h d l k d i k› Is a well established tool to manage peak domestic gas market demands

› Will be critical to the CSG to LNG chain (e.g. for ramp gas)( g p g )

› Mitigates production fluctuations from CSG production

› Will provide additional long term value as eastern Australian gas p g gmarket mature

› UGS will play important role, when CSG dominates Australian energy marketenergy market.

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» 22 May 2012

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References

List of references:

li k O ‘20 0 S f› Australia Energy Market Operator; ‘2010 Statement of Opportunity Report’, Page15, http://www.aemo.com.au/planning/1410-0001.pdf

› Evans D.J, Chadwick R.A, ‘Underground Gas Storage’, Geological Society London, 2009. Fig4, Page 177.

› Goiye Alex; ’Gas Storage Presentation Otway Bason Victoria › Goiye, Alex; Gas Storage Presentation – Otway Bason, Victoria, Truenergy, SPE/PESA, April 2009, Page17. Website: http://vistas.spe.org/article.cfm?id=97

› Queensland Government, ‘Blue Print for Queensland LNG Industry’, accessed 23/03/2011, site: http://www.industry.qld.gov.au/documents/LNG/Blueprint_for_Q

l d G d dfueenslands_LNG_Industry.pdf

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