Natural gas storage is starting to appear more frequently in investment plans in Brazil's new gas market as a possible solution to lower reinjection, providing flexibility for thermal power generation and balancing services for pipelines or to meet take-or-pay requirements.
But unclear costs and pending regulation may hinder storage expansion. And Brazil's large variety of energy sources and interconnected power grid allows for broader, less expensive and more flexible service options, which gas may have trouble competing against.
The April 2021 gas law allows storage operations under a permit instead of the old concession model, which requires entrepreneurs to allow third-party access. But oil and gas regulator ANP has not yet released new rules on defining costs and fees to use such facilities.
"Gas storage is about providing flexibility for energy supply, and this is the cost that needs to be addressed for investments to start to happen," said Adrianno Lorenzon, gas director at the large energy consumers association Abrace. "And it is starting, since some companies are adding gas storage to their business plans."
But in Brazil, gas storage can help producers reduce reinjection rates, or how much gas is put back into an oil well to avoid flaring or to repressure it for ongoing production. About 90pc of Brazilian natural gas production is associated with crude output, and almost half of it is reinjected because of limitations with demand, processing infrastructure and pipeline location and capacity. In February 66mn m³/d of Brazilian natural gas was reinjected.
Some in the industry suggest that ANP could limit reinjection to just technical reasons, such as to avoid flaring. But Marcio Felix, chief executive at energy firm EnP and former deputy minister of mines and energy, said ending reinjection by decree does not make sense.
"The intent should be to offer a better solution than reinjection for gas producers," Felix said. "But the definition of a ‘better solution' will vary among industry participants."
Brazil's first foray into gas storage facilities came in 2015, when ANP approved Stogas' project in the Santana field in Bahia state, a mature area that started oil production in 1962. But the still-Petrobras-dominated market back then did not embrace it.
Now in the newly liberalized gas market, companies like producer Origem Energia and gas trader GasBridge are trying to revive storage plans.
Felix's EnP is gathering investments for an integrated project that includes gas storage. Called HubSolarES, the project ties together offshore gas pipelines; CO2 capture, transportation and storage; hydrogen production; sustainable aviation fuel (SAF), ethanol and biodiesel production; thermal power generation from biogas and biomass and carbon certificates.
EnP has in its portfolio 2bn m³ of gas storage in depleted onshore fields that are near transportation pipelines in Espírito Santo state's northern areas, close to southern states where most gas demand is concentrated.
Storage in Brazil is also considered an opportunity to provide quick dispatch for thermal power generation, something the country needs to focus on as it expands its power matrix with intermittent renewable sources, such as wind and solar.
Abrace asked the public Brazilian energy research bureau (EPE) to incorporate gas storage in its computational planning models as a quick and flexible source of dispatchable power generation fuel. But the current 10-year energy plan does not account for stored gas.
"Gas storage is the real capacityprovider for the system," Lorenzon said. "Currently, EPE only thinks of LNG when they study thermal power to provide capacity for the system, but in this sense the thermal [generators] connected to gas storage facilities makes much more sense."
