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GAIL to build reserves by storing gas in depleted wells

  • November 25, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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GAIL to build reserves by storing gas in depleted wells

Subject : Geography

Section : Economic geography

Context:

  • India is looking at building its first strategic natural gas reserves by using old, depleted hydrocarbon wells to store the fuel and hedge against global supply disruption.
  • The strategic facilities would be built in phases in India’s western and northeastern regions with an initial capacity to store three to four billion cubic meters (bcm) of gas.
  • India has five million tonnes of strategic petroleum reserves but no storage facilities for natural gas. Indian companies together currently hold two bcm of gas in pipelines and liquefied natural gas tanks for commercial use.
  • India aims to raise the share of natural gas in its energy mix to 15% by 2030 from about 6.2% The nation consumes around 60 bcm gas annually.

About Strategic oil reserves –

  • Strategic petroleum reserves are huge stockpiles of crude oil to deal with any crude oil-related crisis like the risk of supply disruption from natural disasters, war or other calamities.
  • According to the agreement on an International Energy Programme (I.E.P.), each International Energy Agency (IEA) country has an obligation to hold emergency oil stocks equivalent to at least 90 days of net oil imports.
  • In case of a severe oil supply disruption, IEA members may decide to release these stocks to the market as part of a collective action.
  • India’s strategic crude oil storages are currently located at Visakhapatnam (Andhra Pradesh), Mangaluru (Karnataka), and Padur (Karnataka).
  • The government has also given approval for setting up of two additional facilities at Chandikhol (Odisha) and Padur (Karnataka).
  • The concept of dedicated strategic reserves was first mooted in 1973 in the US, after the OPEC oil crisis.
  • Underground storage is, by far the most economic method of storing petroleum products because the underground facility rules out the requirement of large swathes of land, ensures less evaporation and, since the caverns are built much below the sea level, it is easy to discharge crude into them from ships.
  • The construction of the Strategic Crude Oil Storage facilities in India is being managed by Indian Strategic Petroleum Reserves Limited (ISPRL).
    • ISPRL is a wholly owned subsidiary of Oil Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas.
  • After the new facilities get functional a total of 22 days (10+12) of oil consumption will be made available.
  • With the strategic facilities Indian refiners also maintain crude oil storage (industrial stock) of 65 days.
  • Thus, approximately a total of 87 days (22 by strategic reserves + 65 by Indian refiners) of oil consumption will be made available in India after completion of Phase II of the SPR programme. This will be very close to the 90 days mandate by the IEA.

GAIL to build reserves by storing gas in depleted wells Geography

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