Strategic Underground Gas Storages (SUGS)

STRATEGIC UNDERGROUND GAS STORAGE (SUGS)

Strategic Underground Gas Storages (SUGS)

Strategic Underground Gas Storage (SUGS) is a critical component of energy infrastructure, playing a vital role in ensuring the security, stability, and reliability of natural gas supply. It involves storing natural gas in large underground reservoirs or formations, typically within depleted gas fields. This approach allows for the flexible management of gas production and consumption, helping to address seasonal demand variations, balance fluctuations, and stabilize gas prices.

The concept of underground gas storage was first explored as part of gas import projects aimed at enhancing energy security, ensuring uninterrupted supply, balancing seasonal demand, and mitigating risks. In 2004, the Asian Development Bank (ADB), through M/s SOFREGAZ (France), conducted a comprehensive feasibility study, evaluating 107 potential gas storage sites across Pakistan. The study’s final report, submitted in November 2007, recommended converting two existing gas fields—Khorewah and Bukhari in the Badin Block—into gas storage reservoirs.

With the introduction of LNG into the gas supply chain, the underground gas storage project gained renewed momentum. In 2022, ADB-appointed consultant M/s Ramboll updated the feasibility study, recommending the Khorewah, Bukhari, and Turk gas fields. After careful consideration and consultations with the Ministry of Energy (Petroleum Division), the need for a smaller-scale gas storage solution, aligned with lower gas volumes during peak seasons, is now being prioritized.

Gas Field: Final selection pending

Storage Capacity: Approximately 30-100 Bcf (including cushion gas)

Withdrawal Capacity: Approximately 200 MMcfd

Injection Capacity: Approximately 100 MMcfd

 

  • Approval & Funding: In May 2021, the Ministry of Planning granted concept approval for PSDP funding, and the Central Development Working Party (CDWP) approved the PC-II for the bankable feasibility study and transaction advisory.
  • Collaborations: ISGS has entered into agreements and memorandum of understanding (MOUs) with exploration and production (E&P) companies and gas utilities, including OGDCL, PPL, and MPCL, for collaboration on the project.
  • Policy & Regulatory Framework: ISGS has developed an Underground Gas Storage (UGS) policy and regulatory framework under the guidance of the Ministry of Energy (Petroleum Division). This framework outlines gas allocation, licensing requirements, tariff regimes, and incentives for both local and foreign investors. The policy is currently under review by stakeholders.
  • Procurement Process: ISGS has initiated the procurement process to engage reputable consultancy firms for conducting the Bankable Feasibility Study and Pre-FEED (Front-End Engineering Design) of the project. An international tender (RFP) was issued on 13th October 2024, with the proposal submission deadline extended to 17th December 2024.