Viability of Seasonal Natural Gas Storage in the Saudi Energy System

Saudi Arabia expects to double its natural gas production within the next decade. This increased domestic supply is expected to meet the demand for gas from Saudi Arabia's industrial development and, most importantly, to displace liquid fuels in its electricity sector. Given the strong seasonal variability of the latter, underground gas storage (UGS) can help ensure the availability of gas to meet peak power load.In this vein, we assess the geologic and economic viability of UGS in Saudi Arabia under different scenarios: with and without LNG imports allowed, and under low and high domestic gas production. Depleted oil fields or aquifers are best suited for gas storage in the Kingdom. Using a model of the country's energy system, we show that in the case of high gas production, storage capacity would be built to bypass the transport limit for gas for use in electricity generation in the summer. In the low production case, gas storage would facilitate optimal gas use among sectors throughout the year. The net present gain – defined as the discounted sum of the annual differences in benefits and costs – is used to determine the economic viability of gas storage