By Michael Reed, Editor-in-Chief
meet the growing energy demands in the Rockies and Western U.S., Spire Storage
is expanding its facilities in Wyoming, with partial availability of additional
natural gas storage capacity becoming available in 2024.
with the Federal Energy Regulatory Commission (FERC) 7(c) project approval and
FERC’s issuance of a Notice to Proceed, Spire Storage started limited
construction of the initial project phase in mid-August. Full project
completion is expected to take place over the next two years during
construction seasons that run April through October in Wyoming.
expansion project will increase Spire Storage underground working gas storage
capacity from 23 Bcf to 39 Bcf, and involves the addition of injection and
withdrawal wells, compression, pipeline infrastructure, and gas processing
capability. Capital expenditures for the project are expected to total $195
Smith, who brought more than 30 years of energy industry experience to Spire
Storage, when he became the company’s president in 2019, answered a few
questions about this project and storage in general, during a recent interview
P&GJ: In your view, how
essential is natural gas storage when it comes to both energy security and as a
means of supporting renewable power generation?
Scott Smith: Natural gas storage is an
essential part of the gas delivery network to market participants that include electric
and natural gas utilities. Storage is a key component that has been part of the
natural gas delivery system sector in the United States for decades. And then
to think about it from the standpoint of energy security includes security of
supply when you have events like winter Storm Uri, which happened a couple of
Storage is essential in providing
deliverability into the transmission system, whether that is incremental demand
from colder than expected weather or variations to serve power generation, or
alternatively, to cover production freezes as we have seen recently in certain
parts of the country. So that element provides a substantial amount of
reliability and security to those who consume natural gas.
From an energy security perspective, I
think it’s a much broader question concerning the incremental deliverability
and balancing storage can provide? Essentially the natural gas system in North
America is built to manage a process where natural gas production flows 24-7, day
in, day out.
It typically doesn’t vary significantly day
to day. Gas production is delivered into the transportation grid, balanced, and
then obviously transported to markets. The balancing occurs from storage and
pipeline line-pack to meet the variability of Where consumers of natural gas have varying
demand driven by weather, industrial demand, and renewable generation
Also, the natural gas transmission system is
serving a growing LNG export market, and storage can provide shock absorber
flexibility to the system if LNG exports vary which in turn allows natural gas production
Natural gas storage plays different roles
in creating energy security for our natural gas transmission system. As I previously mentioned, storage is playing
an increasingly greater role in supporting renewable power generation. Renewable power
requires generation back-up, predominantly from natural gas fired generation,
due the variability it brings to the power grid from solar and wind
Supporting the build-out or expansion of
renewable generation in the Western U.S., through our ability to provide
flexibility to the pipeline networks, is essentially our investment thesis for
ownership and the expansion of Spire Storage West. in
Wyoming. We’re connected to five pipelines that serve the Rockies and the
Western U.S. market. And those markets, as you know, in the West Coast, have
very aggressive renewable related goals and decarbonization.
So gas-fired generation has a significant
role in helping manage renewable variability and intermittency. To do that, you
need to have flexibility in the natural gas transmission system, which storage
provides. We believe the services we provide at our facility in Wyoming are focused around meeting that need.
P&GJ: The Spire project will
increase the company’s storage capacity from 23 Bcf to 39 Bcf, I believe. How
significant is the addition in terms of expanded services?
Smith: The project will ramp up storage capacity over a two- to three-year period. As we
finish construction, we’re doing it in phases over three years, that capacity
will come online. The more important element that we’re focusing on is not the incremental
capacity but providing more flexibility related
services that we see the market needing today. This as well as supporting the
growth of renewable generation out west.
That’s a big driver of increasing storage
services, from the intermittency aspect to renewables and gas-fired generation.
Overall gas demand in the region may be flat to declining over the long term
but the variation in that demand is only increasing. More storage capacity
gives us incremental capability to inject or withdraw on any given day to meet current
and increases in variable demand.
P&GJ: What’s the role of
pipelines in the gas storage process? Are new pipelines generally needed to
complete such projects? And to that point, if they are, which you have any
specs on new pipelines that are being constructed with this particular project
Smith: Let me start with your last question. So,
as part of our expansion project, we are building a new 7-mile pipeline that
runs between our two facilities. Our storage facility is actually two separate
reservoirs that we manage jointly under one FERC tariff to provide interstate storage services.
The new pipeline as part of our expansion allows more flexibility for us to move gas between
our two different reservoirs and the associated pipeline interconnects.
The pipeline between our facilities is a key
component for our project and our ability to meet growing demand for storage
services. We are always looking at ways that we can increase the amount of
deliverability or services we can provide into the pipelines connected to our
facility which in turn is driven by the needs of pipeline shippers.
We are constantly talking to pipeline
companies in the region about whether we can provide incremental storage
services to meet the demands on their pipeline system, and there may be
potential for larger laterals from our system and our facility into the mainline
system, etc. To my knowledge, there is not a large, long pipeline project that’s
being contemplated right now.
I would say that over time there may not be
a driver for a large scale pipeline expansion
serving the west, as we focus our efforts and how we are marketing customers, our
expansion project is all about providing
reliability and flexibility within the existing pipeline grid.
P&GJ: How arduous is the
permitting process for infrastructure needed for a natural gas storage project
Smith: Well, I think any project where you have to
obtain permits, in particular those that require the federal permitting process
is challenging. There is a growing number of groups that are getting involved to protest or fight the
construction of new gas transmission related facilities. So you have a much
more contentious process today than in the past.
As an example, with our expansion project
and storage, it took roughly a 19-month process from when we filed the
application until we received approval and our notice to proceed. A significant
amount of time. And our project received support from affected landowners plus
strong support from the Wyoming
You compare that to some of other projects,
in particular, those on the East Coast. It is a tough road, and it’s a
significant effort to obtain the required permits to construct and operate.
Permitting, for us, was a significant activity
in and of itself, and I’m glad to have that behind us and be working with the
regulators to implement the project. I
can’t understate that the process is very time consuming as is winning over all
the different stakeholders in an effort to obtain a certificate to operate.
P&GJ: I assume you get out in
front of this with the communities pretty quickly.
Smith: Right. We’re in a different environment
here in Wyoming than in a metropolitan area elsewhere in the U.S. Southwestern Wyoming is an area
that is familiar with oil and gas operations.
We’ve had a significant amount of support
from the state from the governor to federal representatives and Congress to the
local representatives. It was a very well received project and that had a
significant impact to getting the
project over the finish line and approved. P&GJ