Gulf Coast Gas Storage Boom: LNG Export Terminals Drive Demand for Additional Capacity

The Gulf Coast region is experiencing a surge in demand for natural gas storage capacity due to the proliferation of new and expanded liquefied natural gas (LNG) export terminals. The operators of these terminals have locked up most of the existing storage surplus and incremental capacity, leaving only a few projects that are still under development.

According to RBN Energy, more than 350 billion cubic feet (Bcf) of new gas storage capacity is being developed in Texas, Louisiana, and Mississippi. Most of this capacity will be in the form of high-cycle salt cavern storage with high injection and withdrawal rates. This type of storage provides a firm service connecting Permian supply with LNG, power generation, utility, industrial, and Gulf Coast end-use markets.

The main drivers behind this buildout are the new LNG export terminals along the Gulf Coast and the need for terminal operators to have nearby storage capacity as an at-the-ready buffer in case of a liquefaction plant outage. Without such storage, terminals could face significant financial losses due to either not having sufficient gas supply or being forced to dump large volumes of gas into the market during an outage event.

As RBN Energy notes, LNG export terminal operators typically require 15 to 20 days of storage capacity under contract, which translates to approximately 12-16 Bcf. This highlights the need for additional storage capacity in the region.