Storage is a keystone in the Keystone State’s fast-developing Marcellus shale-gas play. At a recent Marcellus Midstream conference held in Pittsburgh, John Shelton, director of storage for NiSource Gas Transmission & Storage, discussed the company’s experiences to date in solving storage issues, and looked at the opportunities presented by the wide-spread Marcellus. He termed this a “balancing act.”

NGT&S’ assets have annual deliveries of 1.4 trillion cubic feet over 15,500 miles of pipeline, with operations in 16 states. It owns 37 storage fields with total capacity of 640 billion cubic feet and daily delivery of 4.7 billion. The horsepower in its 106 compressor stations totals 1.1 million.

Shelton noted that the company’s local storage—comprising 16 billion cubic feet—is in the heart of activity in the Marcellus. There is flow-path flexibility available as production has shifted upward from 50 million cubic feet per day in 2007 to 450 million projected for 2011.

Its Adaline station-Victory A&B storage facilities help address the fact that market-area storage is now a hybrid—both a market and a supply opportunity. There are peak demands for the nearby Pittsburgh market area, and winter turnover is critical for summer reservoir capacity, he noted. Further, supply-area storage is an important “market” for summer take-away, he said.

As production ratchets up, NGT&S has been busy with recent storage development. Its Hardy storage facility, a greenfield JV with Piedmont, has capacity of 12 billion cubic feet, and delivers 170 million cubic feet per day. Started up in April 2007, it was fully utilized two years later.

The company’s Eastern Market Expansion, put into service in April 2009, can store 5.7 billion cubic feet per day. Loop and compression have been added to that facility.

The Ohio Storage Expansion holds 6.8 billion cubic feet per day with deliverability of 100 million per day. It was also placed into service in 2009. And, the Artemas storage presents an additional area of growth, with a seismic shoot being evaluated in anticipation of further expansion of existing facilities.

The balancing role that storage will play in the Marcellus will be driven by continued use by large end users such as LDCs and industrials, Shelton noted. Further, new power generation will come into the picture, with new markets and services. “Flexibility in pipeline and storage design is key,” said Shelton, and success rests upon subtle responses in size, timing, structure and complementary assets.

With only a limited number of geological structures suited for storage development in the region, the hybrid market/supply storage approach best fits shale production, he said.

Contact the author, Susan Klann, at sklann@hartenergy.com.