With Storage Space Evaporating, the Oil and Gas Industry Will Get to Put Its Products Back

With Storage Space Evaporating, the Oil and Gas Industry Will Get to Put Its Products Back Underground


Last month, as the COVID-19 pandemic pushed oil prices into negative figures, drillers in the state’s sprawling shale plays were still pumping and piping oil and gas to the Texas Gulf Coast as usual. But there was a problem: The massive storage tanks dotting the coastline, where tankers load and ship the product abroad, were filling quickly. With limited space to store crude, oil producers resorted to paying buyers to take the stuff off their hands.

Then the industry had an idea: Why not just put it back in the ground?

It’s an idea that has been successfully explored in the past. After all, the U.S. Strategic Petroleum Reserve, where 641 million barrels of crude are stored in a network of underground salt caverns, underlies much of East Texas and Louisiana. The unique geology of the caverns makes them prime candidates to store oil and liquefied gas (known in industry parlance as liquid hydrocarbons) because the products can’t easily escape and taint nearby drinking water sources. There’s not much space left in the reserve, however, which is why industry players have asked state regulators for permission to store oil and gas in “unconventional” geological formations.

On May 5, their wish was granted. The Texas Railroad Commission (which regulates oil and gas producers, not railroads) voted at its regular meeting to temporarily allow the industry to store hydrocarbons underground outside of the usual salt caverns. The commission unanimously rolled back some provisions of Statewide Rule 95, which historically has prohibited storing hydrocarbons outside of salt caverns to prevent groundwater contamination. The rules were waived for a year; producers may store hydrocarbons underground for up to five years.

Read more: https://www.texasobserver.org/underground-storage-oil-rule-rollback/