ISLAMABAD: An underground gas storage (UGS) project on the depleted Khorewah-1 gas reserve in Badin district is viable for making low-cost gas available in the country all year around, an economic feasibility study commissioned by the Asian Development Bank (ADB) said.

The feasibility report has been prepared by a Danish consulting company in association with German and Pakistani partners within the framework of ADB’s technical assistance for gas development projects signed by Pakistan and the bank in July 2019.

The report proposed that the project be financed through a combination of debt and equity with the expectation of a debt-to-equity ratio of 80:20. The Khorewah project will cost $1,388.82 million, and the most likely option for implementation is a hybrid of public and private participation, according to the financing framework.

The expected storage capacity at Khorewah gas reserve is 70BCF, which is flexible depending upon the market demand and supply. The Khorewah gas reserve is in the sandstones of the Lower Goru Formation.

The ADB study proposed that the gas be imported under the Turkmenistan–Afghanistan–Pakistan–India (TAPI) Pipeline and Iran-Pakistan (IP) Gas Pipeline and transported to the storage site via the Sui Southern Gas Company’s pipeline. Initially, a certain amount of gas would be stored in the storage as a “cushion,” which is the volume of gas required as permanent inventory to support the technical operation of an underground gas storage.

In order to meet the growing energy demands, the government of Pakistan is pushing the implementation of various gas import projects, such as TAPI, Offshore Gas Pipeline Project (OGPP), etc. Currently, the growing energy demands of Pakistan are partially met through the import of liquefied natural gas (LNG).

According to the final report of the economic feasibility study, the development of the project in Khorewah has neither resulted in unacceptable impacts on the environment during the construction phase nor will impose any threat to the environment in the subsequent operation phase.

One major concern addressed by the Pakistan government was the non-availability of an underground gas facility as the Khorewah Mining Lease is still valid and producing, with an expiry date of December 2024. The field is still producing, however, at very low rates. All rates will be zero in December 2020.

The report says working gas is the volume of gas in the storage facility above the cushion gas. Injection capacity is the amount of gas that can be injected into a storage facility daily. Withdrawal capacity is the amount of gas that can be withdrawn from a storage facility.

The report says that there might be an additional benefit to having LNG storage capacity in place to provide some gas supply to the southern area during winter periods, while the UGS storage will be primarily used to provide natural gas to the northern region of Pakistan. This has the advantage that the gas can be directly supplied from the LNG storage facility instead of re-gasifying the LNG, sending it to the northeast to the UGS facility, and later sending it back to the south during high demand.

The report, apart from the contracting strategy proposed, calls for the need also look at additional gas supply by constructing storage facilities near existing LNG infrastructure and adjacent to the tie-in of the future North-South Gas Pipeline, in addition to the construction of a UGS in Khorewah.

Published in Dawn, July 10th, 2022