Utilities plan onsite gas storage to improve reliability; critics warn of costs, safety concerns

As the U.S. electric power system has become more reliant on natural gas plants, it’s also become more vulnerable to gas system failures.

During Winter Storm Elliott in 2022, about 18% of the anticipated power supply in the portion of the grid that serves the entire eastern half of the United States, called the Eastern Interconnection, was offline. Of the power plants that failed to perform, 47% were natural-gas fired, according to a joint inquiry by the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation.

Natural gas fuel problems accounted for 20% of all generation outages, the report noted.

However, in an era when building new gas pipelines, along with other infrastructure, has proven increasingly fraught, some utilities see a solution to gas shortages: adding liquified natural gas storage onsite.

Virginia utility giant Dominion Energy is proposing to add liquefied natural gas storage to serve two large power plants it operates near Emporia in southern Virginia. And in South Dakota, Otter Tail Power Company is planning to add gas storage at its Astoria combustion turbine plant in Deuel County. A spokesman for Duke Energy, a large North Carolina-based utility company which was forced to cut power to customers during Elliott last year, said it is “exploring all on-site storage options, including LNG and other alternative fuel storage technologies for future use.” A 2021 study by researchers at Carnegie Mellon University found that storing gas onsite could also yield benefits for electric customers in New England, where gas supply is tight.

Some pro-renewable energy analysts, though, are wary about the costs and impacts of adding new gas infrastructure at a time when cutting emissions to mitigate climate change is becoming ever more pressing. There are also safety and environmental concerns. 

 ‘Ensuring access to fuel’ 

Having backup fuel on site is common at many natural gas power plants, though the go-to option is typically a distillate fuel oil (like diesel), said Michael Caravaggio, director of research and development at the Electric Power Research Institute, an independent nonprofit research organization. The main advantage is ease of storage and management over a long period of time, whereas liquefied natural gas needs to be kept at extremely low temperatures, (about -260 degrees Fahrenheit). That means that adding LNG storage involves either liquefying pipeline gas onsite or transporting LNG in for storage in specialized tanks.

“That’s a lot of infrastructure for backup fuel,” Caravaggio said. “The vast majority of the U.S. would likely pencil out with diesel and distillate oil as the onsite backup and that’s what we see currently.”

But Bill Swanson, manager of supply operations and planning for Otter Tail Power Company, which has about 133,000 customers in Minnesota, North Dakota and South Dakota, said adding LNG at the company’s 245-megawatt Astoria plant made the most economic sense. Winter Storm Uri in 2021, which sent gas production plummeting, and Elliott last year prompted the company to pursue LNG backup fuel.

“During Winter Storm Elliott we had a situation where we couldn’t get gas out of the pipeline,” he said.

The company explored fuel oil but found it would require modifications to the gas turbine. Burning the oil, he added, also reduces the output of the plant more than 10% and increases emissions.

“On an evaluated cost basis, LNG was lower cost,” Swanson said, though when asked he said the total cost of the gas storage project is not public. If Otter Tail had to liquefy the gas onsite instead of trucking it in from a nearby facility, “economics might flow back to fuel oil,” he added.

Jeremy Slayton, a spokesman for Richmond-headquartered Dominion Energy, said Elliott, Uri, and the Colonial Pipeline cyberattack in 2021 all underscored the need for backup fuel.

The company is proposing to add a 25 million gallon LNG storage facility that will enable its two large combined cycle plants at Brunswick and Greensville to run at full bore for up to four days each. Those plants alone generate enough electricity to power 700,000 of its 2.6 million Virginia customers’ homes.

A cost estimate for the project was not available, Slayton said.

“We are in the process of finalizing the project design, specifications and cost estimates,” he said.

Whether other electric ratepayers elsewhere across the country will be asked to pick up the tab for natural gas storage is unclear. Scott Fiedler, a spokesman for the Tennessee Valley Authority, which is the largest public power company in the U.S. and operates 17 natural gas power plant sites across its footprint, is not considering adding onsite liquefied natural gas storage at current or future plants. Fiedler cited cost, supply chain issues, regulatory and permitting challenges and safety as considerations.

Since 2011, LNG plant operators have reported 39 incidents to the U.S. Pipelines and Hazardous Materials Safety Administration, an agency spokesperson told States Newsroom. Eight of those “indicate the released commodity ignited,” the spokesperson said. A 2022 fire and explosion at the Freeport LNG import and export facility on Quintana Island, Texas, was attributed to testing and operating procedure failures, human error and fatigue, Reuters reported. In North Carolina, where Dominion is building another large LNG storage facility designed to serve gas customers, the facility is expected to emit 65,579 tons of greenhouse gasses a year, among other pollutants. Similar storage projects intended to serve gas customers have been built or are being developed in New Mexico and Wisconsin.

Sarah Durdaller, a spokeswoman for the Edison Electric Institute, a trade group for investor-owned utilities, said the organization does not track individual projects but added that gas storage is valuable.

“Natural gas is a partner to reliability and clean energy. It’s helping accelerate the clean energy transition by allowing our member companies to integrate more renewables into the energy grid while ensuring resilience and reliability,” she said. “Storage, both onsite at power plants and regional hubs, along with other redundancies ensure natural gas is available when customers and the energy grid need it most.”

Todd Snitchler, president and CEO of the Electric Power Supply Association, which represents competitive power producers, said their membership is “constantly evaluating the options available to ensure reliable operation of their assets, including ensuring access to fuel.”

‘

Not the answer’ 

Yet, at a time when urgent action is needed to mitigate the effects of climate change, investing more money in natural gas infrastructure doesn’t make sense, said Mark Specht and Paul Arbaje, energy analysts at the Union of Concerned Scientists who authored a report released Jan. 9 on the failures of gas power plants during five severe winter storms over the past 13 years.

“More gas infrastructure is not the answer. Utilities should be instead focused on diversifying and reducing their reliance on gas,” Arbaje said in an interview with States Newsroom, noting that the U.S. Energy Information Administration is predicting that battery storage installations will nearly double in 2024.

Specht noted that about 70% of gas plant failures in the storms they studied were caused by freezing equipment and other problems unrelated to fuel availability.

“That picture would not change if you have onsite gas storage,” he said. “One of the conclusions from our report is they really should have someone regulating the reliability of the gas system. That might be a more sensible solution.”