Hard Rock Caverns for the Energy Industry - A Technical and Economic Overview

This report delivers a comprehensive technical and economic evaluation of hard rock caverns for gas storage, addressing Australia’s need for sustainable energy solutions as it transitions to a low carbon future. Authored by Lane Power & Energy Solutions, the report explores the technical aspects, construction, operation, and global practices of these underground storage facilities. The analysis centers on proven cavern construction techniques that involve pre-planning and site preparation, precise excavation using advanced equipment, and structural reinforcement to ensure long-term integrity. Economically, the report highlights a preliminary cost profile for unlined hard rock caverns, with significant capital expenditures (CapEx) estimated at $120 million for a 1-million-barrel cavern and $187.5 million for a 2-million-barrel facility, reflecting the labor and equipment intensity of excavation. While the initial CapEx for underground storage may exceed that of surface storage, the operational expenditures (OpEx) are significantly reduced thanks to the inherent protection provided by a cavern's isolation from surface conditions. From an operational perspective, this study outlines essential factors, including the hydraulic containment principle and required permeability properties of potential host lithologies, while outlining risks such as hydrogen embrittlement and overpressurization and providing potential mitigation strategies. The report also offers a global perspective including unlined caverns, like the Jurong Rock Caverns in Singapore with a capacity of 9.3 million barrels and the ammonia storage in Gibbstown, NJ with a capacity of 186,000 barrels, as well as lined storage caverns such as Skallen in Sweden, with a capacity of 252,000 barrels, serving as operational benchmarks. These global cases and practices underscore the versatility and reliability of hard rock caverns as storage solutions. In conclusion, this report presents hard rock storage caverns as a strategic asset, enhancing energy security and decarbonization objectives. It encourages stakeholders to leverage the report’s insights to explore customized, sustainable gas storage solutions.