Volume 3: Innovative Solutions for Energy Transitions: Part II

Optimize China’s Seasonal Natural Gas Storage: A Welfare-Economics Approach Mengyang Chen, Nan Li, Hailin Mu

Abstract

China’s strict coal-to-gas policy in the recent years has brought unexpected natural gas demand into the domestic market, leading to additional uncertainty and pressure, and further increased China’s import dependency rate. The current situation urges China to establish valid storage system for natural gas, which have been proved to be a preferred method in circumstances with high uncertainties. In this paper, we implement a model based on welfare economics to show the optimal gas storage capacity and its monthly scheme. The result indicates the basic optimal natural gas storage size to be 11.91 billion cubic meters. Under normal conditions, the storage shall reach its peak near November, then begin to release through the next April, and switch back to injection progress to prepare for the upcoming winter.

Keywords Natural gas storage, Working gas capacity, Coal to gas reform