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Topical issues in prospecting and development of oil and gas deposits

Economic impact analysis of national natural gas storage

Authors:
Eun-Young Ahn
  • Korea Institute of Geoscience and Mineral Resources (KIGAM)
Date submitted:
2017-01-27
Date published:
2007-02-01

Abstract

Natural gas storage is meaningful for governments undertaking national energy risk management at the potential stage. The analytical solution used in this study is based on the DIS-Risk simulation model developed by P.N.Leiby & D.Jones (1993) in order to analyze strategic petroleum reserves. Annual natural gas supply disruption is simulated herein via the beta probability distribution, and then it affects annual natural gas import prices, supply and demand. Finally natural gas supply disruption causes gross domestic product (GDP) losses and higher natural gas import costs. As the result of the Monte Carlo simulation for 5,000 times results in the domestic natural gas supply disruption, the national natural gas storage capacity is estimated as the range from 1.30 to 2.25 million tons. The economic effect of avoiding losses ranges from US$ 10,9 billion to US$ 17,7 billion and the total cost US$ 3,4 billion to US$ 5,6 billion over a thirty-year period from 2006 to 2035.

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