Oil reserves in salt caverns: The potential in India

Context: Government-owned engineering consultancy firm Engineers India (EIL) is studying the prospects and feasibility of developing salt cavern-based strategic oil reserves in Rajasthan, in line with the government’s objective of increasing the country’s strategic oil storage capacity.

What are strategic petroleum reserves (SPR)?

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  • Strategic petroleum reserves (SPRs) are stockpiles of crude oil maintained by countries for release in the event of a supply disruption. 
  • For example India currently has an SPR capacity of 5.33 million tonnes, or around 39 million barrels of crude, that can meet around 9.5 days of demand.
  • India’s strategic oil reserves come under the Petroleum Ministry’s special purpose vehicle Indian Strategic Petroleum Reserve (ISPRL).

Locations in India:

  • The country’s three existing strategic oil storage facilities — at Mangaluru and Padur in Karnataka, and Visakhapatnam in Andhra Pradesh — are made up of excavated rock caverns.
  • The country is in the process of expanding its SPR capacity by a cumulative 6.5 million tonnes at two locations — Chandikhol in Odisha (4 million tonnes) and Padur (2.5 million tonnes).
  • So far India stores crude oil in the rock based caverns and not in salt based caverns. 

What are rock based caverns?

  • Rock caverns are mined underground cavities in solid rock deep underground, using conventional mining techniques, and consist of a system of shafts or ramps and drifts, forming cavities, e.g., in granite.

How salt based caverns are different from rock based caverns?

  • Unlike underground rock caverns, which are developed through excavation, salt caverns are developed by the process of solution mining, which involves pumping water into geological formations with large salt deposits to dissolve the salt. 
  • After the brine (water with dissolved salt) is pumped out of the formation, the space can be used to store crude oil.
    • Advantages of salt caverns:
      • The process is simpler, faster, and less cost-intensive than developing excavated rock caverns.
      • Salt cavern-based oil storage facilities are also naturally well-sealed, and engineered for rapid injection and extraction of oil. This makes them a more attractive option than storing oil in other geological formations. 
      • The salt that lines the inside of these caverns has extremely low oil absorbency, which creates a natural impermeable barrier against liquid and gaseous hydrocarbons, making the caverns apt for storage.
      • Also, unlike rock caverns, salt cavern-based storages can be created and operated almost entirely from the surface.
      • Salt caverns are also used to store liquid fuels and natural gas in various parts of the world. They are also considered suitable for storing compressed air and hydrogen.

Strategic petroleum reserves programme: story so far

  • India’s strategic oil reserves are part of the effort to build sufficient emergency stockpiles.
  • Crude oil from the reserves are to be released by an empowered committee set up by the government, in the event of supply disruptions due to a natural calamity or an unforeseen global event leading to an abnormal increase in prices.
  • The International Energy Agency (IEA), a Paris-based autonomous intergovernmental organisation in which India is an ‘Association’ country, recommends that all countries should hold an emergency oil stockpile sufficient to provide 90 days of import protection.
  • In India, apart from the SPR the oil marketing companies (OMCs) have storage facilities for crude oil and petroleum products for 64.5 days — which means there is sufficient storage to meet around 74 days of the country’s petroleum demand.
  • India has also decided to commercialise its strategic petroleum reserves, as part of which the Abu Dhabi National Oil Company (ADNOC) stored about 0.8 million tonnes of crude oil in the Mangaluru strategic reserve. 
  • In the second phase of the programme, the government wants to develop strategic reserves through public-private partnerships so as to reduce government spending and exploit the commercial potential of the reserves.

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