Govt mulls turning abandoned Sangu field into underground LNG storage

In a bid to ensure stable gas supply, the government is planning to use the abandoned Sangu gas field in the Bay as an underground storage to store liquefied natural gas (LNG).

The plan is to import and store LNG at a cheaper price and use it when demand increases and price goes up on the international market, according to sources.

Petrobangla, the state-owned company that explores, produces, transports and sells natural gas, has already signed a Memorandum of Understanding (MoU) with the American multinational oil and gas corporation ExxonMobil for conducting an engineering study on the field to find out the feasibility of using it as an underground gas storage.

Once the feasibility study is done, it will be clear how much LNG could be stored there and what will be the cost of storage and reproduction of the stored gas, a Petrobangla official with direct knowledge of the matter told The Business Standard.

He said the MoU has been signed based on a "desktop study" of the field, with ExxonMobil claiming that an underground storage could be developed in the Sangu field.

A desktop study involves a desk-based collation of documentary data before investigating a site. This includes records of site history, geology, hydrogeology/hydrology, waste, pollution incidents etc to produce an outline conceptual model, according to Wesson Environmental, a British firm that provides such services.

Md Anisur Rahman, senior secretary at the Energy and Mineral Resources Division of the Ministry of Power, Energy and Mineral Resource, said based on a proposal by ExxonMobil, a contract has been signed for conducting a feasibility study in the Sangu field.

"It is now in a very primary stage. If we find it technically and financially viable, we will proceed to the next step," he said.

Energy experts, however, expressed concern about the recovery of the stored gas and whether it would be financially and economically viable.

Dr M Tamim, a professor at the Petroleum and Mineral Resources Engineering Department of Buet, said there are many cases of underground storage in abandoned gas fields in the United States.

At present there are 387 active gas storage fields in 48 states of the US, according to the country's Energy Information Administration.

"But such storage has to be technically viable by ensuring that there is no leakage in the storage. Otherwise, the purpose of such storage will not be beneficial," said the professor.

Currently, Bangladesh has a demand for 4100mmcf of gas every day, while production from the local gas fields is only 2400mmcf.

To meet the increasing demand for gas from industries and power sectors, the government started importing LNG in 2018 and added it to the national grid through floating storage and regasification units established in the sea near Maheshkhali of Cox's Bazar.

The two regasification units have a capacity of re-gasifying 1,000mmcf of LNG a day, though only 600 to maximum 800 has been re-gasified in a single day so far.

Due to a skyrocketing price hike in the global market, the government has refrained from full use of these regasification units by importing more LNG despite the outcry for gas.

Sources at Petrobangla said observing the volatile LNG price in the global market, the government is now trying to set up storage to ensure stable gas supply to the national grid at an affordable price.

The state-owned company earlier undertook a programme to set up land-based LNG storage in Maheshkhali and launched a feasibility study through a Japanese firm.

Apart from that, the government is now planning to use the Sangu gas field, which has been abandoned since 2013, as an underground storage of LNG.

LNG will be imported when its price is comparatively cheaper on the international market and will be stored under the sea at the location of the Sangu gas field. The stored gas will be extracted when normal import faces price hikes on the global market.

The Sangu gas field, discovered in 1996 by Cairn Energy, a British oil and gas exploration and development company, was in production until 2013. The field's probable reserves were estimated to be 577.78bcf.

But, 487.91bcf of gas was produced before it was declared suspended in October 2013. From then on, the field has been under the authority of the Bangladesh Gas Field Company Limited. As it stands, maintenance of the Sangu platform has remained off for a long time. Closed-circuit cameras to monitor the platform from land are not functioning, it has been learnt. The last known activity on the platform was for the installation of solar-powered lights.

Recently, Petrobangla decided to set up beacon lights for the safe navigation of ships.