E&E News by Politico – The historic Spindletop oil site in Texas offers a model for storing more natural gas underground amid forecasts of surging demand.
BEAUMONT, Texas — From the surface, the Spindletop salt dome in East Texas looks like a shadow of its former glory.
The marshy area started Texas’ oil boom in 1901, when a gusher spewed 800,000 barrels of crude over nine days.
Now, while the area’s oil production has faded and a few industrial sites dot the landscape, Spindletop is home to what may become a new gold rush: underground natural gas storage.
The U.S. could face a shortage of natural gas storage capabilities because of rising demand for liquefied natural gas exports and gas-fueled electricity to help power artificial intelligence and data center hubs. If companies don’t boost storage capabilities as demand for natural gas expands, a crunch could upend natural gas prices and how the market works, said Jason Feit, an adviser to energy data provider Enverus.
“We’re getting really close to a timing mismatch risk where you’ve got LNG exports that are going to be in service and operating before new storage sites are going to be in service,” Feit said. “You can expect gas price volatility for the next few years and even more so if these storage projects don’t go forward.”
Natural gas production has risen by an average of 4.7 percent a year from 2013 to 2023, according to the American Gas Association. Underground natural gas storage capabilities, meanwhile, have grown by 0.1 percent annually from 2014 to 2023.
The trend is apparent near the U.S. coast of the Gulf of Mexico, which President Donald Trump renamed the Gulf of America. That’s where large LNG export facilities are expected to come online in the next decade.
But bringing underground storage online takes years, and some environmental groups and neighbors of gas facilities worry about safety risks — especially after a handful of accidents such as storage cavern collapses that have spawned sinkholes, swallowed personal property and triggered evacuations.
“It is not a clean track record,” said Matt Rota, a senior policy director with Healthy Gulf, an environmental group. “These injections can have impacts on drinking water and can cause seismic disturbances and other things as well.”
In response to questions from POLITICO’s E&E News, White House spokesperson Harrison Fields said boosting natural gas production and LNG is a priority for the Trump administration.
“President Trump is leveraging every tool of government to boost natural gas production and LNG exports,” Fields said in a statement. “This stands as a major priority and success for President Trump, as we’ve already witnessed significant demand and interest from our trading partners for more American LNG.”
Roughly 306 billion cubic feet of natural gas is stored in salt domes across the country over a five-year average, according to the U.S. Energy Information Administration, while another 782 billion cubic feet of gas is stored underground in places like depleted oil and gas fields and old aquifers, typically located outside the Gulf Coast. The amount of gas in storage ebbs and flows based on seasonal demands.
Prices also change over time and can affect gas production levels as well as projects such as power plants that plan to run on natural gas. On Thursday, the U.S. benchmark natural gas price was trading for less than $4 per million British thermal units. Average spot prices last year swung from a high of $3.18 per million British thermal units in January to $1.49 per million British thermal units in March, according to EIA.
The science
Southeast Texas and Louisiana are dotted with little isolated mounds — but they’re not hills. They’re called salt domes, a geological formation that’s created when large masses of salt, buried thousands of feet underground, rise upward and pierce through layers of rock toward the surface, creating a domelike feature.
In the 1990s, the United States Geological Survey estimated there to be some 624 salt domes both onshore and offshore stretching from Texas to Mississippi.
For nearly 70 years, companies have used them to store natural gas, petroleum products, and other liquids and gases, said Siddarth Misra, an associate professor of petroleum engineering at Texas A&M University.
Misra said salt is the ultimate sealed container for gas.
“First and foremost, salt, also known as halite, is incredibly dense and solid, meaning it has virtually no tiny holes or cracks for gas to sneak through,” Misra said in an email. “Unlike many other common rocks in the Earth’s crust, like sandstones, which are designed to hold and let fluids flow, salt acts as an almost impenetrable barrier.”
The process to create salt-dome storage starts with water — lots and lots of water. Crews drill into a salt formation and lay a pipeline that streams millions of barrels of water into the salt formation. The water chips away at the salt, becoming extra salty in the process. Once the extra salty water is removed, it leaves an empty void in the salt formation.
“You need anywhere from seven to 10 units of water, raw water, for every barrel of space you want to create,” said Scyller Borglum, underground storage lead in the U.S. with WSP, an engineering and professional services firm. “So if you want a 9-million-barrel cavern, you’re going to need anywhere from 63 to 90 million barrels of raw water.”
At Spindletop, a natural gas cavern owned by Entergy and operated by WSP gets water from a channel diverted from the Neches River.
Disposing of that extra salty water is another issue. At the Entergy storage facility, operators inject it underground through a disposal well. Borglum said other companies pipe it out into the ocean, dumping it about three miles offshore and diffusing it so it’s not as concentrated when it mingles with seawater.
“There are no chemicals involved, and so it literally is just saltwater, just highly, highly saturated saltwater that you’re pumping into the ocean, um, and that’s it. We wouldn’t be able to do that if there were any chemicals involved,” Borglum said.
But that disposal practice has raised concern among environmental groups, which argue that changing the chemistry of the water by adding more salt can damage the coastal ecosystem.
“All of this ocean life is adapted to a certain salinity level,” said Rota with Healthy Gulf. “So if you’re putting in a lot more salt, you’re going to basically impact this wildlife that have a very specific balance that they need for salinity.”
The economics
The amount of U.S. underground storage capacity has remained relatively stagnant for decades, according to Enverus’ Feit.
Natural gas companies, utilities and pipeline companies historically would buy and inject natural gas into the storage in the summer, when demand and prices were relatively low. Those companies would then withdraw the natural gas in winter, when many homes rely on natural gas for heating, and sell it at higher prices.
“Historically, it used to be somewhat predictable aside from the weather,” Feit said of the natural gas market. “So that delta between the value of gas in the winter and the value of gas in the summer used to be enough to cover the cost of building the storage field and paying the operator to store your gas.”
That began to change because of the U.S. shale boom earlier this century, when the use of fracking drilling technology led to a surge of natural gas production, especially closer to the Northeast. No longer were Northeastern natural gas customers needing to get gas piped from the Gulf Coast to Northern states — operators could pull it out of the ground as needed in places like Appalachia or the Marcellus Shale formation and deliver it on almost an as-needed basis, Feit said.
“So the requirement to use storage isn’t quite what it used to be because you can ramp up and down the gas that’s directly coming out of the wells a lot more than you used to be able to do historically,” he said.
The market is beginning to change.
Demand for natural gas is poised to boom in coming years. Last week, EIA forecasted that dry natural gas production could grow by more than 10 percent to as much as 44.3 trillion cubic feet a day in the early 2030s.
Some of that will help feed growing demand for electricity, which is expected to grow after decades of remaining stagnant in the United States. Texas has created a $10 billion loan plan to help bring new natural gas generation online. And Ohio Gov. Mike DeWine, a Republican, signed into law a bill to encourage new power generation, especially from natural gas sources.
Data centers and AI could also create a spike in power demand, with their share of power consumption forecast from about 4.4 percent of U.S. electricity consumption in 2023 to as much as 12 percent by 2028, according to the U.S. Department of Energy.
But more than anything, Feit said, there will be surging demand along the Gulf Coast as more LNG export facilities come online. He said projects capable of exporting a combined 10 billion cubic feet of LNG daily are expected to come online by the end of the decade, translating to a roughly 10 percent increase in natural gas demand in the Lower 48 states over that time period.
Without a way to store natural gas before export facilities can liquefy it and ship it off, natural gas prices could be more volatile.
“I think you might end up with more LNG being exported well in advance of these new storage facilities coming online — at least there’s a risk for that to happen,” Feit said. “And then if that occurs, then just the potential for gas price volatility becomes higher.”
Growing demand
Already, a supply-demand mismatch is showing up in data. EIA reported that the use of natural gas storage grew by 1.7 percent in 2024 “due to market conditions.” The amount of storage available grew by just 0.1 percent that year.
“What we observe is a market that’s growing, but our ability to store and transport gas kind of both across time and space is becoming more limited,” said Richard Meyer, vice president of markets, analysis and standards with the American Gas Association, a trade group for the natural gas industry. “We have the pipeline infrastructure, but now we also need storage.”
The hunt for more storage is evident in the Gulf Coast.
Bryce Dubee, a spokesperson for the Railroad Commission of Texas, which regulates oil and gas, said the agency has received 10 applications for permits to add salt cavern storage capacity over the last year. In Louisiana, officials have received two similar applications this year, two in 2024 and seven in 2023, according to the state Department of Energy and Natural Resources.
At Entergy’s Spindletop gas storage facility, officials are working with contractors to expand one of the storage caverns and increase its capacity from 4 million barrels to 6.5 million barrels.
“When I came in 2012, no one was talking about gas,” Phillip Colvin, assistant vice president of projects for WSP. “Now with LNG exports moving forward, you hear about it a lot.”
Borglum with WSP said the potential for booming LNG growth on the Gulf Coast makes the location of these salt dome storage sites ideal.
“They are all along the American Gulf Coast, which is also where we happen to have the bulk of our ports and terminals for export for LNG,” she said. “So there’s a beautiful synergy there in terms of the availability of subsurface storage capabilities plus surface infrastructure, all of which would work together.”
But growing storage along the Gulf Coast has caused some concerns, especially in areas that have seen salt domes fail in recent years.
Salt dome debate
In 1980, oil drillers accidentally punctured a hollowed-out salt dome used for mining, creating a 150-foot waterfall as water from the nearby Delcambre Canal rushed in. What was once a roughly 10-foot deep lake called Lake Peigneur is now more than 200 feet deep and 1,125 acres in size.
In 2012, a sinkhole opened up at Bayou Corne in Louisiana after an operator punctured a salt dome. About 350 residents were asked to evacuate as the hole grew to more than 22 acres in diameter, and the salt cavern operator Texas Brine Co. was ordered to pay about $48 million in a settlement with residents.
More recently, former Louisiana Gov. John Bel Edwards (D) issued an emergency declaration in 2023 after land began to subside around a salt dome mine near the town of Sulphur, Louisiana. Residents there remain concerned over drinking water as an operator has been pumping saltwater into one of the caverns to prevent collapse, according to Louisiana TV station KPLC.
“There are multiple examples of salt caverns having issues and swallowing large swaths of land, including people’s property,” Rota with Healthy Gulf said.
Charlie Riedl, executive director at the Center for LNG, said in a statement that the industry follows a litany of federal and state rules and prioritizes safety. He said storage facilities are constantly tested to ensure their integrity.
“Safety incidents are taken seriously and have shaped stronger oversight and risk mitigation measures over the years,” Riedl said. “It’s also important to distinguish between legacy cases with limited regulatory oversight and modern facilities developed under today’s stringent rules.”
James Minter, a compliance manager with WSP who helps operate Entergy’s Spindletop gas storage facility storage site, said pressures in the salt domes are measured constantly. In Texas, the state’s oil and gas regulators requires underground storage facilities to empty their caverns and check their casings, use sonar to check for any issues underground and conduct mechanical integrity tasks.
“We have 11 people monitoring the pipes 24/7,” Minter said. “The industry is very safe.”
And in other instances, the underground natural gas storage can serve as a lifeline to the power grid, said Ben Marsh, an asset team lead for Entergy.
Entergy, for example, doesn’t use its storage to ship to LNG liquefaction plants or to sell its gas on the market. It only uses its stored gas to power its power plants — including a 2,000-megawatt plant in Bridge City, the smaller Lewis Creek Power Plant north of Houston and a combined cycle plant near the Sabine River that’s slated to come online in 2026.
The stored gas can act as a backstop when there are disruptions to natural gas supplies.
Its two caverns can store up to a month of emergency power supply when they’re full, Marsh said. That helped Entergy keep the lights on at its power stations in the 2021 winter storm that plunged much of Texas into darkness as natural gas supplies became scarce, he said.
And when weather is not an issues, Marsh said the storage helps Entergy keep power prices lower by allowing them to inject gas when its cheap and withdraw it when prices on the open market rise.
For LNG, Riedl said salt dome storage will help manage supply fluctuations and ensure consistent deliveries to export terminals, especially during periods of peak demand.
But Rota with Healthy Gulf said it’s one thing to have storage on hand to help with emergencies or to serve as strategic stockpiles for U.S. consumers and another to create more storage to serve the growing LNG industry.
“Why do we need these LNG storage caverns? It’s just we have too much natural gas — we’re fracking too much,” Rota said. “And the solution to that is not to cause more environmental damage by hollowing out salt domes when we could just stop fracking as much.”