Context

Recently, a 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.

India’s Strategic Oil reserves:

• A strategic reserve is the reserve of a commodity or items that is held back from normal use by governments, in pursuance of a particular strategy or to cope with unexpected events.
• Countries keep strategic reserves of crude oil to meet the immediate demand in ‘times of crisis’ or ‘unexpected events’.
• India, the world’s third-largest consumer of crude, depends on imports for more than 85% of its requirement.
• Government of India through Indian Strategic Petroleum Reserve Ltd. (ISPRL) under Phase–1 has setup Strategic Petroleum Reserves (SPR) at three locations with a capacity of 5.33 MMT (million metric ton) –
  • Vishakhapatnam (1.33 MMT),
  • Mangaluru (1.50 MMT) and
  • Padur (2.5 MMT)
    

About Salt Cavern-based oil reserves:

• Underground storage caverns are used to store very large quantities of unrefined petroleum and natural gas.
• These underground caverns are cavities that have been “mined” out of naturally occurring salt domes.
• Approximately 7% of total underground natural gas storage capacity is in Salt Caverns.
• 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.

Salt Cavern-based Storage v/s Rock Cavern-based Storage:

• Rock caverns are large man-made spaces in the rock and are considered the safest means of storing hydrocarbons.
• In comparison to rock caverns, salt caverns are considered cheaper and less labour- and cost-intensive.
• 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 entire strategic petroleum reserve programme of the United States has so far been based on salt cavern-based storage facilities.
• In comparison, India’s all 3 strategic petroleum reserves are made up of excavated rock caverns.

India’s Potential:

• Rajasthan, which has the bulk of requisite salt formations in India, is seen as the most conducive for developing salt cavern-based strategic storage facilities.
• A refinery is coming up in Barmer, and Rajasthan has crude pipelines as well; such infrastructure is conducive for building strategic oil reserves.
• However, no Indian company, including EIL, had the requisite technical know-how to build salt cavern-based strategic hydrocarbon storage.
• This gap in access to technology has been bridged by EIL’s recent partnership with Germany’s DEEP.