Utah salt caverns handy for energy storage

DELTA, UTAH - How's this for an energy trick?

A Utah company plans to use wind or solar power to pump hollowed-out salt caverns full of compressed air. Then, as daily demand for electricity peaks, the company would release the underground air to spin power-generating turbines.

That's just one way Salt Lake City-based Magnum Development plans to use a series of salt caverns near Delta in central Utah.

The caverns are primarily intended for storage of natural gas — as much as 45 billion cubic feet of gas. Gas producers need storage typically in summer when demand is low, so they can pull it out in winter when demand is high.

Magnum is collecting federal permits for its versatile "energy hub" and hopes to open the first cavern for business by 2012.

"It would be like a big storage battery for electricity," said Craig Broussard, a managing director for Magnum Development, a portfolio company of Houston-based private equity group Haddington Energy Partners III.

Magnum is leasing state land in the same area where another Utah company is generating geothermal power for export to California.

"It isn't often that nature cooperates and places resources right where they are needed for industrial development," Broussard said. "We have the perfect location and the perfect resource."

But first, Magnum needs to dig out caverns from salt deposits believed to be thousands of feet thick.

It plans to pump a solution underground to dissolve salt — and extract the brine solution for sale.

Hollowing out just one cavern will take at least 18 months, said Rob Webster, another of Magnum's managing directors.

The salt caverns won't suffer from lack of interest — no fewer than 26 gas companies have indicated they'll rent the space, he said.

The salt caverns can hold compressed gas when they're not being used for natural gas.

Other companies building or planning solar or wind farms in central Utah could use the caverns to essentially store some energy, by converting it into compressed air.

Or the caverns could store carbon dioxide from the coal-fired Intermountain Power Project nearby, if the federal government decides to regulate carbon emissions.

Magnum obtained a 2,200-acre lease of state trust lands last September for its project. Terms of the lease call for it to pay $25,000 a year, an amount that will rise to $50,000 after the third year.

If the energy project is successful, the company would pay the Utah Institutional Trust Lands Administration about $240,000 in royalties a year for each salt cavern, based on volumes of energy stored and released.