Abstract This paper presents a model for effective management of natural gas storage in salt caverns. An interactive and dynamic phenomenological inventory model is developed that considers the effects of hydrocarbon thermodynamics, phase behavior, and heat and mass exchanges along cavern walls during gas loading, storage and unloading. The model predicts cavern behavior and accounts for gas ballooning, losses due to porous characteristics and leaky salt formation fractures, variation of temperature and pressure, vapor and liquid composition changes and cavern volume change due to salt creep. The model consists of a set of coupled nonlinear algebraic and differential equations, for which the solution as a function of time is obtained by numerical means. The capabilities of the proposed model are demonstrated by analyses of several field scenarios. The dynamic response of the cavern-well assemblage to injection and production cycles is simulated.