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Natural Gas 101

Natural Gas 101

What is natural gas?
Natural gas is made up of hydrocarbon gases, primarily methane. It is usually found deep below the earth’s surface, often with deposits of oil, and is removed by wells that are drilled to access the petroleum deposits.

After it reaches the surface, the gas is separated from any oil or water that may have been present in the petroleum deposit. It is then processed to remove impurities, other gases such as propane and butane, and any remaining water or water vapor.

Why use natural gas?
Natural gas is a fuel of choice because it is:

Natural gas is the cleanest-burning fossil fuel. Environmental concerns have led to a number of new uses for gas to take advantage of its clean-burning characteristics. For example, electric generation facilities are choosing to build and install gas-fired turbines and to use natural gas in conjunction with other fuels to reduce emissions.

How is natural gas transported?
Natural gas is transported in an underground system of large-diameter pipes. The force that propels the gas is its pressure, which gradually dissipates as it travels through the pipeline. A series of compressor stations are positioned along the pipeline’s path. Each station has a number of large compressors that increase the pressure of the gas to push it to the next station along the line.

Who uses natural gas?
There are five main groups of natural gas users.

Industry Sectors
More than 200,000 miles of transmission pipelines deliver natural gas to more than 160 million North American consumers in the United States, Canada and Mexico. While most electric energy is delivered through integrated utility companies, four industry segments coordinate to bring natural gas from producing wells to homes and industry. Pipelines serve as the highways of the gas industry, making it possible for gas sellers and buyers to reach each other.

Gathering & Processing
Natural gas is a commodity produced by major oil and gas companies and independent gas producers and traded in a competitive market.

During the production phase, gas producers use advanced technology to locate and drill for gas reserves. Gas is pumped from wells into gathering lines. Gathering operations bring natural gas to processing plants that remove moisture and impurities from the gas stream, and to separate liquid byproducts. Today, Americans use about 22 trillion cubic feet of gas per year, which is about 25 percent of the energy consumed in the United States.

Marketing companies act independently from gas pipeline companies, and serve as sales agents or brokers, purchasing gas from producers, selling gas and arranging transportation for large consumers and local gas distribution companies.

Transportation & Storage
Interstate natural gas pipelines are transportation companies, like railroads or trucking companies. They do not own the commodity they carry in their pipelines or store in their underground facilities. Their job is to move natural gas from producing areas to market areas under contract to gas buyers. Buyers such as local gas distribution companies and marketers resell the natural gas to their customers. Others transport directly to industrial and electric generation facilities. The Federal Energy Regulatory Commission (FERC) sets transportation and storage rates charged by pipeline companies; however, FERC requires pipelines to operate “open access” systems that allow any shipper to request gas transportation on any pipeline.

Local Distribution
If you have gas service in your home, your meter reader works for a local distribution company (LDC). LDCs contract for gas supplies and for interstate pipeline transportation to bring natural gas to their own “city gates,” where they deliver gas to homes, businesses and industrial plants served by their own distribution pipelines. State public service authorities regulate these distribution companies and their sales.