Natural gas is a mixture of combustible gases and vapor, mostly methane. It is converted into butane, propane and naphtha and is recommended by environmentalists because it is more efficient and produces less pollution and greenhouses gases than oil or coal.

For a long time natural gas was an underutilized commodity. Much of it was simply flared off as oil-field waste to get at oil or allowed to escape until the technical problems of storing it and transporting it were solved.

Natural gas is much more difficult to store and transport than oil. It is generally transported in Liquid Natural Gas (LNG) tankers or by pipelines with special expansion joints and elastic couplings to prevent leaks and booster stations every 100 miles or so to maintain pressure. Gas is often stored in natural reservoir or abandoned fields.

Natural gas from found in deep, saline-rich limestone and sandstone cavities, where spongelike pours store gas and help it from leaking away.

Natural gas has a high burning efficiency and emits 29 percent less carbon dioxide than oil and 45 percent less than coal burned in power stations.

Websites and Resources: American Petroleum Institute ; Investopedia Oil Handbook ; Petrostratgies Learning Institute ; U.S. Energy Information Administration ; New York Times article New York Times ; Wikipedia article Wikipedia ; Oil. com ; Petroleum Online ; Natural

Book: “The Prize” by Daniel Yergin.

Uses of Natural Gas

Natural gas is generally used for heating but is also for household cooking and running factories and is also vital component for fertilizers, plastics and other industrial products. . More than 62 million households in the United States use it. Large amounts are brought into Europe by pipeline from Russia for the same reason. It is also used in industry, mainly in the production of chemicals and fertilizer, and by utility companies to generate electricity.

In recent years there has been an effort to switch from oil and particularly coal to natural gas for electricity generation because it burns cleaner than oil or coal. Natural gas emits 0.8 carbon dioxide per kilowatt hour compared to 2.1 for coal and 1.4 for petroleum. Between 1989 and 2005 natural gas consumption by electric utilities increased by 76 percent

Natural gas, coal, wind and nuclear energy all produce energy at a rate of about 5 to 7 cents per kilowatt hour.

Natural Gas Prices and Supply

Natural gas is becoming a world commodity ;uke oil. It is still loosely connected to world oil benchmark prices usually set by long term contracts but can vary widely from continent to continent. As time hoes its prices fluctuate more independently of oil. When oil was reaching highs in 2008 and 2009 the price of natural gas was falling.

Natural gas, use mainly for heat, has different users than oil, which is used more in transportation.

Until recently liquified natural gas was a high-priced commodity for countries such as Japan that did not have their own supplies or have access to gas pipelines. As time has gone on more terminals have been built and giant tankers are able to carry LPG from one continent to another.

The global capacity will increase from $299 million tons a year by 25 percent in 2009 and 2010after the completion of six new plants in Qatar, Russia, Indonesia, and Yemen, totaling $48 billion in investments, and the upgrading of a seventh plant in Malaysia. More plants are due to go on line in 2010 and 2011.

The market is controlled by national energy companies, assisted by oil giants such as Exxon Mobile, Total, BO and Shell.

Natural gas prices tripled between 1998 and 2006 and peaked in 2008 at $13 per thousand cubic feet and then plummeted in 2008 to $4 per thousand cubic feet in 2009.

In the alter 2000s the price of natural gas collapsed as a result of the worldwide recession and new discoveries in America and new supplies coming online in the Persian Gulf. Between October 2008 and October 2009 the price fell from $1.13 per therm (equal to about $70 a barrel of crude oil) to about 32 cents.

Natural Gas Development

Natural gas is found alone and with oil, usually in the same kind of geological formation where oil is found. Many times gas is found in a formation above oil. The methods used to explore for gas and drill for it are similar to those used for oil.

Freshly pumped oil often contains natural gas. Much of it used to be burned off in dramatic flares. Now an effort is made to collect it. Gas can also be found in sands and shales and is easier extract from these materials than oil.

Natural gas is much more difficult to extract and transport and expensive to bring to market than oil. Many countries with natural gas try to develop it for domestic uses because it is relatively expensive to transport.

The most advances drilling operation use automated machinery that joins mine-meter lengths of pipe and insert them into new wells that can be over three kilometers deep. The steel piers cam withstand pressure up to 690 kilograms per square centimeter. It is encases in concrete to 700 meter or so. The pipes allow a fracking fluid of water , sand and chemical at high pressure into the gas-bearing rock.

At specific depths identified by geologists, pipe is perforated with small holes b controlled explosions. The fracking mixture then breaks up the rock, allowing natural gas to rise to the surface, About 70 percent of the water mixture remains underground, while the rest is pumped back up and later reinjected into 3,000-meter disposal wells. One of the problems with the method is that sometimes spills and leaks of fracking fluids occurs.

Gas moved to place that are relatively close using pipelines but transporting over long distances requires transforming it LPG and moving by ship

Natural gas is dangerous and prone to shortages. A huge explosion occurred at a natural gas production plant in the 2000s.

In recent years development has slowed the cost of build LPG plants has tripled. According to Bechtel, a large LNG builder, the price for plant with annual production of 1 million metric tons rose from $200 million in 2000 to $600 million in 2006. Construction takes about four years, Reasons for the hold ups include shortages sin contractors and manpower to complete them, instability in nations where they built, struggles over royalties and environmental concerns. The plants have to be large to make them economical and are so expensive because they have liquify large amounts of gas at 162 degrees C.


Natural gas needs to be liquified into LPG (liquified petroleum gas) or liquid natural gas (LNG) to be transported by tanker. Gas liquification is an old technology but scientific advances have made it cheaper to do.

Liquid natural gas (LNG) is natural gas that has been super cooled and liquified by chilling it to -162 degrees C (-260 degrees F). in a gas liquification plant. The chilling compresses the gas, and makes it easier to store and transport, particularly in LNG ships that are used to transport gas overseas. When the gas reaches its destination it is released into pipelines, where it becomes a gas again.

LNG technology has transformed the delivery of natural gas around the world. Compressing it allows it to be transported in tankers like oil, creating an international gas market that didn’t exist before the technology came on line.

LNG tankers are huge, strange-looking ships with large hemispheres bulging from their decks. The largest one hold 145,000 cubic meters of LNG, enough to supply around 200,000 households for around one year. LNG tankers cost around $200 million each, about twice the price of an oil supertanker. They have double-walled hulls to make sure they can not be penetrated by a collision.

Natural gas hydrate (NHG), or solidified natural gas is an icel0ke material made by natural gas and water under high pressure. As it established as a solid around -20 degrees C as opposed to 162 degrees C for LNG It is being pushed in some paces because it much cheaper and reserve to transport and need a relatively small plant to convert the gas to NHG. The method still has to be approved for international commerce and some technical matters still have to worked, the technology is best for small and mid-size field at distances less than 6,000 kilometers between supplier and user.

Dangers with LNG

An explosion on a LNG tanker could produce a fireball almost a kilometer in diameter. How big the explosion depends on how much gas leaks out before it explodes. In worst case scenarios large amount of it leak out then it explodes. If this happened while the ship is anchored at a port the result be catastrophic.

In November 1974, thirty-three crew members died in a huge explosion and fire that occurred when a tanker carrying liquified petroleum gas and naphtha collided with a cargo ship in Tokyo Bay. The tanker was towed outside the bay and sunk with torpedoes fired from a submarine and destroyer and still continued to burn for more 20 days.

There are worries about a terrorist attacks involving LNG tankers. The plot of the film “Syriana” revolves around a Pakistani terrorist trying to blow up such a tanker with a U.S.-Cole-style attack using a warhead hidden in a fishing boat. Before September 11th an Al-Qaida member entered Boston Harbor aboard a LNG tanker originating in Algeria.

Natural Gas Reserves

There is still lots of natural gas out there. One survey in 2000 calculated that the world had consumed 1,752 trillion cubic feet at that time and there were proven reserves of 4,793 trillion cubic feet, and estimated reserves at 3,660 trillion cubic feet, plus an additional 5,196 trillion cubic feet was projected to be discovered.

By current estimates the amount of natural reserves are roughly equal to oil reserves — about 1.2 trillion barrels of crude, according to BP. But oil is being used up twice as fast as natural gas, which means that natural gas will become an increasingly important energy sources as time goes on.

LNG sales rose 11 percent in 2006 to 157 million metric tons, or 173 million tons. . sakes are expected to rise to 261 million metric tons in 2010 and another 488 million by 2020.

145,000 cubic meters of LNG is enough to supply around 200,000 households for around one year.

About $37 billion worth of natural gas in burns as waste every year, most in place like Nigeria, Brazil and the Russian Arctic

Natural Gas Producers

The major natural gas producers are (proven reserves in trillion of cubic feet: 1) Russia (1,680), 2) Iran (974), 3) Qatar (911), 4) Saudi Arabia (240), 5) United Arab Emirates (214), 6) the United States (204), 7) Nigeria (182), 8) Algeria (162), 9) Venezuela (152); 10) Iraq (112), Indonesia, Malaysia. [Source: Energy Information Administration]

Russia, Iran, Qatar Algeria and Venezuela have discussed forming an OPEC-like cartel.

There can be prices variation in LPG from place to place and at different times. In 2008 the prices between the United States and Asia were so different that importers in the United States were making big profits exporting to Asia what they imported and spot prices were 1½ to two ties higher than LPG purchased via a long term contracts.

In the late 2000s the United States government said ut was doing to make a major effort to switch from coal to natural gas

Natural Gas Contracts

Most natural gas is bought with long term contracts, some as long as 30 years, rather than on the spot market. Often the price is linked to the price of oil.

In Europe, the supplier market is controlled by Gazprom of Russia, Sonatrach of Algeria and Statoil Hydro of Norway. They supply gas mainly through long-distance pipelines under “take-or-pay” contracts. These deals are often lined to a large gas fields’s entire output and require purchasers to takes specified annual volumes of gas. . If they don’t take all the gas they must pay for it anyway and the volume declined can ve supplied later when demand increases, The take-or-pay price is almost always linked to an index, made up typically of a basket of alternatives fuels related to crude oil.

The take-or-pay system was organized when there were few buyers and sellers and was set up so that seller had a buyer lined up to justify the cost drilling and developing a gas source and establishing pipelines.

Natural Gas and the Environment

Natural gas is the cleanest burning fossil fuel. But that doesn’t mean it is a totally environmentally-friendly fuel. The dirtiest and nastiest part of natural gas is drilling and developing it. In new development sites in Wyoming in the United States, large natural gas deposits lie underneath aquifers and many farmers complain that drilling for natural gas has causes natural gas and chemical use in the drilling process to leak into their water supplies. Farmers who lIve in the area have installed expensive reverse osmosis water purifiers but still complain the water produces seizures and cognitive problems.

The Japan Agency for Marine-Earth Science and Technology (JAMSTEC) is developing technology to seal off carbon dioxide in seabed coal fields and convert it to natural gas using microorganisms.

“Coal cracking” is a system developed by Haliburton to extract natural gas from coal seams trapped in subsurface aquifers. The process produces huge volumes of toxic “produced water”, which is often stored in containment ponds that sometimes pollute ground water supplies.

Image Sources:

Text Sources: World Almanac, United States Geological Survey (USGS) Minerals Resources Program, Investopedia Industry Handbooks, U.S. Energy Information Administration, Department of Energy and National Geographic articles. Also the New York Times, Washington Post, Los Angeles Times, Smithsonian magazine, Natural History magazine, Discover magazine, Times of London, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated March 2011

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