Natural gas

Summary: Natural gas is largely composed of methane and is one of the three major fossil fuels used to generate energy. Natural gas may lead to the development of economically viable and efficient alternatives to fossil fuels.

Natural gas is one of the three major fossil fuels currently used to generate energy. In 2015, it was the fastest-growing fossil fuel in use, and by the early 2020s it provided over 20 percent of the world’s total primary energy, according to the International Energy Agency (IEA). Uses for natural gas vary between less developed and more developed nations, the former using natural gas largely for household heating and cooking and the latter for industry, electricity production, residential uses, and a small percentage of transportation fuels.

Natural gas consists primarily of methane and other hydrocarbon compounds. It is odorless and colorless and is often found associated with other fossil fuels, such as coal or petroleum beds. However, there are nonassociated stores of natural gas in isolated beds. Like other fossil fuels, natural gas is a highly combustible substance that, with recent infrastructure developments, is relatively easy to transport and store. Its combustibility makes it a highly effective resource for generating energy and heat.

The Creation Process

It is generally believed that two processes create two types of natural gas. Biogenic gas is created when bacteria decompose organic material at shallow depths below the earth’s surface. For example, these gases can be observed when wetlands are disturbed and “swamp gas” is released. Thermogenic gas develops deep underground, resulting from compression and heat. Holes must be drilled to access thermogenic gas deposits. Once accessed, in most cases, the natural gas must then be pumped to the surface. In a few cases, however, the gas will flow freely because of natural pressure. Both thermogenic and biogenic gases are created from biomass that has been buried in anaerobic environments. There is also a third theory that nonassociated gas stores exist far below the earth’s surface, which were created during the formation of the earth.

One of the earliest known extractions and uses of natural gas by human society occurred during the Han dynasty (200 BCE). Chinese laborers drilled for natural gas with bamboo and used it to boil seawater for salt extraction. In the late 1700s, cities and towns in Britain used natural gas for lighting. In the United States, the first known intentional drilling for natural gas occurred in New York State in the 1820s. However, it was not until the invention of the Bunsen burner in 1885—allowing for more conventional uses such as cooking and heating—that natural gas became a viable option for generating energy around the world.

Nonrenewable Resource

Natural gas is considered a nonrenewable resource because recoverable reserves are being exhausted at a rate that is a tiny fraction of the amount of time needed to create them. In 2023, the United States was the top producer of natural gas in the world, producing nearly all the natural gas consumed by the country and also exporting its supply to other countries. The top natural gas-producing states were Texas, Pennsylvania, and Louisiana. Other large producers of natural gas at this time included Russia, Iran, China, and Canada, though many European nations worked to reduce their reliance on Russian gas following the Russian invasion of Ukraine in 2022. If extracted with contemporary technologies and known costs, current reserve-to-production ratio estimates (R/P ratio, measured in years) suggest there are enough conventional reserves to satisfy society’s consumption needs for the next several decades. The vast majority of these proven reserves are located in Russia and the Middle East. The largest deposits are in Iran, Russia, and Qatar. The largest conventional gas field is the Urengoy Field in the Western Siberian Basin, east of the Gulf of Ob, within the Arctic Circle. The Urengoy Gas Field was discovered in the 1960s and held an estimated initial total of 8 trillion cubic meters (280 trillion cubic feet).

Historically, natural gas was considered a low-value by-product found interspersed with oil and coal deposits. Until the early twentieth century, natural gas was too inefficient for use as a large-scale energy resource. Because of a lack of technological development and insufficient infrastructure, producers could not get natural gas to markets in a feasible manner, and it was often burned off or allowed to vent into the air on site. Natural gas production remained slow during the industrial era, until post–World War II, when improvements in pipeline construction (and hence fuel transport) and safer infrastructure made natural gas technologically possible and economical. In 1937, after an undetected leak caused an explosion at the New London School in Texas, killing at least three hundred people, minute amounts of odorants (such as mercaptan) were added to retail natural gas. This allows consumers to detect leaks in order to prevent fires or explosions.

Impact of World War II

During World War II, large pipelines were built in the United States from Texas to the northeast states to ensure energy security for the country during wartime. These pipelines were known as “Big Inch” and “Little Big Inch,” and were responsible for transporting more than 350 million barrels of crude oil and refined products to the northeast before the war’s end in the summer of 1945. After the end of the war, there were debates to determine if the pipelines should continue to transport oil or be converted to transport natural gas. The issue was settled in 1946, when an influential coal miner strike motivated the Senate and War Assets Administration to award the Tennessee Gas and Transmission company a lease to supply natural gas commercially. This transition made natural gas readily available to the northeastern United States, where there was a high-demand home heating market.

A Costly Endeavor

Although modern techniques (such as seismology) have reduced the costs of finding, extracting, and processing the fuel, natural gas production is an uncertain, complex, and costly endeavor. Natural gas straight out of the well is often accompanied by water and liquid hydrocarbons, including benzene, toluene, ethylbenzene, and xylene (BTEX), hydrogen sulfide (H₂S), and other organic compounds that must be removed. To make “pipeline quality” natural gas, it must be passed through units (called heater treaters) with chemical substances that absorb the by-product water from the gas. Once the chemical extraction solution is saturated with water, the heaters raise temperatures to boil off the water. When cool, these large volumes of by-product water are pumped to a “produced water” tank. The chemical separating fluid, which has a higher boiling point than water, cools and is recycled into reuse. By-product oily substances that were produced with the gas and water become volatile and re-condense in a separate holding tank. This “condensate water” is commonly re-injected underground or hauled offsite to waste evaporation pits. In some cases, temporary pits are constructed, which hold waste materials and drilling mud so they can be reused through the drilling process. In order to reclaim drilling pads and sites, reserve pits must be drained and covered with topsoil or a capping material within a month of drilling completion.

After natural gas is processed and impurities are removed, it is often liquefied and compressed for storage and transport. Storage is an important issue, as most gas is used for heating during winter. A refrigeration process is used to condense the gas into liquified natural gas (LNG) by cooling it to –260 degrees Fahrenheit. LNG is then stored in insulated tanks, specially engineered to hold a cold-temperature liquid. LNG storage tanks are typically double-walled, composed of an outer wall of thick concrete and an inner wall made of steel. Between the walls is a thick layer of insulation. Often such storage facilities are underground to increase insulation. LNG will boil off and evaporate as natural gas, no matter how efficient the storage or refrigeration. This gas is then removed from the tank and used as a fuel on site, or refrigerated again to return it to the liquid state and placed back into the storage tank. If no pipeline is available to immediately transport gas, LNG also makes natural gas easier to store and transport. When LNG is transported (by train, truck, or ocean tanker) to its destination, or when it is removed from storage, it must be regasified. Regasification is accomplished by heating LNG and allowing it to evaporate back into its gas state at typical temperature and pressure conditions. Regasification is usually done at a facility where the gas can be placed into storage or directly into a pipeline for transport.

Regasification Terminals

The two types of regasification terminals are called liquefaction terminals and regasification terminals. Liquefaction terminals, which turn natural gas into liquid, are on the export end of transactions. Regasification terminals, which turn LNG back into natural gas, are on the import side of operations. Most natural gas is transported domestically within enormous infrastructure-intensive pipeline networks. Natural gas pipelines are often constructed of carbon steel to withstand the extremely high pressure of transporting compressed gas over large distances. Gas pipelines typically have small gathering systems that are composed of small diameter pipelines (2–8 inches). These “gathering lines” tap into gas fields and gather to larger “trunk lines,” which typically have an 8- to 48-inch diameter and are large cross-national or international transmission pipelines. Natural gas as a final product is delivered through another set of local pipelines directly to consumers. The US has a highly complex network of natural gas pipelines that delivers natural gas throughout the country, with approximately 3 million miles of pipeline carrying nearly 30 trillion cubic feet of natural gas to consumers in the early 2020s.

The Federal Energy Regulatory Commission (FERC) regulates natural gas in the United States. Their primary responsibilities are to regulate transmission and sale, approve facility siting, render penalties for FERC energy market violations, oversee environmental matters, and administer reports. Safety rules fall under the purview of the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA). In early 2016, PHMSA required older pipelines to be pressured tested and previously unregulated gathering lines to be marked and undergo repairs and preventative maintenance in response to several accidents in the 2010s and concerns about leaks along pipeline routes contributing to greenhouse gas emissions.

Deregulation

Since the mid-1980s, the demand for, and production of, natural gas has risen significantly. This is largely due to deregulation, geopolitical dynamics, rising energy demands, and new technologies. In this context, natural gas is often characterized as an energy source that can potentially bridge society’s current fossil fuel dependence to the development of economically viable alternatives to fossil fuels. Natural gas burns much cleaner than other fossil fuels, and the development of infrastructure and technology has made it much easier to extract and transport. In the early part of the twenty-first century, T. Boone Pickens (an oil tycoon and prominent alternative energy promoter) advocated the development of natural gas–powered automobiles in the United States. Pickens claimed that by transitioning the transportation fleet to natural gas, US society could fight the rising costs of oil with a smaller environmental impact, particularly in terms of reducing air polluting auto emissions.

Deregulation is a particularly important aspect of natural gas use. Natural gas has been regulated since the mid-1800s. The US Congress passed national-scale regulations in the form of the Natural Gas Act (1938) in order to manage interstate natural gas transmission and control monopolies. By the 1970s, however, many consumer states in the Midwest were experiencing shortages, despite adequate levels of supply in producer states. To remedy this, Congress passed the Natural Gas Policy Act (1978), which created a single natural gas market and equalized supply and demand. This market-based approach was further embraced by FERC Orders (436 and 636), which unbundled transport, storage, and marketing, resulting in more consumer choice. As a result, prices decreased for large commercial and industrial customers but declined only slightly for residential consumers.

Traded Commodities

In the United States, a large percentage of natural gas is traded on the New York Mercantile Exchange (NYMEX) located in New York City. NYMEX is the exchange for energy products, metals, and other commodities, and transactions reflect the prices of traded commodities. Thus, US gas prices are closely correlated with trading on the NYMEX. Because the price of natural gas in the United States is significantly lower than in the rest of the world, the US has become a global exporter of natural gas, particularly for firms with access to LNG export terminals.

Global Benefits

Globally, the popularity of natural gas as a fuel around the world has initiated numerous large-scale and high-profile international natural gas pipeline projects in Asia, Europe, and North America. Today, LNG is exported from many regions where natural gas production exceeds consumption, such as the Middle East and northern Africa, Russia, Trinidad and Tobago, Australia, and several southeast Asian countries. The low price of natural gas as a commodity often offsets the costs incurred when building liquefaction plants, converting the gas into LNG, and transporting the product to distant markets. To increase the country's capacity for exporting gas, the US Department of Energy promoted the construction of liquefied natural gas export terminals, and many new LNG export terminals were built in ports across the country. The larger markets for LNG include South Korea, Japan, and Taiwan. These are countries with densely populated areas and little to no available domestic fossil fuel sources. Having access to this global LNG market has provided a relatively clean-burning fuel that can be easily distributed in pipelines.

It should be noted, however, that there are a relatively limited amount of remaining conventional deposits of natural gas and that, since it is a nonrenewable resource, it is not a suitable long-term substitute for oil and coal. While several large deposits of natural gas have been located throughout the world, experts believe that the majority of proven conventional reserves have been accessed. Estimates of dry natural gas reserves vary, but in 2014, the EIA approximated the world total at around 6,973 trillion cubic feet. Additionally, although natural gas is considered the cleanest of the three major fossil fuels, producing it often releases methane (the main constituent of natural gas and a potent greenhouse gas) directly into the atmosphere. Further, burning natural gas emits carbon dioxide (CO₂), the most prolific greenhouse gas implicated in global climate change. Natural gas production and combustion, therefore, impact water quality, air quality, and contribute to global warming.

In the early twenty-first century, growing demand and improved technology increased the potential of extracting and producing unconventional natural gas deposits. The majority of these unconventional deposits are located in interbedded geologic layers such as in coalbeds and shales, mixed with heavy crude oil, as methane hydrates in cold regions, or are near the ocean floor. The use of hydraulic fracturing, or "fracking," enabled the extraction of natural gas from places such as shale that were previously too expensive to process. However, research increasingly suggested that extraction of unconventional natural gas deposits inadvertently emits large amounts of methane, one of the most potent greenhouse gases. Despite concerns, unconventional natural gas resources grew rapidly in importance. In 2000, unconventional natural gas resources contributed to only 1 percent of the US natural gas supply. By 2016, however, they represented 50 percent, and the EIA estimated in 2023 that the largest sources of US dry natural gas production through 2050 would be from shale and tight gas resources. Therefore, much of the speculation, investment, and technological development concerning natural gas in the early twenty-first century focused on the greater extraction, production, and consumption of what were considered unconventional natural gas resources. Technological advances also enabled drilling firms to drill deeper and expand the industry, tapping into formerly unrecoverable reserves with greater efficiency and reduced costs.

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