Natural Gas Overview

Natural gas is primarily methane (CH₄) with smaller amounts of hydrocarbons like ethane, propane, and butane (collectively called natural gas liquids or NGLs), along with non-hydrocarbons such as CO₂, nitrogen, and helium. These impurities and NGLs are removed at processing plants before methane is transported and sold, with NGLs also sold commercially.

NGLs

Uses

Natural gas emits less CO₂ per unit of energy than oil or coal, making it a key fuel for power generation—especially with recent shale gas discoveries. It's also used for cooking, heating, transport (as Compressed Natural Gas or CNG), fertilizer production, and oil sands extraction.

Regional Pricing

Unlike oil, natural gas prices vary regionally due to transport challenges. While pipelines work on land, overseas transport requires liquefaction (Liquefied Natural Gas, LNG), shipping, and re-gasification—making global price alignment difficult. Regional prices are shaped by extraction costs, transport logistics, local demand (e.g., weather), and pipeline capacity.

LNG Value Chain

Formation

Oil and gas are often co-located, with their type and quantity influenced by the thermal maturity of the source rock: oil forms at lower maturity, NGLs at medium levels, and natural gas at higher levels. Beyond a certain point ("overmature"), hydrocarbons lose commercial energy value.

(Source: National Energy Board (NEB), Kimray, U.S. Energy Information Administration)