Guide to the natural gas industry, production, & market prices


Natural Gas Formation

Natural gas is primarily methane (approximately 97% by volume), which is an odorless, gaseous compound composed of one carbon atom and four hydrogen atoms (CH4).

Natural gas formed from terrestrial and marine organisms and marine algae plankton remains that settled at the bottom of isolated (from marine currents), inland ocean basins and were then buried millions of years ago beneath the Earth's surface. This thick layer of organic material was buried beneath mud, sediment and soil, which itself was then buried and eventually solidified into rock. The pressure and heat exerted by the rock on this organic matter results in the low- or non-oxygen anaerobic decay of organic material, which can become reservoirs of coal (and bitumen), oil (petroleum), and natural gas as long as the prerequisite geologic conditions are in place (the greater the depth and the higher the temperature the more the likelihood that gas will develop rather than petroleum). Similarly, the mixture of this insoluble organic matter (kerogen) in sediment rock also leads to the formation of oil and gas shale, again as the result of the existing geologic conditions. Once formed, the gas tended to migrate toward the surface and will collect in locations such as the undersides of domes of impermeable stone. Directly below the impermeable layer is the natural gas, which forms a gas cap; oil is below the gas and under the oil is the saline water of the primeval oceans. Because of the variety of subsurface conditions the composition of the gas differs from one gas reservoir to another.

Natural gas is extracted as a product from subsurface gas reservoirs. Natural gas is also extracted from associated gas reservoirs as a by-product of crude oil extraction operations, which means that the gas is present in a crude oil reservoir, either separate from or in solution with the oil. Condensate(s) / Natural gas liquids (NGLs) are heavier hydrocarbons such as ethane (C2H6), propane (C3H8), butane (C4H10), isobutane and natural gasoline, which are found in a gaseous state under the conditions of pressure and temperature found in the reservoir, but which changes to liquid state or phase once at the surface and are extracted and separated from the natural gas stream and are used as petrochemical feedstocks, home heating fuels and in refinery blending.

An additional source of methane is from Methane Hydrates. Methane hydrates are solid deposits composed of isolated cages of water molecules that contain molecules of methane. The solids can be found deep underground in polar regions and in ocean sediments of the outer continental margin throughout the world.

Natural gas is also produced from coalbeds. Coalbed gas is simply natural gas (methane) extracted from certain coal seams.

Sour gas is natural gas that contains not only methane (and some long-chain hydrocarbons), but also H2S (Hydrogn Sulfide) and/or CO2 (Carbon Dioxide). Mercaptans, organic sulfur compounds in the form R?S?H, are usually also present. The tubing, pipes and pumps for sour gas must be made of special metal, since H2S, CO2, and mercaptans are corrosive. These compounds must be removed before the gas can be sold thus their presence in approximately 40% of the world's untapped fields creates obstacles to developing these sources, with the greatest concentration of sour gas fields being in Middle East and Central Asia (sour gas is also found in Europe, Africa, North and South America)