EME 801
Energy Markets, Policy, and Regulation

Characteristics of Natural Gas

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Please read the natural gas section of the "Energy Explained" series from the Energy Information Administration before you get started with the material for this lesson.

Like crude oil, natural gas is an energy source based on hydrocarbon chains, but the composition of natural gas is generally different than the composition of crude oil. Natural gas is primarily composed of methane, though some natural gas deposits also contain substantial fractions of other hydrocarbon gases or liquids such as ethane and propane (these are longer hydrocarbon chains that have substantial value as chemical feedstocks). Most gas deposits also contain impurities such as sulfur or other carbon compounds that must be separated prior to the gas being injected into transmission or distribution pipelines. Gas deposits that consist primarily of methane are known as “dry” gas deposits, while those with larger fractions of other hydrocarbons are known as “wet” or “rich” gas deposits.

Photograph of a natural gas pipeline
Figure 3.1. Natural gas pipeline.
Credit: www.eia.gov

Unlike oil, natural gas is essentially wedded to its transportation system – without pipelines (and liquefied natural gas tankers, which we’ll discuss later), there is no economical way to get large quantities of gas to market. Moreover, natural gas pipelines generally need to be dedicated assets. Using oil or petroleum product pipelines to move natural gas is not really possible, and moving other products in natural gas pipelines is not possible without completely repurposing the pipeline (and the injection/withdrawal infrastructure on either end). This asset specificity and complementarity between natural gas and the pipeline transportation infrastructure has been a significant factor in the development of the natural gas market. Each has little use without the other.