Natural gas is mainly methane (CH4), with trace elements of ‘heavier’ hydrocarbons like ethane (C2H6), propane (C3H8), butane & isobutane (C4H10) and natural gasoline (C5+). It is naturally odourless and colourless (but we add mecaptans to it to make it smell like rotten eggs, so we can detect leaks). It can be found in, or with, oil (called associated, or ‘casinghead’ gas), or in its own gas reservoir (called non-associated gas).

“Overall, the United States depends on natural gas for about 23% of its total primary energy requirements (oil accounts for 41% and coal for 24%). Sharply higher oil prices this summer should engender switching from oil to natural gas (and coal) in the utility sector, an expectation that has helped support above normal summer gas forward prices this year.

From 1990 through 1999, natural gas consumption in the United States increased by about 15%. Greater use of natural gas as an industrial and electricity generating fuel can be attributed, in part, to its relatively clean-burning qualities in comparison with other fossil fuels. Lower costs resulting from greater competition and deregulation in the gas industry and an expanding transmission and distribution network have also helped expand its acceptance and use. In 1999, natural gas consumption increased slightly, after falling in 1998, marking the eighth year of gas consumption increases during the 1990s. During 1999, gas consumption by electric utilities fell to 3,125 Bcf, down 133 Bcf from 1998. Gas is consumed in the United States mainly in the industrial (40%), residential (22%), commercial (14%), and electric generation (15%) sectors.

Gas demand is expected to increase by about 3.5%, to 22.2 Tcf, in 2000. This follows less than 1% growth in 1999, when oil prices remained reasonably competitive with gas in electric power and industrial production, and when strong nuclear power and hydroelectric power increases backed out gas use in electric power output. Increased natural gas demand is expected across all sectors in both 2000 and 2001. This is based on assumptions of continued economic growth, normal weather, and a relatively lower price for gas compared to oil, which should encourage fuel switching to gas by the utility sector. Also, a falloff from recent highs in nuclear power and hydroelectric output is expected to lead to increased gas use for power generation in 2000 and 2001.

U.S. natural gas consumption and imports, largely from Canada (and to a far lesser extent from LNG), are expected to expand substantially through 2020, with the fastest volumetric growth resulting from additional gas-fired electric power plants. In particular, new combined-cycle facilities furnished with more efficient gas turbines will help lower the cost of gas-generated electricity to levels competitive with coal-fired plants. Increased consumption of natural gas in the United States will require expansion of gas pipeline and storage capacity. By 2020, U.S. gas consumption is expected to reach 31.5 Tcf, up from 21.4 Tcf in 1998. This will require significant investments in new pipelines and other gas infrastructure -- $1.5 trillion over the next 15 years according to the National Petroleum Council.”
(from the Energy Information Administration)

Let’s move onto Oil/Petroleum.