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YKOFX | Natural Gas

Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane, with up to 20 % of other hydrocarbons as well as impurities in varying amounts such as carbon dioxide. Natural gas is widely used as an important energy source in many applications including heating buildings, generating electricity, providing heat and power to industry, as fuel for vehicles and as a chemical feedstock in the manufacture of products such as plastics and other commercially important organic chemicals.

Natural gas is found in deep underground natural rock formations or associated with other hydrocarbon reservoirs, in coal beds, and as methane clathrates. Petroleum is also another resource found near and with natural gas. Most natural gas was created over time by two mechanisms: biogenic and thermogenic. Biogenic gas is created by methanogenic organisms in marshes, bogs, landfills, and shallow sediments. Deeper in the earth, at greater temperature and pressure, thermogenic gas is created from buried organic material.

Before natural gas can be used as a fuel, it must undergo processing to clean the gas and remove impurities including water in order to meet the specifications of marketable natural gas. The by-products of processing include ethane, propane, butanes, pentanes, and higher molecular weight hydrocarbons, hydrogen sulphide (which may be converted into pure sulfur), carbon dioxide, water vapor, and sometimes helium and nitrogen.


The price of natural gas varies greatly depending on location and type of consumer. In 2007, a price of $7 per 1,000 cubic feet (28 m3) was typical in the United States. The typical caloric value of natural gas is roughly 1,000 British thermal units (BTU) per cubic foot, depending on gas composition. This corresponds to around $7 per million BTU, or around $7 per gigajoule. In April 2008, the wholesale price was $10 per 1,000 cubic feet (28 m3) ($10/MMBTU). The residential price varies from 50% to 300% more than the wholesale price. At the end of 2007, this was $12–$16 per 1,000 cu ft (28 m3).

Consumption growth grew by (+1.7%) a significant increase from the weak growth in 2014, but remained below the 10-year average of 2.3%

The Middle East recorded the strongest regional growth rate (+6.2%), while consumption in Europe & Eurasia declined by 0.3%, with a decline in Russia offsetting growth in the EU. Among emerging economies, Iran (+6.2%) and China (+4.7%) recorded the largest increments to consumption, even though growth in China was sluggish compared with a ten-year average growth of 15.1%. Among OECD countries, the US (+3%) accounted for the largest growth increment. Globally, natural gas accounted for 22.3% of primary energy consumption.

Natural gas supplies over 22% of the energy used worldwide, and makes up nearly a quarter of electricity generation, as well as playing a crucial role as a feedstock for industry. Natural gas is a versatile fuel and its growth is linked in part to its environmental benefits relative to other fossil fuels, particularly for air quality as well as greenhouse gas emissions.

The natural gas market is becoming more globalized, driven by the availability of shale gas and the rising supplies of liquefied natural gas. As gas trade increases, so do the concerns about natural gas security, as a demand or supply shock in one region may now have repercussions in others.

It’s expected that the share of natural gas in the global energy mix will grow from 22% in 2016 to over 24% in 2020, driven mainly by growth in China, India, and South East Asia.