The Composition of Produced Natural Gas and Why It Matters

by Bob Shively, Enerdynamics President and Lead Facilitator

Typical natural gas composition

Natural gas composition refers to the amount of various constituents that make up a stream of natural gas. Though natural gas is mostly methane, there are many other components. Gas composition varies by well, but a typical composition of raw gas produced from a gas well is as follows:

raw natural gas

Before natural enters a transmission pipeline it is processed. Valuable natural gas liquids (NGLs) are separated to be sold as additional products and impurities are removed and disposed of. The result is pipeline quality gas that can be moved via pipeline and sold to consumers:pipeline gasDepending on the composition of the raw gas stream, there may also be multiple NGL streams that can be sold.

Natural gas liquids stream for a “wet gas” source:

wet gas

Why composition matters

Based on the market price of the various components, producers may receive more revenues from natural gas sales or more from sales of NGLs. The market value of the different components can determine which gas wells are most economic to produce, as well as the optimal mix of components to be removed and/or left in the natural gas stream. 

NGL v HH prices

Source: EIA website

In a low gas price environment, NGL value is a key component of producer revenue. You can especially see the importance of liquids in the 2011 to 2014 time-frame on the above price graph. During this time, producers pushed to produce as much “wet gas” (meaning gas with lots of liquids in the raw stream) as possible. More recently, a glut of NGLs plus a reduction in the price of petroleum has led to reduced NGL revenues. As you might imagine, gas producers closely watch price trends for both NGLs and natural gas in developing and implementing their ongoing production plans.

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
This entry was posted in Natural Gas and tagged , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s