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:
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:Depending 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:
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.
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.