Understanding Natural Gas’s Position in the World Energy Market

As the global energy industry transitions toward renewables and a lower carbon future, natural gas is poised to be an effective backup for these intermittent sources. This efficient, flexible power source will help smooth out fluctuations in renewable energy production on windless or cloudy days.

Natural gas combines gaseous hydrocarbons, mainly methane, and smaller amounts of higher alkanes. It can be compressed to transport over long distances as pipeline-grade natural gas or liquefied to travel in special ocean tankers.


The definition of “gas” will change as the world shifts to value chains built upon biomethane extracted from organic matter and hydrogen produced from gas (with carbon capture and storage). These energy sources might not look or feel like traditional natural gas, but they will have similar physical properties, and each will require different technology and business models.

The current global gas market is a patchwork that relies on complex pipeline systems across the continents. This structure has limited the expansion of a global gas market, in contrast to the worldwide oil market that emerged as technical solutions were solved to transport crude oil worldwide.

What is natural gas? Natural gas can be found underground or in combination with crude oil. It is a mixture of hydrocarbon gases, predominantly methane, with a small amount of ethane and propane. After being dug up from the ground, it can undergo additional processing to eliminate contaminants. Drilling and squeezing it out of wells or reservoirs covered with impermeable rock are the methods used to remove it from the earth.

Natural gas is most commonly used to generate electricity, which offers a cleaner, more practical option than coal or oil. However, the demand for new gas-fired power plants is declining due to the development of renewable energy sources and initiatives to lessen energy intensity. The effectiveness of the switch to clean energy and whether or not efficiency gains are sufficient to buck these trends will determine the sector’s future.

If Natural Gas’s position is not available in your area, you can find energy plans that can be also good alternatives for it such as solar, wind, or geothermal to power your home or business. Research local providers and consult with experts to find the most suitable and sustainable energy option for your needs.


Natural gas will be a crucial power generation component as the world shifts toward low-carbon energy sources. In some markets, it will play a significant role in the displacement of coal, but it will not have a privileged position, and renewables will also play an important role. In other countries, it will remain a small part of the mix.

Over the following decades, there will be a significant increase in the demand for natural gas worldwide, with developing nations driving most of this expansion—particularly China and India. However, the pace of this growth will be primarily determined by politics and technology rather than the need to address climate change.

Unlike oil, which is shipped in tankers across the globe, most natural gas moves through a network of pipelines. It creates a partially fragmented market structure, and high prices in one region don’t necessarily transmit to buyers in another.

Most of the gas market’s demand comes from buildings for space and water heating and industry for feedstock or process heat. In non-OECD regions, buildings account for about 80 percent of the need; in OECD nations, that figure is only 28 percent. In Africa, building energy demands are relatively modest but still growing, while in the Asia Pacific and Europe, the market is dominated by utilities seeking to replace aging infrastructure.


Unlike oil extracted from underground rock deposits, natural gas is produced by tiny microorganisms living in low-oxygen environments. They decompose organic matter, such as animal waste and sewage, and create a form of methane called biogenic methane, which becomes natural gas. This methane is found in landfills and other places where organic material decomposes without oxygen, and it can also be harvested from other sources such as coal or plant residues.

In addition to its direct use as an energy source, gas is a raw material for industrial processes such as plastic production and heating and cooling commercial buildings. It is also used in residential homes as a heat source and for cooking.

Sedimentary basins around the world, from the deserts of Saudi Arabia to the freezing Arctic in Alaska, contain large deposits of natural gas. Conventional natural gas is trapped in porous material beneath impermeable rock. More recently, technologies such as horizontal drilling and hydraulic fracturing (better known as “fracking”) have made it possible to extract natural gas from more minor, unconventional deposits, including non-porous sand and coal seams.

In most countries, natural gas is pumped to consumers through pipelines. Liquefied natural gas (LNG) is required for long-distance transportation. The United States is an LNG exporter, and many power facilities maintain LNG reserves for usage during high energy demand. New LNG technology could change this value chain, making gas a baseload power source.


As with all fossil fuels, the primary usage for natural gas is electric power generation. The other significant use for the energy in residential and commercial heating and cooking, with industrial applications in a close third place.

Natural gas, also known as fossil gas or fracked gas, is a combination of hydrocarbons formed organically over millions of years from decaying plant and animal matter. It forms naturally in pore spaces, fissures, and cracks of sedimentary rock layers buried deep underground. It slowly migrates through these layers until it comes in contact with impermeable shale, salt, or clay and is trapped there.

Once discovered, it can be extracted from the ground through wells and a network of pipelines. The resulting raw natural gas contains several components, including methane (CH4), butane (CH3), propane (CH2), carbon dioxide, and water vapor. It then undergoes processing, converting it to pipeline-quality natural gas comprising 95-98 percent methane.

The process includes extraction, gathering, processing, compression, and transmission. Storage is another vital market component, mainly in depleted reservoirs, aquifers, and salt caverns. It is often transported to end users through a vast network of high-pressure pipelines. Unlike oil, where large tankers are used to transport the product, most of the world’s natural gas is pumped through pipelines that limit the supply to the span of the channel.

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