INSTITUT FRANÇAIS DU PÉTROLE

Natural Gas Fundamentals

1.1 – Natural gas history

The 19th century is considered as the starting point of the gas industry. Gas, initially used
mainly for lighting, was obtained by producing synthesis gas from coal.

The start of natural gas production goes back to 1821, with the first well drilled eight meters
deep near Fredonia in the State of New York. It was initially used for street lighting and only
20 years later was natural gas used in its first industrial application. The first company
known for the use of natural gas, the Fredonia Gas Light was created in 1858. The first main
developments occurred in the United States, with a 160 km gas pipeline linking Chicago to
the reservoir in Indiana built in 1891.

In 1950, the United States still largely dominated the sector according to the available
statistics: 240 Bcm produced and 170 Bcm consumed, or 80 and 90% respectively of the
world total. The growth of natural gas worldwide dates from the mid-1950s, with the
production of gas, often combined with oil production in countries like Venezuela, the Former
Soviet Union, Romania, Iran and Saudi Arabia. The gas was partly reinjected and, lacking
markets, largely flared.

In Europe, gas production started with discoveries made in Italy (Po plain), in France (Lacq
in 1957) and in the Netherlands (Groningen in 1959). These were followed by discoveries in
the North Sea: British West Sole developed in 1967, followed by Cod and in 1968, Ekofisk in
the Norwegian zone.

The early 1970s saw the development of natural gas in other parts of the world, in Latin
America, Asia, Africa and the Middle East.

These developments were often hindered by the lack of local markets and of transport
networks.

During the recent years, the role of natural gas has been progressing due to its assets in
terms of environment protection and flexibility of use. Substantial cost reductions achieved
through technical progress have resulted in longer distance transports. LNG developments
have also contributed to this evolution.

Thus, the demand for natural gas progresses at a steady rate: the growth rate anticipated
during the ten coming years is located between 3 and 4%. The share of natural gas in the
primary energy consumption should rise from 18% in the beginning of the 80's to 25% in
2010.

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3600

3200

2800

2400 25%
Bcm

18% Gas
2000 share
Gas
share
1600

1200

1980 1985 1990 1995 2000 2005 2010

Figure 1 – Evolution of the gas demand

1.2 – Natural gas origin and composition

In the broad sense of the term, any natural substance present underground the earth in the
gaseous state is a natural gas. Besides light saturated hydrocarbons, such a substance can
comprise carbon dioxide, nitrogen, hydrogen sulfide, hydrogen, helium and argon.

In practice, it is only when such a gaseous substance contains a significant proportion of

methane that it will be considered as a natural gas in the common sense used here. This gas
is trapped in a natural reservoir formed by a sedimentary porous rock below a caprock which
acts as a seal (Figure 2).

ground

natural gas

cap rock
Sedimentary
porous rock

Figure 2 – Natural gas reservoir

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Below the region occupied by natural gas, the sedimentary rock is normally filled with water.
Oil can also coexist with natural gas. Such associated gas comprises the gas dissolved in the
oil layer and the gas cap.

ground

gas cap

oil layer
with dissolved gas

Figure 3 – Oil and associated gas reservoir

Natural gas has been formed by degradation of organic matter accumulated in the past
millions of years. Two main mechanisms are responsible for this degradation:

Bacterial or biochemical gas has been formed due to the action of bacteria on the organic
debris accumulating in the sediments. Such a gas is produced at depths generally not
greater than a few hundred meters and formed by comparatively pure methane. Bacterial
methane genesis is considered as responsible for the occurrence of around 20% of the
reserves currently known.

Thermal gas is formed by degradation of organic matter, called kerogen, accumulated in

fine-grained sediments, especially clays. This degradation occurs through the combined
effects of temperature and pressure.

Gaseous hydrocarbons are produced either directly from kerogen by primary thermal
cracking or from the oil formed in the previous steps by secondary thermal cracking. At a
certain time, the proportion of gas related to oil tends to increase with depth.

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ground

Indicative depth (km)

2
oil gas

Figure 4 – General pattern of degradation of sedimentary organic matter

After being formed, the hydrocarbons are expelled and migrate until they are trapped in a
porous rock reservoir.

Apart from methane, natural gas may contain various other components as illustrated by the
diagram in Figure 5.

COS R-SH
CO2 H S BTX
N2 2

He H20
Hg
{
C1
As LP N
{

G G
L
C2
C3
iC4
nC4
iC5
nC5
C6
P C7

Figure 5 – Natural gas components

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Apart from methane, light hydrocarbons usually present in natural gas are ethane, propane
and butane. Propane and butane form the LPG (Liquefied Petroleum Gases) fraction. Natural
gas can contain also a small proportion of C5+ hydrocarbons. When separated, this fraction
is a light gasoline. Some aromatics (BTX: benzene, toluene, xylenes) can also be present,
raising safety issues due to their toxicity. Some nitrogen may be present, but in most cases
is not separated.

Natural gas can contain other contaminants too. Acid contaminants such as mercaptans: R-
SH, carbonyl sulfide (COS), carbone disulfide (CS2), may be present in small quantities.
Mercury can also be present either as a metal in vapour phase or as an organo-metallic
compound in liquid fractions. Concentration levels are generally very small, but even at very
small concentration levels, mercury can be detrimental due its toxicity and its corrosive
properties (reaction with aluminium alloys).

1.3 – Different types of natural gas

According to the proportion of hydrocarbons heavier than methane, different types of natural
gas can be considered:

(a) Dry gas that does not form a liquid phase and contains a high proportion of
methane.
(b) Wet gas, forming a liquid phase during production at surface conditions.
(c) Condensate gas, forming a liquid phase in the reservoir during production, during
the depletion process.
(d) Associated gas, coexisting in the reservoir with an oil phase.

Pf Reservoir

Retrograde
condensation zone
Pressure

Cct

Surface
Ps
condensate gas
wet gas
dry gas

Ts Tf Temperature

Figure 6 – Phase diagram of different types of natural gas

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These different types of gases are best distinguished by considering the phase diagram in
pressure-temperature coordinates.

• In the case of a dry gas, the two-phase region is comparatively narrow. In the limiting
case of pure methane, it reduces to the single saturation curve of methane. The two
points representing both reservoir and surface conditions lie outside the two-phase
region.

• In the case of wet gas, the two-phase region is broader. The point representing reservoir
conditions remains outside this two-phase region and no liquid phase can appear in the
reservoir during production. On the other hand, the point representing surface conditions
lies within the two-phase region which means that a liquid phase is produced at the well-
head together with the gas phase.

• Considering now a condensate gas, the two phase region is even broader and the
maximum temperature at which two phases can coexist, which corresponds to the
cricontherm point CCT is higher than the reservoir temperature. In the hatched zone,
retrograde condensation occurs. A liquid phase appears by decreasing the pressure and
penetrating in this zone. It means that during the depletion process, a liquid phase can
be formed in the reservoir as a result of the decline of the pressure. This liquid phase
deposit, which forms in the channels of the porous rock containing the condensate gas,
reduces the productivity.

• In the case of associated gas, the gas is close to equilibrium with the oil phase.

When natural gas contains a substantial amount of hydrocarbons heavier than methane, it
may be necessary to adjust the concentration level of these hydrocarbons for one of the
three following main reasons:

- Avoid a liquid phase formation during transport.

- Adjust the gas heating value within a fixed limited range; therefore the gas
should not contain neither a two high level of an inert gas such as nitrogen which
decreases this heating value nor a two high level of ethane or heavier
hydrocarbons which tend to increase this heating value.

- Recover hydrocarbon liquid fractions which, used for instance as a feedstock for
petrochemistry, can be more valuable than methane itself.

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1.4 – Natural gas reserves and production

Proven reserves of natural gas amount to 142 Gtoe1 and represent more than 60 years of
consumption at the present level. They are now practically equivalent to oil reserves, which
represent around 40 years of consumption at the present level. The renewal of proven
reserves has been much more rapid than their consumption. In 1970, identified proven
reserves amounted to only 35 Gtoe. It means that, whereas during the last thirty years
47 Gtoe were consumed, further reserves, representing 154 Gtoe, were identified. There is
presently no indication of a significant inversion of this trend.

Beyond proven reserves, ultimate resources are estimated to range between 400 and
450 Gtoe, while taking into account only conventional gas resources (Figure 7).

Proven reserves = 142 Gtoe

Conventional resources = 450 Gtoe

Unconventional resources = 650 Gtoe?

Speculative resources = 18 000 Gtoe?

(hydrates)

Figure 7 – Natural gas resources

The estimation of unconventional gas resources is much more uncertain; with present
assessments, around 650 Gtoe might be ultimately recovered from coal bed methane, tight
formation gas, geo-pressured gas, gas from fractured shales and ultra-deep gas. Potential
resources such as ultra-deep gas might be under-assessed by an order of magnitude. Gas
hydrates represent a further resource, which, for some authors, might be equivalent to
hundred times present proven reserves. Although such figures are still a matter of
considerable debate, it is necessary to realise that resources which are completely
overlooked now, might be identified in the future.

Natural gas reserves are spread on all continents. The biggest reserves are located in the
FSU countries and the Middle East, but very significant reserves exist also in other regions.

1 With the equivalence 1000 m3 = 0.9 toe

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Table I summarizes the figures for gas reserves and gas production in the different
geographic zones.

Reserves Production
North America 6 550 705
South America 8 296 122
Europe (western) 7 170 270
Europe (central) 701 25
FSU 56 677 688
Africa 10 444 105
Middle-East 53 054 187
Asia-Oceania 14 811 242
157 703 2 344

Table I – Proven reserves and annual production of natural gas (10 9 m 3 ).

An increasing share of natural gas reserves exceeding now 30% is located offshore. The
share of natural gas reserves located onshore, easy to produce and close to consumers is
decreasing and the major present challenge of the gas industry is to be able to bring gas to
the consumers at an economic cost.

1.5 – Gas chains

Natural gas is a dilute form of energy when compared to oil. A standard conditions (15°C,
1013 mb), 1 ton of gas occupies a volume around 1350 m3 whereas 1 ton of oil occupies a
volume slightly higher than 1 m3 according to its specific gravity.

It means that natural gas is much more difficult and costly to transport than oil.

There are two main ways of transporting natural gas (Figure 8):

- In gas pipelines, under pressure; for onshore pipelines, 70 bars is a standard

pressure; offshore pipelines operate most frequently with a pressure at the entry
of the pipeline higher than 100 bars or even 150 bars. During transportation, the
pressure drops and for a long distance transport recompression stations are
required. The distance between two recompression stations is onshore typically in
the range of 100 to 150 km.

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Gas
pipeline
Gas
Collecting Compression pipeline
Reception/
Processing Recompression Storage
(a) Pipe - line

Liquefaction LNG carrier Regasification

Storage/ Reception/
Loading Storage
(b) LNG

Figure 8 – Gas chains

Before being sent to the pipeline, the gas must be processed. Gas treatment processes
involve:

• Dehydratation, for avoiding liquid water deposits, hydrates formation and

corrosion in presence of even minor amounts of acid contaminants.
• Hydrocarbon dew-point adjustment for avoiding the formation during transport
of a hydrocarbon liquid phase and/or for complying with commercial
specifications.
• Acid gases removal, when such contaminants are present: sweetening, for
avoiding the presence of toxic and corrosive H2S; adjustment of the CO2 level
for limiting corrosion and keeping with commercial specifications concerning the
gas heating value.

- In the form of LNG (Liquefied Natural Gas), cooled at a temperature close to its boiling
point at atmospheric pressure (around –160°C, as the boiling point of methane is
–161.49°C). The gas is liquefied in a liquefaction plant. Before being sent to the
liquefaction plant the gas must be treated. The treatment specifications are more severe
than in the case of pipeline transport, as it is necessary to avoid any risk of solid-phase
formation during the liquefaction process. At the reception terminal, LNG is pumped,
regaseified under pressure and sent to the distribution grid.

In the two cases, gas transportation involves heavy and expensive infrastructures, which
result in rather rigid ties between the producer and the consumer. This is the reason why
the different steps involved form what is called a gas chain.

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An alternative is to convert natural gas into electricity and to transport electricity instead of
natural gas. For the time being, massive transport of natural gas remains favoured in
economic terms, although promising new developments have been made in the
transportation of natural gas in the form of high-voltage DC current.

Chemical conversion of natural gas into liquid fuels is presently considered as a most
promising route, as it opens to natural gas almost unlimited markets in the area of
automotive fuels. Commercially proven processes exist already, for producing high quality
Diesel fuels from natural gas by Fischer-Tropsch synthesis. Such a process involves an
intermediate production of synthesis gas with the adequate proportions of CO and H2.

It should be mentioned also that some further ways are explored for transporting natural
gas: this includes the transportation of gas in the form of hydrates and also the
transportation of compressed natural gas in metallic coils (Coselle ship).

1.6 – Future outlook

Due to its advantages, natural gas is expected to become the major energy source during
the new present century. The demand will be driven by the development of new markets for
natural gas:

• Gas demand for electricity production is growing presently at a mean rate of 6% per
year. Natural gas share in the world electricity production is thus expected to grow from
15% to 24% by 2010. The will to curb CO2 emissions might impose an even more radical
shift towards natural gas.

• Chemical conversion will open new markets for vehicles and chemicals. The need to use
high quality fuels for environment protection will strongly favour the use of Fischer-
Tropsch synthesis fuel.

Natural gas can be used also directly as a fuel for vehicles in the form of CNG (NGV) and
other alternative fuels will be derived from natural gas, among which oxygenated
compounds such as methanol, DME and acetale.

In the future, natural gas might become also a major feedstock for producing chemicals,
including olefins and aromatics through oligomerization and cyclization reactions.

The high hydrogen content of natural gas and the comparatively low CO2 emissions released
by its combustion clearly favour natural gas for the future, preparing a transition to what
might become a new "hydrogen economy".

On the supply side, this evolution will require innovative technologies for producing and
transporting natural gas at a lower cost. It will call for deep offshore production
technologies, new more cost-efficient treatment and liquefaction processes, new concepts
for gas transportation in pipelines and lower cost LNG tankers.

1.7 – Conclusion

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Natural gas is a clean energy source with the highest hydrogen content of all fossil fuels.
Proven reserves are very large and ultimate resources are huge.

Natural gas has certainly a key role to play as an energy source in the 21st century and the
demand is steadily growing. Nevertheless, gas is always in competition with other energy
sources and the share of natural gas reserves located offshore in difficult or distant areas is
growing. Technical progress remains essential for maintaining its competitivity and
developing new outlets for natural gas.

Alexandre Rojey
Chairman of Cedigaz

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Standards and units

Gas quantities

Natural gas quantities are generally expressed in volumes (m3) at standard conditions. In the
international system of units (SI), reference is made to the following standard conditions:
Temperature: 15°C
Pressure: 101 325 Pa
In British units, "standard" conditions refer to a temperature of 60°F (15.56°C) and to a
pressure whose precise value depends on the standard applied: the pressure usually used is
14.73 psia (101 563 Pa) according to AGA and API recommendations.

Reference is made also to "normal" conditions (temperature: 0°C, pressure: 101 325 Pa).

Energy content

Gas quantities may be also expressed by their energy content, corresponding to the gross
heating value (GHV).

This heating value, which should be expressed in J (SI system) is still often expressed with
the following units:

- 1 thermie (th): 1 000 kcal = 4.18.106 J

- 1 kilowatt hour (kwh): 3.5.106 J
- 1 British Thermal Unit (Btu): 1 055 J

The heating value varies considerably. As an approximation, the following values can be
assumed:

- 1 Sm3: 9.5 th (GHV)

- 1 000 Sm3: 0.9 toe

Liquefied natural gas

LNG is measured in cubic meters or tons. The equivalence between the mass of LNG, the
volume of LNG, the volume of gas and the energy content depends on the gas concerned.
As an approximation the following equivalence factors can be considered:

1 ton of LNG: 2.2 m3 of LNG

1 ton of LNG: 1 350 Sm3 of gas
1 ton of LNG: 1.2 toe

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