Natural Gas 101

Natural gas is a fossil energy source originating from the remains of plants and animals that lived millions of years ago and are buried under many layers of rock and soil. It is made up of hydrogen and carbon compounds, is combustible, and is one of the most highly used energy sources.

Natural gas is the most environmentally friendly fossil fuel because it burns cleaner. Natural gas emits 50% to 60% less carbon dioxide (CO2) than regular oil or coal. It also emits greenhouse gases with a lower life cycle into the atmosphere. Only about 20% of the methane emitted today will still be in the atmosphere after 20 years. Unlike carbon dioxide, that hangs around for much longer; as much as 15 percent of today’s carbon dioxide will still be in the atmosphere in 10,000 years.

Canada is the fifth largest supplier of natural gas in the world and Alberta produces the majority of Canada’s supply. Approximately 49% of Alberta’s natural gas production is consumed here in Alberta and the rest is exported.

Have you ever wondered how natural gas gets from the ground to your home?

Step 1. Energy companies use wells to drill into shale and rock formations and pump the natural gas to the surface. This gas is called Wet Natural Gas.

Step 2. At the top of the well, natural gas is put into gathering pipelines and sent to processing plants. The processing plants remove any water vapor and nonhydrocarbon compounds. The gas is now almost pure methane and called Dry or Pipeline Quality Natural Gas.

Step 3. During the summer months when demand is lower, natural gas is injected into underground storage facilities so that it can be withdrawn during the winter months when demand increases. This means energy companies don’t have to slow down during the summer and can continue drilling all year long.

Step 4. High-pressure transmission lines, such as TransCanada and ATCO Gas Pipeline, transport the natural gas from the processing plants or storage locations to major markets. The producer is now ready to “offer” the natural gas commodity for sale on the NYMEX and NGX trading platforms.

Step 5. Natural gas suppliers “bid” on the natural gas using the Daily Index Pricing and take physical delivery of the gas. This pricing is very volatile and fluctuates based on weather conditions, inventory in storage, drilling levels, and economic conditions. Some of the gas is purchased by the United States, Asia and other countries. When gas is transported across oceans, it is cooled to a liquid state of about -260°F, stored in cryogenic tanks on ships and then returned to it’s gaseous state once it reaches it’s destination.

Step 6. Now that the gas is ready for retail, local gas utilities, such as Crossroads Gas, can purchase the gas from it’s supplier. Crossroads’ supplier is a company called Gas Alberta.

Step 7. Low-pressure pipelines, owned by the local gas utilities like Crossroads, connect to the high-pressure transmission lines. At the connection point, known as a Station, the pressure is reduced to safe distribution levels and a sour scented odourant is added to the gas so that consumers can detect leaks very quickly by smell.

Step 8. Natural gas is transported from the Station through the low-pressure lines to the gas meter on your house or business. The pressure is reduced again and then flows into the buildings piping system. When a gas appliance is turned on, the gas flows out of the burner of the appliance and ignites in a clean blue flame.

Step 9. The gas meter measures the volume of gas passing through it and the gas utility retrieves a reading from the meter once a month to create a bill. For more information about your gas bill, click on this link: Charges Explained | Crossroads Gas Co-op Ltd.