Natural Gas Production and Distribution

About 10,000 companies in the US explore, produce, transmit, and locally distribute natural gas, with combined annual revenue of $100 billion. Exploration and production are conducted by large, vertically integrated petroleum companies like ConocoPhillips and Chevron, by large independents such as Anadarko and Devon Energy, and by thousands of smaller exploration companies. Transmitting gas from production to consumption areas is handled by about 1,000 pipeline operators. Local distribution is handled by thousands of utilities. Regional energy companies like Dominion Resources and ONEOK combine transmission, storage, and distribution operations.

COMPETITIVE LANDSCAPE

Demand for natural gas depends partly on the health of the US economy and partly on the price of crude oil, a competitive product. The profitability of natural gas companies depends largely on the efficiency of their operations. There are large economies of scale in the production, processing, and distribution of gas, but small companies can effectively compete with large ones in exploration, where technical ability is more important than size.

PRODUCTS, OPERATIONS & TECHNOLOGY

Raw natural gas is a mixture of methane, ethane, propane, butane, and other hydrocarbons, along with various contaminants such as nitrogen compounds, sulfur compounds, and water. Processed natural gas is mainly methane, with a small amount of ethane and other components. Because it is mainly methane, processed natural gas burns very cleanly and efficiently. Natural gas is found in various geological formations, often along with crude oil. Natural gas is used by consumers ...