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Natural Gas Marketing

Topics

1. End Use Markets

2. Natural Gas Prices

3. Structural Changes

4. References

End Use Markets

Natural gas is used in a number of markets as illustrated in the pie chart below.

Please click on the link Natural Gas Consumption by Sector to see historical data.

Industrial uses of natural gas represented the largest market with fuel and raw material applications. Natural gas is used to dry potato chips and automobile paint finishes. Natural gas is converted into fertilizer, methanol, and gasoline blending compounds.  Please see the a graph of the latest Natural Gas Consumption.

Natural gas is used in the residential and commercial sector for home heating and cooking.  Natural gas used to  produce electricity is growing rapidly.

Natural gas is moved to market through a network of gathering systems and pipelines. Natural gas from producing wells is collected in a field gathering system. The gas is processed in a natural gas processing plant where the heavier hydrocarbon liquids are removed and the gas is compressed. 

[Click on image to view full-size]

The natural gas is sent to interstate transmission pipelines that transport the gas to consumers. Gas compressors along the line maintain the system pressure and keep the gas flowing.

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Natural Gas Prices

Natural gas prices increase as gas in transported and distributed to end users.  The prices reflect the costs of compression, storage and other logistical operations.

The chart below indicates the average prices to end users in 2008.

Please click on the link Natural Gas Prices to see historical data.

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Structural Changes

Natural gas marketing  has undergone many changes since the days when natural gas was a highly regulated by-product of crude oil production.

Natural gas marketing has changed considerably over the past decade. In the past, the natural gas transmission companies purchased the gas from producers, transported the gas, and sold it to local distribution companies or large users. The local distribution companies (LDCs) sold the gas to end-users in residential, commercial, industrial, and utility power markets. The new deregulated natural gas market allows producers to sell directly to end-users. 

[Click on image to view full-size]

Source: J. Richard Moore

Today's market has also fostered the development of natural gas marketers who can either collect suppliers and find markets for the production (supply aggregators) or collect customers and find supplies to meet their demand (market aggregators).

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References

To learn more about natural gas marketing, check out the following references:

	NaturalGas.org - an educational website covering a variety of topics related to the natural gas industry. The purpose of this website is to provide visitors with a comprehensive information source for topics related to natural gas, and present an unbiased learning tool for students, teachers, industry, media, and government. This site has been developed and is maintained by the Natural Gas Supply Association.
	American Gas Association
	Natural Gas Marketing Center
	Understanding Natural Gas Markets - American Petroleum Institute
	Natural Gas is America's New Energy Frontier - American Petroleum Institute

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