About Natural Gas
Natural gas is an energy commodity, a fossil fuel. Just like other forms of petroleum, natural gas is primarily used to generate power and drive things around us. It is therefore a vital commodity and has become increasingly important over the past years.
Types
Broadly speaking, natural gas can be divided into two categories: dry gas (almost pure methane) and wet gas (contains other hydrocarbon compounds, such as ethane, propane and butane). Dry natural gas is also known as consumer-grade natural gas and it is the market for this type of gas that we analyze at Bluegold Research.
Measures
Quantities of natural gas can be measured in two ways. One way is to measure the actual volume of the commodity itself. In this case, it is common to use normal cubic meters (cm) or standard cubic feet (cf). Another way is to measure the energy content of natural gas (the so-called “gross heat of combustion”) – i.e., the amount of energy released as heat when natural gas is burned. In this case, the most common measures are: joule (J), kilowatt hour (kwh) and British thermal units (Btu).
Below are approximate measurements and conversions for dry natural gas:
Measure |
Btu |
kmw |
Joule |
Megajoule |
1 cubic foot |
1,027 Btu |
0.301 kwh |
1,083,600 J |
1.08 MJ |
1 cubic meter |
36,409 Btu |
10.67 kwh |
38,412,000 J |
38.4 MJ |
To put things into perspective, one Btu is approximately equal to the energy released by burning a single wooden kitchen match. So, burning one cubic meter of gas is equivalent to burning 36,409 wooden matches.
Natural gas pricing in the United States has moved from a volume-based pricing system to a heat-content pricing system. In other words, natural gas is bought and sold based on its BTU content, not on how many cubic feet it contains. That is why it is very important to understand the measurements in this market.
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