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About Natural Gas

Why Invest in Natural Gas?

Typing on a laptop computer

Natural gas is fast becoming one of the largest sources of power generation in the United States, for residential and commercial heating and cooling systems, in particular. Presented as an effective alternative to coal and oil because it is significantly less toxic for the environment, natural gas is typically used to power gas turbines or steam turbines.

As natural gas continues to emerge as a viable resource, opportunities to invest will become more and more prevalent. Natural gas production in the United States is considered to be one of the most stable and intelligent investment opportunities on the market.

If you are interested in investing in the future of natural gas, there are a wide range of opportunities available to you in the marketplace.

ETFs

Exchange-traded products are an investment avenue for people seeking initial exposure to natural gas investment options. The United States Gas Fund (UNG) is a popular option for this particular investment, with a focus on front month futures contracts.

Teucrium Natural Gas Fund (NAGS) and the United States 12 Month Natural Gas are also options. Each one utilizes futures contracts to gain exposure to natural gas.

Futures

Under the symbol NG, natural gas futures contracts are traded on the New York Mercantile Exchange. The current market for these types of contracts is very liquid, with a bevy of activity throughout the week, generally. The Department of Energy releases their natural gas storage report on the Thursday of each week, and this often results in the heaviest trading of the week.

Stocks

Stocks are for those who would rather avoid futures contracts, and seek more indirect expose to natural gas through investment opportunities. It is a matter of finding publicly traded companies that have operations focused on natural gas.

Investing in natural gas is a solid opportunity for future growth. Taking the time to explore it is well worth it, and could be hugely beneficial in the future.

Natural Gas Conversion

Natural gas storage facility

Natural gas is efficient, safe and reliable. As one of the cleanest-burning fuel sources available, natural gas can be an appealing alternative energy source, both in terms of cost and environmental benefits. In addition to reducing carbon emissions and improving the air quality, heating with natural gas typically costs less than heating with electricity or propane.

Converting your home to natural gas is the first step towards safeguarding the future with an improved environment. The process for doing so has been streamlined over the years, allowing for a more seamless transition that could end up saving you money in the long run.

The transition is much simpler if there is an existing gas service, at which point the gas supply would need to be evaluated to determine whether it is adequate for your heating needs. If that is not the case, installation will be required, for which you’ll be provided an estimate.

The cost for a natural gas conversion varies from customer to customer. The two main costs will be the work done within your property and the installation of gas facilities that will connect to your property. The exact costs for the total services will be outlined in an estimate from your provider.

Licensed plumbers or contractors handle the installation of new natural gas equipment in your home, which will be followed by an initial safety inspection before gas service can be activated.

There are also steps that can be taken to convert your gasoline vehicle to natural gas. If you are interested in doing so, conversion systems are available for certain vehicles.

Ultimately, the process of converting your home to natural gas can appear daunting at first. But natural gas is an investment. By converting, you’re not only improving the efficiency of your home, but you’re also being more environmentally conscious.

Types of Natural Gas Storage

Energy diagram

Because demand for natural gas fluctuates based on what season it is, finding adequate storage for that gas during periods of low demand is vital to ensuring that the resource does not go to waste.

Demand for natural gas is typically higher during the cold months of winter because of the need for heat in both residential homes and commercial buildings. By storing it during the summer, a surplus of natural gas can be built up for winter. Storing natural gas also serves as insurance in the event of an accident or natural disaster that disrupts the production of natural gas.

Underground reservoirs are the most common type of storage for natural gas. These kind of storage units consist of depleted gas reservoirs and salt cavern reservoirs.

Depleted gas reservoirs serve as storage facilities through a process that requires the natural gas to be injected into the pores of the underground rock from which the gas first originated. Salt caverns are considered a strong method of storage because salt is impermeable and self-sealing. Salt caverns can also extend more than 1,000 feet underground, allowing for a significant amount of storage space.

Aquifers are another example of underground reservoirs used for storage of natural gas. These are underground rock formations that act as natural water reservoirs, due in large part to their porous and permeable nature. Reconditioning of the rocks is required before these formations can serve as storage facilities, and in-depth analysis of the geological characteristics must first take place to determine whether the formations are suitable for storage purposes.

As we mentioned in a previous blog post, natural gas can also be refrigerated and converted to liquid form for storage. Liquefied Natural Gas (LNG) is considered a more efficient method of natural gas storage because it is denser than natural gas and holds more energy for the space it occupies.

How Natural Gas is Formed

Where natural gas is found underground

Natural gas is responsible for approximately 23 percent of all energy produced in the world. It is used to heat the homes of millions of people across the globe, but very few people take the time to understand what natural gas is and where it comes from.

Natural gas is an odorless and colorless substance composed of methane, ethane and propane. Carbon dioxide, hydrogen sulphide and nitrogen are the additional impurities that comprise a smaller percentage of natural gas’ composition.

There are two general types of natural gas. Biogenic gas originates from marshes, bogs and landfills, where methanogenic organisms manufacture the gas. Thermogenic gas is what comes from deep beneath the earth, where buried organic material breaks down under high temperature and pressure.

The natural gas that heats your home comes from deep beneath the earth, under several layers of rocks. The remains of plants and animals from millions of years ago were left buried under layers of rock and soil, before heat and pressure converted that matter into natural gas and petroleum.

To be more specific, natural gas is the result of methanogenic bacteria producing methane while in the process of decomposing organic material, coupled with the decomposition of kerogen. These two actions combine to complete catagenesis, the process that produces both petroleum and natural gas.

Once the gas has been created, it will attempt to migrate to a new location. The layers of the earth are molten rock, and those rocks can act as sponges for natural gas. Certain types of rocks within these layers contain large pores that act as storage units for natural gas.

To access these natural gases, companies drill hundreds of feet into the earth, pumping the gas into pipes. When piped to homes via boilers, furnaces or water heaters, this gas can serve to power ovens, gas-heated clothes dryers, central heating and cooling and more.

Ways to Conserve Energy

Adjusting a thermostat

Energy is a vital resource which is often taken for granted. Without it, our lives would be entirely different. We would be without lights and lamps, gas and electric, air conditioning and heat. It is a necessary commodity for us day in and day out. With such high demand, it is no surprise that energy comes at a cost- to our ecosystem and our checkbooks. Fortunately, within our own household there are many simple ways to conserve energy, as well as time, money and the environment.

First and foremost, it is important to begin monitoring your energy expenses. Knowing where the majority of your energy is being spent will help you know how to more efficiently cut back.  To better track your usage, you might also consider purchasing a plug load monitor. This device can be plugged into an outlet and will display how much energy is being consumed and when. Some are even programmable to automatically cut power.

Next, turn your attention to your house’s lights. If you are not willing to let go of any lamps or radiant bulbs, then you may want to think about a dimming switch. Dimming a light by just 10 percent will more than double a bulb’s life. Another option would be motion sensors for outdoor fixtures or indoor rooms that are not used as frequently or purchasing LED or fluorescent bulbs.

During the brisk winters, it can be difficult to manage the heating bill. To help these costs, you should lower your thermostat when you leave the home or during the night, minimize the use of expensive portable heaters, be sure not to block any air vents and utilize the sun’s heat by leaving shades and blinds open during the daytime. Similarly, much can be done to keep a home cool in the summer. Make use of ceiling fans, close exterior doors and windows when the air conditioning is on, block the sun by pulling blinds and shades, clean the AC’s air filters and set the thermostat to “auto” rather than “on” when air is constantly running.

These quick and effective tricks will keep your home running in tip-top shape while keeping your energy costs and usage down.

Fixed vs Variable Rate Natural Gas

Gas meter

If you’ve recently looked into switching natural gas providers or just ways to save more money on your utility bill, you may have uncovered that there is more than one kind of natural gas plan available. Which natural gas plan is right for you: fixed or variable rate? What is the difference between the two anyway?

The biggest difference between these two plans is that variable rate will fluctuate each month in relation to market conditions like demand, seasonal conditions and more. In contrast, a fixed rate plan allows you to lock in a particular rate for several months.

Variable Rates

So which plan Is a better deal for you? It’s hard to say with absolute certainty because there is no way to predict how much variable prices will fluctuate each month. Pricing history can be used to help you anticipate how much you’ll pay for natural gas, but it is merely a tool for estimation and can change on a yearly basis. Last year, a customer on the variable rate plan paid $1.02 per therm while a customer in a ­fixed rate agreement paid 66 cents per therm. For this year in particular, a fixed rate plan ended up being a better deal.

Fixed Rates

If you decide to sign up for a fixed rate plan, the price you pay each month will be locked in for the length of the contract, which usually ranges from six months to a year. When you sign up for a fixed rate, Walton EMC Natural Gas will purchase the gas that you will use in the future at the current rate. This is how we are able to provide you with a constant rate. This is the biggest advantage of a fixed rate plan- you already know how much you are going to pay.

Still not sure which natural gas plan is right for you? For more information about fixed or variable rate plans, contact Walton EMC Natural Gas.

Rumors of Natural Gas Inventory Decline

icicles hanging off a metal pipe

An unseasonably cold winter has many implications, one being the increased demand for natural gas to heat homes across the country. Due to this drastic demand, it is no surprise that working gas in storage is much lower than last year. The U.S. Energy Information Administration recently reported that natural gas totaled 1.44 trillion cubic feet, while the same period last year totaled 2.42 trillion cubic feet. These low storage numbers continue to drop below the EIA’s five-year calculations.

Stocks and natural gas prices have been affected by this inventory decline. Consumers were forced to pay a five-year high of $6.15 per billion BTUs (British thermal units) in late February. In just a week’s time, the prices had increased almost $.50. Large natural gas producers in the United States are seeing the effects as well. Exxon Mobil Corporation was up about 0.8%, Chesapeake Energy Corp. was up 0.2% and EOG Resources Inc. was up 0.9%. Additionally, The U.S. Natural Gas Fun, which tracks spot prices, was down 0.6%, whereas The Market Vector Oil Services ETF, which includes major drillers and service companies, was up 0.4%.

However, the anticipation of warmer temperatures will lessen prices. Stephen Schork, President of Schork Group Inc., a consulting group in Pennsylvania explains, “This is a pretty good sign the run-up has run its course. Demand is going to remain strong, but we are at the end of the season and prices aren’t reacting the way they would have a month ago. At these prices, production is going to be very strong.”  The beginning of March marked the first monthly decline since September and futures dropped 25 percent, one of the biggest one-week price drops since 1996.

Although this winter was one of highs and lows, the spring forecasts look promising and has again led to a decline in natural gas futures.

How Often Should I Have my Furnace Checked?

Fixing your furnace

There is no better feeling than hurrying in to a warm, cozy home during this blistering cold winter. Without a furnace, our houses would be freezing. That is why maintaining and annually inspecting your furnace is important. This will assure that it is in good working condition and will help save you money on heating costs. Some of the inspection and repairs can be done yourself, while others are more complex and require professional services.

Furnace manufacturers recommend a professional inspection to be done annually. Some of the services completed include checking the ventilation system for leaks or blockage, ensuring that the blower access door is sealed, inspecting for rust and corrosion on the heat exchanger and analyzing the combustion gases to compare them with the unit specifications. They may also check the burners, drainage system and the filters. Hiring a professional may seem unnecessary, but most homeowners are not knowledgeable enough to complete all these tasks confidently. In fact, some technicians claim that 75 percent of homes without heat in the winter are due to lack of maintenance.

A few steps of regular maintenance can be done yourself throughout the year to keep the furnace in tip-top condition. Keeping your furnace clean is most essential. Dirt can potentially cause the furnace to overheat and it decreases its efficiency. The three main areas to clean are the motor, the blower and the filter. The filter can easily be inspected by take it out and holding it up to the light to examine it. If it looks clogged you can simply purchase a new filter of the same size and type. A permanent filter, on the other hand, can be sprayed with a chemical to help it stay clean as well. This chemical spray is available at most hardware stores.

Whether you are doing your own assessment or calling in the professionals, servicing your furnace is a key element in preparing for cold temperatures. Checking it can often be overlooked, but it is better to be safe than sorry. You wouldn’t want to have a breakdown in the dead of winter. Regular inspections can be done at home by cleaning the filter, while more complex services will require annual visits from the experts.

How Cold Weather Affects Natural Gas Distribution

Snow covered road on a sunny day

There are many factors that impact the distribution of natural gas and the cold weather is one of the most notable. The ways in which cold weather can impact the access to the significant resource is commonly acknowledged through prices, demand and withdraw. There are several factors to consider but the most obvious are those that directly affect the consumers.

When the temperatures drop the need for the resource increases and our budgets will stretch to accommodate for the purchase. It is no mystery that our economy has learned there are places to save a few dollars yet some necessities, like natural gas, are worth the asking price. Regardless of the costs we find it necessary to meet the needs of our lifestyle more so than ever in the uncontrollable temperature of the winter months.

While price reflects the most direct impact on the distribution of natural gas the demand is also a part of the equation. Majority of US homes are utilizing natural gas, and certain areas experience different highs and lows which will embark upon the distribution levels expected for each region. The impact a winter has on the varying locations will drive the demand and in return the demand will call for more extraction.

The withdraw of natural gas consists of a process that can be overwhelming. When the cold weather hits the states it spirals down to the extreme, and absolute critical, need to heat homes and remain safe. The truth of the drilling matter is that there will be increased extraction that will call for an increase in mechanical needs and the obligation to stray from contracts to provide for the high demands. It is a circle of life for the resource as the price will be paid, the demands will be accommodated, and the drilling will go on.

Natural gas is one valuable resource that contributes to most of our daily conveniences. The weather will fluctuate many variables regarding the distribution but it will remain a constant need for many.

Natural Gas History and Use

Natural gas burning from ground

Natural gas has been around for millions of years. Although it hasn’t been used for energy until fairly recently, its existence was always known although not necessarily understood.

Natural gas first came to light as blazing fires underneath of the earth’s crust which puzzled ancient civilizations. One of the most famous natural gas fires can be traced back to ancient Greece in 1000 B.C. On Mount Parnassus, a livestock herdsman discovered flames rising from cracks in the rock. The Greeks then believed this to be a sign from the gods and built a temple around the flame.

These natural gas fires or “burning springs” popped up in other regions like India and Persia and were also embraced as divine symbols. In 500 B.C., the Chinese began to utilize these natural gas fires for purposes beyond spirituality. In places where the natural gas was leaking from the surface of the earth, pipelines were constructed from bamboo shoots in order to move the gas. The Chinese then used natural gas to boil water from the sea in order to make it drinkable.

In approximately 1785, Great Britain became the first country to use natural gas for commercial purposes. This natural gas was created from coal and used to light houses and streetlamps. New England tried to utilize natural gas for similar purposes around the same time, but this manufactured gas was much less efficient than the type that comes from underground.

It was not until 1859 when Colonel Edwin Drake was digging a well around Lake Erie and struck both oil and natural gas that the natural gas industry really took off in America. From Drake’s well, a pipeline was constructed, running over five miles to Titusville, Pennsylvania. The construction of this particular pipeline was pivotal because it proved that natural gas could be transported securely and efficiently from its underground source and used for everyday purposes.