NAtural Gas PRICE | Henry Hub

What Are the Differences Between Raw, Compressed, and Liquefied Natural Gas?

Raw natural gas is the name for unprocessed natural gas that has just been pumped from the ground. Raw natural gas is unprocessed, which means it contains several components that need to be taken out, such as water, nitrogen, and carbon dioxide. Once the components have been removed and natural gas has been separated, there are two ways to make it dense enough for transportation: compressing it or liquefying it. Both are important terms to know.

Compressed natural gas (CNG) is natural gas that has been literally pushed into a chamber, which is then gradually condensed. Compressed natural gas is stored at room temperature and has 100x as much energy as the same volume of gas that is not compressed.

Liquefied natural gas, is chilled and held at extremely cold temperatures. LNG comes is a bit more difficult to store and transport, however LNG it is much more energy dense than compressed natural gas making it around 600 times more energy dense than regular gas.

Natural Gas Pricing

What sets the prices of natural gas? It boils down to supply and demand. There are two markets for natural gas: the spot market, and the futures market.

The natural gas spot market is the day-to-day market where natural gas is bought and sold at present time. To find the price of natural gas on a specific day, the spot market is the best place to look.

The futures market consists of buying and selling natural gas under contract at least one month in the future, in advance. For example, one could enter into an agreement today, for delivery of the physical gas in two months. Natural gas futures are traded on the New York Mercantile Exchange (NYMEX).

Natural gas is priced and traded at different locations throughout the United States. These locations are called market hubs and exist across the country and are located at the intersection of major pipeline systems. There are over 30 of these hubs found throughout the country. The main hub is named the Henry Hub, and is located in Louisiana. The futures contracts that are traded on the NYMEX are Henry Hub contracts, meaning they reflect the price of natural gas for physical delivery at this hub. The price at which natural gas trades differs across the major hubs, depending on the supply and demand for natural gas at that particular point. The difference between the Henry Hub price and another hub is called the location differential.

In addition to the spot market, futures market,  and market hubs, it is helpful to understand what a citygate is. Citygates are the locations at which distribution companies receive gas from a pipeline. Citygates at major metropolitan centers can offer another point at which natural gas is priced.

What is an LNG Tanker?

What is an LNG tanker?

Commonly known as an LNG ship (or carrier, vessel,) a LNG tanker is a massive water vessel equipped with containment systems for transporting LNG in mass quantity. A feature which makes LNG ships unique from other giant bulk cargo ships are it's heavy insulated, temperature-controlled tanks, which ensure gas is kept in a cold liquid state at approximately -162 C. One really cool feature on LNG tankers are their propulsion systems which are powered by steam turbines driven by boil-off-gas (BOG) from LNG, boiled liquid fuels such as oil, or a combination of both.

By the end of 2019, the global LNG fleet hovered around 541 active ships with the top importing markets being Asia Pacific and Asia.