In this post “Natural Gas and How is it Produced”, we explained what natural gas is, the contain, the source and Natural Gas Production in Nigeria.
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What is natural gas?

Natural gas also called methane gas or natural methane gas or Fossil Gas is a naturally occurring hydrocarbon gas mixture consisting of methane and commonly including varying amounts of other higher alkanes, and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulfide, or helium.

Natural gas is a fossil energy source that formed deep beneath the earth’s surface. Natural gas contains many different compounds. The largest component of natural gas is methane, a compound with one carbon atom and four hydrogen atoms (CH₄).

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Natural gas also contains smaller amounts of natural gas liquids (NGLs, which are also hydrocarbon gas liquids), and nonhydrocarbon gases, such as carbon dioxide and water vapor. We use natural gas as a fuel and to make materials and chemicals.

Natural gas is colorless and odorless, and explosive, so a sulfur-smell (similar to rotten eggs) is usually added for early detection of leaks. Natural gas is formed when layers of decomposing plant and animal matter are exposed to intense heat and pressure under the surface of the Earth over millions of years. The energy that the plants originally obtained from the sun is stored in the form of chemical bonds in the gas.

Natural Gas Source

In some places, natural gas moved into large cracks and spaces between layers of overlying rock. The natural gas found in these types of formations is sometimes called conventional natural gas. In other places, natural gas occurs in the tiny pores (spaces) within some formations of shale, sandstone, and other types of sedimentary rock.

This natural gas is referred to as shale gas or tight gas, and it is sometimes called unconventional natural gas. Natural gas also occurs with deposits of crude oil, and this natural gas is called associated natural gas. Natural gas deposits are found on land, and some are offshore and deep under the ocean floor. A type of natural gas found in coal deposits is called coalbed methane.

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How Natural Gas forms

Millions to hundreds of millions of years ago and over long periods of time, the remains of plants and animals (such as diatoms) built up in thick layers on the earth’s surface and ocean floors, sometimes mixed with sand, silt, and calcium carbonate. Over time, these layers were buried under sand, silt, and rock. Pressure and heat changed some of this carbon and hydrogen-rich material into coal, some into oil (petroleum), and some into natural gas.

Natural Gas Production in Nigeria

Natural gas is largely produced from oil mining leases held by petroleum joint ventures between the national oil company, Nigerian National Petroleum Corporation (NNPC), and third parties.

Natural gas is also produced from sole risk concessions or from marginal fields held by private sector entities. Natural gas discovered in some oil-mining leases owned by the NNPC which are subject to production-sharing contracts (PSCs) do not have a clearly defined contractual framework for the development of such gas, as Nigerian PSCs are focused on crude oil exploration and development.

Revenues from natural gas production are earned by the government through royalties from gas production, taxes on profits earned by the various producers from gas projects and from revenues derived from its share of equity gas in its petroleum joint ventures with third parties. The government also earns dividend income from its investment in the Nigeria LNG Limited.