Natural gas

25 September 2017

Natural Gas is a type of fossil fuel that is abundant in Australia. It’s often called ‘natural gas’ because it’s a naturally occurring hydrocarbon (a particle made of hydrogen and carbon atoms). It’s colourless and consists mainly of methane, which is the simplest type of hydrocarbon.

How is natural gas formed?

Natural gas was formed over hundreds of millions of years from organic matter, such as plankton, plants and other life forms, which is why it’s sometimes referred to as a ‘fossil fuel’. 

Over time, sand, sediment and rock buried the organic matter and eventually large quantities of natural gas were formed and trapped underground. 

Natural gas in Australia

We’ve used natural gas in Australia for more than 100 years and it’s increasingly being used around the world. That’s because natural gas helps to address climate change by emitting around half the carbon of coal when used to generate electricity, it’s easy to store and it’s an abundant fuel source.

It’s also considered a ‘flexible fuel’, because it can be used in a variety of ways:

  • as baseload power, steady and reliable 24/7; 
  • in peaking generators, which are ideal for meeting peak electricity demand and supporting intermittent renewable energy sources;
  • in super-efficient combined heat and power plants for producing power, heating and cooling for large buildings, called co-generation plants;
  • and cooled, liquefied and shipped to overseas markets.

Gas is an important ‘transitionary fuel’ as countries around the world look for reliable, affordable, safe and low-carbon alternatives to coal and nuclear, and ways of supporting intermitting renewable energy sources.


Did you know that natural gas is typically odourless? That ‘eggy’ smell is added so that people can smell it and remember to turn it off.


Getting to the gas

Gas is extracted by drilling wells into the ground, through the geographic layers, to reach the gas deposits. The gas industry often talks about two main types of natural gas, which actually have nothing to do with the gas itself, but rather where it’s found:

Conventional gas is found in large permeable sandstone reservoirs and is easier to get out of the ground through traditional well-drilling techniques.

Unconventional gas is just standard natural gas, but found in places other than permeable sandstone reservoirs. There are two main types of unconventional gas: 

  • coal seam gas (CSG), found in coal deposits, usually 200 to 1,000 metres below the ground.
  • shale gas, found in shale rock deposits. The wells for extracting this gas are generally a lot deeper than those for CSG.

Continue the gas journey with a peek inside a natural gas peaking power plant.

Quick Facts

What is Natural Gas?

Natural gas is a combustible mix of hydrocarbon gases. It’s colourless and consists mainly of methane (CH4). ‘Conventional gas’ is easily extracted; ‘unconventional gas’ requires more sophisticated extraction technologies.

Natural gas is delivered in pipelines and typically fuels hot water, appliances and heating.

What is Fossil Fuel?

Fossil Fuel is a fuel formed over millions of years from organic matter such as plankton, plants and other life forms. These underground resources are still the primary fuel source for electricity, heating and powering vehicles around the globe.

How does natural gas produce electricity?

A fuel source such as coal, gas, hydropower or wind, is required to generate electricity.

Most generators operate on the same principle: they turn a turbine so that it spins magnets to get the flow of electrons across atoms, which in turn generates electricity.

Natural gas is burned to heat water, which creates steam and turns the turbine, creating electricity.

Find out more about how electricity is made.

What’s the difference between natural gas and LPG?

LPG (or liquefied petroleum gas) is a versatile fuel that is commonly used in Australian homes and businesses.

Home appliances can run on either natural gas or LPG, so it’s worthwhile knowing the differences between them.

LPG is produced during oil refining or is extracted during the natural gas production process. If you release LPG, gas is emitted. In order to transport it, LPG needs to be placed under modest pressure to form a liquid. It can then be stored and transported in LPG cylinders.

Natural gas is extracted from deep within the earth and can contain ethane, propane, butane and pentane. Australian homes typically have hot water, appliances and heating fuelled by natural gas, which is delivered in pipelines.

Find out more about LPG.