Very few commodities can match natural gas in terms of its contribution to human

survival and industrial progress around the globe. Natural gas provides an efficient
and reliable form of heat in the coldest of climates, allowing people to live and be
productive under conditions that would normally make survival very difficult. It is
also an essential component of nitrogen-based fertilizers, making it an important part
of modern agriculture and farming, and thus responsible for much of the world's food
supply. Refrigeration, lighting, air conditioning, transportation, industrial production,
there are very few aspects of our modern civilization that are untouched by this
incredible commodity. Recently dubbed a green form of energy under the EU's
taxonomy, is natural gas truly environmentally friendly or has political influence and
business interests forced the hand of regulators to declare it a part of the new green
economy? Tensions over the supply of natural gas in Europe have rocked the nation,
with prices rising to levels previously unimagined, and at the head of the gas supply
sits the Kremlin, ever patient and calculated in their approach to gaining a
geopolitical advantage in the region. On today's episode, we turn up the heat and
shed some light on one of the world's most controversial but nonetheless vital
resources. Its natural gas, on Commodity Culture.

Tens of millions of years ago, a variety of creatures inhabited the earth, from
massive dinosaurs to minuscule organisms such as plankton and algae. When these
life forms died, they eventually ended up buried in the ground with other kinds of
organic material, including plant matter. This organic material, along with cellulose
and protein, broke down into a thick and viscous fluid before being compressed
under layers of earth and sediment. As the ages passed, a length of time
inconceivable to the understanding of our short life spans, the organic material was
covered by additional layers and the sheer weight of the earth, along with proximity
to the planet's burning hot core, pressurized and heated it. This transformed the
substance into kerogen, an insoluble and complex fossilized organic
material. Further heat and pressure caused the kerogen to break down, which
produces natural gas. To keep this gas in place and form a reservoir, a non-
permeable layer of rock must be present that traps the gas, allowing it to be
extracted millions of years later by humankind. Natural gas was first discovered in
the United States in 1775. It was initially used for street lighting and eventually
developed into the vital natural resource we know it as today. Principal components
of natural gas are methane and ethane, and it also contains varying amounts of other
hydrocarbons such as propane, butane, and pentane. The main component of natural
gas is methane, which is a simple combination of hydrogen and carbon
atoms. Methane is a light hydrocarbon with a relatively low boiling point so it
becomes a gas at room temperature. Natural gas is the cleanest of all the fossil fuels.
The main products of the combustion of natural gas are carbon dioxide and water
vapor. Unlike other fossil fuels such as coal and oil, natural gas releases very little
sulfur dioxide and nitrogen oxide when combusted and practically no ash or
particulate matter. Natural gas is measured in terms of heating value referred to as
British Thermal Units, or BTUs and one BTU is the amount of heat needed to raise
the temperature of one pound of water by one degree fahrenheit. Natural gas is very
effective at heating with end-use heating values typically ranging between 950 and
1,150 BTU per cubic foot. The best natural gas wells produce hundreds or even
thousands of cubic feet of gas every day. Because of its clean burning properties and
high heating value, natural gas is used widely all across the world. Residential homes
use it for heating, cooking, and fueling appliances such as dryers and water heaters.
The commercial sector uses natural gas for space and water heating, lighting, air
conditioning, cooking, and refrigeration. Natural gas is used in the industrial sector
to fuel industrial processes such as manufacturing glass and heat treating steel.
Power generating companies are the largest users of natural gas for industrial
purposes. They burn natural gas to produce electrical power. Gas-fired power plants
have relatively low levels of emissions of carbon dioxide and nitrous oxide
compared to coal or oil-fired power plants. Natural gas is also used to make nitrogen-
based fertilizers, the most common fertilizer type. This starts with nitrogen from the
air being mixed with hydrogen from natural gas at high temperatures and pressure to
create ammonia. Around 60 percent of the natural gas is used as a raw material and
the remainder is employed to enable the synthesis process. That ammonia is then
used to create nitric acid, with which it is mixed to produce nitrate fertilizers such as
ammonium nitrate. Natural gas also sees use in the transportation sector as
compressed natural gas and liquefied natural gas. This powers cars, buses, trucks,
and ships, with most of the vehicles that use natural gas being in government and
private vehicle fleets.

Natural gas is combusted through a combination of fuel, air, and an ignition hotter
than 1200 degrees fahrenheit. If any of those three ingredients are missing,
combustion will fail. For gas to burn properly and release energy, the percentage of
gas to air needs to be between 5 and 15, referred to as the range of combustion.
Natural gas is odorless in its original state. For safety reasons, a chemical called
mercaptan is added to it, which causes it to give off a smell similar to rotten eggs.
This allows anyone nearby to detect a gas leak and report it to their gas provider and
emergency services. Now that we have the rundown on what it is and how it is used,
let's examine how natural gas is extracted from reservoirs.

Natural gas is present in four different types of deposits. Conventional deposits are
pockets of gas contained in relatively porous rock and are the most easily extracted.
Shale gas deposits are found in fine-grained sedimentary rock, referred to as shale.
Shale is porous but non-permeable. Hydraulic fracturing, a process involving fluids
being pumped into a well in order to fracture the rock that holds the gas, is required
to extract gas from shale deposits. Tight gas deposits are almost identical to shale
deposits and are also trapped within porous non-permeable reservoir rock, with the
only difference being the lack of shale. Natural gas can also be found in coal seams.
This kind of gas is referred to as coal bed methane. This gas is extracted as a
byproduct of coal mining, with diminishing pressure in the coal seams allowing the
gas to flow into a well bore, where it is then extracted. Aside from these four deposit
types, some of the world's gas supply also comes in the form of associated
gas. Associated gas is also known as casing head gas or oil well gas, and occurs in
conjunction with crude oil reservoirs, either dissolved in the oil or occurring
separately in the same reservoir. Large quantities of associated gas come from crude
oil production in the Middle East. Associated gas is often re-injected into the
producing well to raise the pressure to get more oil out of the well or is held in the
reservoir until a distribution system can be put in place to move the gas to market.
Natural gas is discovered through seismic surveys which are done by
specially equipped trucks on land and ships when searching for offshore reserves.
This involves using seismic instruments similar to those used in prenatal exams that
send sound waves into the ground. The sound waves bounce back and give a picture
of what is happening under the earth. If the seismograph shows the possible presence
of one or more natural gas reservoirs, the next step is to find the most suitable place
to begin drilling. This process is often started with a pilot well to start testing the
quality of the natural gas in the deposit. If both the quantity and quality of natural gas
is sufficient to economically justify extraction, the next step is to develop the reserve
and build the required infrastructure to transport the gas to a facility for processing.
Prominent natural gas fields include Groningen in the Netherlands, the Troll Field in
Norway, the Marcellus Shale Field in America, the Central Basin of Algeria, the
Arabian-Iranian basin in the Middle East, and the North Sumatra Basin of
Indonesia, but the largest natural gas reserves in the world are held in Russia and as
we shall see, this provides them with a massive advantage in the European region. In
fact, when it comes to energy production in Europe, the Kremlin holds all the chips
at the table.

The modern history of natural gas in Europe kicked off in 1959 with the discovery of
the Groningen Field in the Netherlands, followed by the first discoveries in the UK
sector of the North Sea a few years later. Substantial discoveries of gas in the
Norwegian sector then followed in the 1970s and although the UK had a huge
domestic market, Norway did not have the population size to use all their resources
and so created a hugely successful export business, with pipelines delivering gas to
both the UK and Continental Europe. At this point, Russia was not yet a key player
on the stage of natural gas exportation, although the Soviet Union had been
exporting small quantities of natural gas to Poland since the late 1940s. Large-
scale exports into Western Europe were not on the table, for both logistical and
economic reasons. Instead, they focused on moving gas from Ukraine and the North
Caucasus to Siberia, which required transportation across several thousand
kilometers. That issue of long-distance transportation was eventually solved in the
1970s when super giant Siberian gas fields were discovered at Yamburg,
Medvezhye, and Urengoy, allowing for production to take place locally. Multiple
large diameter pipelines were then built from Siberia to Ukraine and from
there, only a short extension was required for one or two pipelines to reach Europe.
From 1970 to 1980, Soviet gas delivery to Western Europe ramped up, increasing
from 3.4 to 26 billion cubic meters. Once the 90s rolled around, gas exports had
risen to a whopping 109 billion cubic meters, making Western Europe the largest
natural gas buyer from the Soviet Union.

In today's world, natural gas availability is vital to the survival of Europe and the
supply demand fundamentals in place highlight the importance of Russia as a
partner. While the current energy policy in the EU is forward thinking in its targets
for renewable energy and emission reduction, it is woefully unprepared for the
security threat of increased dependence on natural gas from Russia. As of 2008, the
European Union imported 50 percent of its energy requirements in the form
of hydrocarbons and projections out to 2030 predict these imports will rise to 70
percent of all energy consumed in the EU. A number of factors are driving the
increased reliance on external sources of hydrocarbon energy but chief among them
is the fact that the majority of European oil and gas resources are either depleted or
in serious decline. Aside from Russia, prospects for meaningful domestic European
production seem to be at this point, nothing more than a pipe dream. The farther east
one goes in Europe, the greater the reliance on gas imports from Russia to the extent
that seven former Warsaw Pact and Soviet Union countries rely on Russia for 99
percent of their natural gas requirements. In addition, nearly all central and Eastern
European countries depend on Russian gas imports for the majority of their
consumption. With the recent full-scale invasion of Ukraine by Russia, doubts have
been cast on the role that Russian energy has to play and some very strict sanctions
are being levied by many countries, both in Europe and in places like the United
States and Canada. One of the biggest sanctions is the halting of the Nordstream 2
pipeline, which was designed to double the flow of gas from Russia into Germany.
Ironically, it was Germany who opted to deny themselves much-needed gas supplies
as their own electricity costs continue to rise. This caused Dmitry
Medvedev, Russia's former president and now deputy chairman of its security
council, to declare: "Welcome to the new world, where Europeans will soon have to
pay 2,000 euros per 1000 cubic meters." He may be right but regardless, we can see
just how fragile the energy situation is across the whole region at the moment. How
this plays out in the years ahead will be fascinating, and potentially tragic, to
observe as we still don't have a firm grasp on when the conflict in Ukraine will end
or just how bad it will get. Natural gas prices in Europe have already risen
massively, spiking parabolically to 180 euros per megawatt hour in december of
2021, before dropping down to around 70 euros, still a huge increase when we
consider that it was only 4 euros in may of 2020. Pile on top of this the absolutely
moronic decision to phase out nuclear energy in countries like Germany and Austria
and replace it with unreliable wind and solar, and a lot of Europe may be in for a
great deal of pain and even fatalities due to the lower income brackets being unable
to afford heating in the coldest months of winter. This is certainly a grim
scenario that we're seeing play out but let's hope cooler heads prevail and perhaps
through a reorganization of the political landscape, energy prices can be made more
affordable for all citizens across the European continent and violent wars can
become a thing of the past. We can only hope.

Natural gas is one of the most important energy sources on planet earth and despite
protests and political initiatives that misguidedly vilify hydrocarbons, that isn't going
to change anytime soon. In fact, everyone who has access to natural gas to heat their
homes and cook their food should be thanking their lucky stars that it exists and
should hope it will continue to be available at affordable prices. Sadly for many in
Europe, this may not be the case but it is important to understand that in a lot of
these places it is not malicious Russian forces that have created the problem, but
rather the ignorant politicians that run their country and have chosen to make a
push towards the so-called new green economy as a means of garnering votes from
equally ignorant constituents. There is, however, a middle ground that can be
reached and many efforts are underway to make natural gas even cleaner than it
already is. This includes lower carbon gas mixtures and carbon neutral mixtures of
renewable gas, which is extracted from rotting food, cow manure, wastewater, and
sewage treatment plants. Now that doesn't sound very appealing but after it is
cleaned and converted to biomethane, it can be run through gas pipes
interchangeably with conventional natural gas, providing a similar benefit to the
climate as wind or solar energy. At the end of the day, natural gas is one of our most
precious resources and for those who oppose it, I'd ask them to first live without it,
using purely renewables, before they attempt to virtue signal their dedication to the
environment. For the rest of us, here's hoping more people in power wake up to
reality and realize that natural gas is to be prized, and not politicized. Commodity
Culture is a series that covers the history and culture surrounding commodities and
natural resources. If you enjoyed this episode and want to see more, please
subscribe and hit the bell notification to ensure you are always alerted of the latest
episodes.