Gas 101

In the past, most of the Natural Gas came from oil rigs based in the Gulf of Mexico. Natural Gas is a biproduct of the oil production and was piped onto land in Louisiana. Now, most of the Natural Gas is sourced from shale deposits across the country.

Interesting note: In the past, natural gas prices were greatly influenced by the weather. As meteorologists predicted the Hurricane Season, prices would rise, or fall based on how many storms were predicted to hit the gulf. Hurricanes would shut down production of the rigs in the gulf. Now that the majority of natural gas come from shale, the hurricane forecast, and the actual hurricanes have very little impact on natural gas prices.

With the introduction of hydraulic fracturing and horizontal drilling, the production of natural gas from shale deposits has boomed. For centuries, the geologists have known where the shale deposits were located, but could not find a way to get the natural gas and oil from them. In 2009, the use of hydraulic fracturing and horizontal drilling has allowed producers to harvest natural gas from the shale. The largest shale fields in production are in the Appalachian Basin (Marcellus Shale deposit), North and South Dakota (Bakken Shale Deposit), and Texas (Permian, Eagle Ford, Barnett).

Interesting note: Natural gas has traditionally flowed from South to North in the Interstate pipelines. With the increase in production in the North East, during some summer months, the flow of gas reverses and flows North to South, from NY to the Carolina's and Georgia.

As noted in Point #1, there are numerous natural gas pipes that flow out of the gulf of Mexico and come together in Louisiana. The point where these pipes come together is called Henry Hub and its used a "Price Point" for the gas as it is purified and injected into the major interstate pipelines for distribution. Natural gas is traded on the New York Mercantile Exchange (NYMEX). Gas can be purchased (or priced) based on where the gas enters the pipeline (Henry Hub) or a specific Zone on the Pipeline, like Transo Zone 5. The commodity price for your natural gas on your FireSide bill is based on a NYMEX price.

There are two major pipelines that transport natural gas to Georgia. The Trans Continental Pipeline (Transco) and Southern Natural Gas Pipeline (SONAT). These pipelines start in Louisiana and transport natural gas north to New York. The interstate pipeline charges (ISPC or DDDC) on your FireSide bill detail the cost to move your gas through the pipeline to its delivery point at the Atlanta Gas Light distribution network also known as the City Gate. The AGL base charges on your bill reflect the costs associated with the maintenance and management of the natural gas from the City Gate to your meter. AGL owns and operates all of the piping, storage, and is responsible for reading your meter.

Along the Interstate Pipelines, there are storage facilities to manage how much gas is in the pipe at any given time. Gas can be moved from the pipeline to storage when there is more supply than demand and then can be moved from storage back to the pipeline when demand is high.

Interesting note: Most of the natural gas storage facilities are formed by creating salt domes. The domes are formed by using hot water to dissolve the salt - creating an airtight storage facility under ground.