Operating Economics: III. Natural Gas
N atural gas is one of the forms in which petroleum is found under the earth, and much of the world's output is produced along with oil from the same wells: yet it is not too easy to fit into an economic rationale of the oil industry. It is generally a joint product of the exploration stage of the oil business and sometimes of the production stage, just as most saleable oil products are joint products of the later refining stage. But unlike oil, it is sold almost without processing, as a raw fuel, and it has competed from its early beginnings in the general fuel market, without special advantages in any specialized use. It can be transported long distances overland, though not nearly as cheaply as oil, but it is only just beginning to be moved across the sea. It has entered international trade, therefore, only across certain land frontiers -- notably in pipelines from Canada to the United States. But even with that limitation natural gas has developed more rapidly than any other primary fuel since the last war. By 1960, it supplied more than a quarter of all the fuel consumed in the world's richest market, the United States, and in that same year its consumption in the rest of the free world was probably six times as much as it had been in 1950.
Wherever you find worthwhile deposits of oil there is gas too: but the converse does not hold good. Gas exists in an oil reservoir sometimes as 'cap gas' compressed between the top level of the crude oil and the sealing 'caprock' above it, but also, nearly always, dissolved in the crude oil. At a given temperature and pressure, oil will dissolve a given volume of gas. If it contains more, this will tend to come out of solution into a gas cap: if it has less, the gas does not help much in bringing the oil to the surface. When gas is stripped out of the oil at the surface it may be put down the well again for 'repressuring' (providing this is not 'unsaturated' oil that would simply dissolve it) or for 'gas lift' to keep the oil coming. Gas, however, may exist in reservoirs on its own. Its