Understanding Natural Gas

Exploration, production and transmission are key elements in the supply of natural gas.

Shell Natural Gas Operations

From exploration to end use 

Finding, developing, processing and transporting natural gas for end use is a complex process that involves the expertise of many well-trained professionals who ensure natural gas is developed and delivered safely to 6,800,000 Canadian homes and businesses every day (Source: Canadian Gas Association) Below is a list of key players involved: 

  • Exploration and production company – also known as the ‘producer,’ holds the lease rights to land where they are exploring and potentially producing natural gas
  • Service company – companies that are contracted by the producer for:
    • Drilling, completions and related services
    • Hydraulic fracturing operations
    • Seismic testing
    • Other services such as waste disposal, water supply, road construction
  • Regulator – The provincial or federal agency that provides regulatory oversight and enforcement for natural gas development and operations including exploration, development, pipeline transportation and reclamation

Phase 1 – Exploration 

Ownership of the mineral or below surface rights is usually held by the government. The government may provide a time-limited right, or agreement, to a producer to develop resources such as natural gas.  These rights are sold to companies through auctions that are overseen by the relevant government organization. All subsequent exploration and production activities that take place are managed through strong and effective government regulations. 

Once the producer has secured rights to the land, geologists and geophysicists examine the underground potential for natural gas. Once the geo-experts find an area where natural gas likely exists, more tests may be conducted to ensure natural gas is present. For example, seismic testing, contracted to a third-party, provides insight into potential sources of natural gas by using seismic waves to understand how the earth interacts with various types of underground formations. In some cases, a producer may choose to drill a test well to determine the resource potential. Based on all of the testing and data collected, a drilling site is selected.  

Phase 2 – Development 

Once a natural gas deposit has been selected, a company negotiates surface access rights with the landowner and a crew of contracted drilling experts drills the well.  The drilling company works with the producer to manage drilling operations. Two types of drilling could be used:

  • Vertical drilling – Drilling rigs drill wells vertically directly into the porous rock formations that hold the natural gas.
  • Horizontal drilling – Horizontal drilling uses flexible drilling pipe that can to turn a vertical well onto a horizontal plane to extend the well hundreds of metres into the formation to allow more natural gas to be extracted.

The drilling company works with the producer to manage drilling operations. This may include running logging tests during and after the drilling process to monitor the progress of the well drilling and to gain a better idea of underground formations.

If the natural gas deposit is located in tight rock formations, hydraulic fracturing may be required to help open the rock and provide an open pathway for the natural gas to flow to the surface. Hydraulic fracturing service companies are experts in this process and are contracted to perform this work. 

Once the natural gas is freely flowing, the well is completed by replacing all of the drilling equipment with a wellhead connected to gathering pipelines and other processing facilities.   

Phase 3 – Processing  

The producer moves the natural gas through gathering pipelines to processing facilities. Here, the natural gas is separated from water, impurities and other gases such as sulphur dioxide. Some gas plants also remove natural gas liquids (NGLs) such as ethane, propane, and butane. When natural gas processing is finished, the cleaned natural gas is ready for a distributor to ship and deliver through their pipeline network to consumers.  

Phase 4 – Distribution, storage and delivery

The transportation system for natural gas is made up of a network of pipelines that move product safely, quickly and efficiently from the processing facilities to end users. After natural gas is processed, it moves through transmission pipelines. These pipelines are owned and operated by various pipeline operators. 

Natural gas flows through transmission pipelines with the help of compressors placed along the pipeline system to help flow it through the pipe to its destination. Natural gas may also be stored for long periods of time in underground facilities for use at a later time. At the final destination, local distribution companies or gas utilities reduce the pressure so the natural gas can travel through a smaller distribution network for local delivery to homes and businesses.