Southern African Natural Gas Advisory Service Service

The energy content and pricing of natural gas

Energy Content

Natural gas is measured in normal cubic meters (Metric) or standard cubic feet (Imperial). The gross heat of combustion of one cubic meter of commercial quality natural gas is approximately 39 mega joules (or 10.8 kWh) although this can vary.

The typical calorific value of natural gas is roughly 1,000 British Thermal Units (Btu's) per cubic foot. One Btu is the amount of energy required to raise one pound (0.454 kg) of water from 39' F to 40' F (3.8' C to 4.4'C).

In the U.S. and Britain retail sales of natural gas are usually in units of therm's. One therm is 100,000 Btu's.  Gas meters are used in the premises of consumers that measure the volume of gas that is used and this is converted to therm's by multiplying the volume by the energy content of the gas used during a period of time.

Some gas suppliers also reference the price to p/kWh as a standard against electricity prices. In South Africa metric units are used and gas tariffs are in Giga Joules (GJ).  See the Useful Links section below for access to energy unit conversion calculators.  

Price of natural gas

The price of natural gas varies greatly depending on location, volume of gas consumed and type of consumer.  The price for residential use varies from 50% to 300% more than wholesale prices. Natural gas prices are subject to the dynamics of supply and demand on a global, country and regional basis.

As supply becomes more plentiful, international natural gas prices trend lower and become more competitive with alternative energy sources. Since natural gas is commonly priced at ‘market related’ rates relative to other conventional energies including electricity , it usually is the lowest cost energy available to consumers.

Natural gas, unlike electricity, can also be readily stored to assist to even out demand and supply variations on a daily, weekly and seasonal basis. This in turn enables more reliable and stable pricing arrangements. In recent years with a large increase in the discovery, production and shipment of natural gas across the world, it has become a highly affordable and competitively priced energy source for use in the residential, commercial, industrial and electricity generation sectors.

However, in South Africa for reasons that are not entirely clear, natural gas prices are among the highest in the world. The country and consumers  are being denied the benefits of this highly competitive, affordable and modern fuel.