Natural Gas Distribution

The natural gas industry is an extremelydeliver it to each individual customer's location of
important commodity in the energy sector of theuse. It has been estimated that the extensive
U.S. economy. In addition to providing one of thenetwork of small-diameter distribution pipe
cleanest burning fuels available, it offers constantrequired to deliver natural gas in the United States
value and growing commerce to the nation.is over one million miles.
Over the past 15 years, the structure of theThe transportation infrastructure required to
natural gas industry has changed dramatically. Themove natural gas to many diverse customers
industry formerly had a simple structure withacross the country to some remote and isolated
limited flexibility and few options for delivery.areas, distribution costs make up the majority of
Production companies explored and drilled fornatural gas costs for small volume end users.
natural gas, selling their product at the wellhead toDistribution companies must deliver relatively small
large transportation pipelines. These pipelinesvolumes of gas to many more different locations.
transported the natural gas, selling it to localLarge pipelines can reduce unit costs by
distribution utilities, which sold that gas to itstransmitting large volumes of natural gas, but
customers. The price for which the producers soldthese infrastructures are utilized around the
the natural gas to the transportation pipelines andconcentrated metropolitan areas of the country.
the price for which the pipelines sold the localAccording to the Energy Information
distribution companies were both federallyAdministration (EIA), for the typical small volume
regulated. Then state regulation monitored theresidential natural gas consumer, distribution costs
price for which local distribution companies soldrepresent up to 47 percent of the natural gas bill.
natural gas to their customers. The increasingThe actual natural gas commodity represents
demand for natural gas as a fuel source, newabout 34 percent of residential consumers' bill, and
technology, regulation flexibilities, and innovativetransmission (by large interstate and intrastate
data monitoring have changed the industry.pipelines) and storage costs make up about 19
Distribution is the final step in delivering natural gaspercent.
to end users. High capacity interstate andOther innovations affecting the natural gas
intrastate pipelines deliver directly to the largeindustry include the new technology of flexible
industrial, commercial, and electrically generatedplastic and corrugated stainless steel tubing in
customers. These accounts are usually contractedplace of rigid steel pipe, new electronic
through natural gas marketing companies. Mostmeter-reading systems capable of transmitting
other users receive natural gas from a localdata information directly to the local distribution
distribution company (LDC). There are two basiccompany, new trenching techniques allowing for
types of local distribution companies: those ownedpipe installation with less impact on the above
by investors, and public gas systems owned byground surroundings, and new supervisory control
local state governments.and data acquisition (SCADA) systems which
Local distribution companies like Triple Diamondassimilate gas flow control and measurement
Energy Corp transport natural gas throughproviding a comprehensive accurate report for
small-diameter distribution pipe. Delivery points tothe LDC. All of these improvements result in cost
LDCs, especially for large municipal areas, aresavings for the LDC, which are passed along to
often termed 'citygates'. LDCs usually takecustomers.
ownership of the natural gas at the citygate, then