The Natural Gas Industry Structure

Of the over 8,000 natural gas producers in the United States, there are about two dozen large integrated production companies in the industry termed 'Majors'. From these majors which usually have operations worldwide, producers can range from having interests in all segments of the oil and gas industry all the way to small one or two person operations that may only have partial interest in a single well.

In 2000 the over 580 natural gas processing plants in the United States, at the time, were responsible for processing almost 17 trillion cubic feet of natural gas and extracting over 720 million barrels of natural gas liquids.

About 160 pipeline companies operate over 285,000 miles of pipe in the United States, of which is 180,000 miles of interstate pipelines. This pipeline is capable of transporting over 119 billion cubic feet (Bcf) of gas per day from the producing regions to the consuming regions.

There are about 415 underground storage facilities in the United States with about 114 natural gas storage operators. The storage capacity of these facilities is 3,923 billion cubic feet (Bcf) of natural gas, maintaining an average daily deliverability of 78 billion cubic feet (Bcf). The Energy Industry Association (EIA) keeps a weekly storage survey which monitors the injection and withdrawal of stored natural gas. By measuring the natural gas extracted or stored at any one time in response to the demand, this survey gives a good indication of the status of the natural gas market.

As companies enter and exit from the industry quite frequently, the status of the natural gas market is constantly changing. The volume of non-physical natural gas that passes through the hands of marketers is very large, and can be much greater than the actual physical volume consumed. This is an indication of just how vibrant and transparent the commodity markets are for natural gas. Just for example, in 1998, it was estimated that for every thousand cubic feet of natural gas consumed, about 2.7 thousand cubic feet passed through natural gas marketers.

The natural gas market is similar to other commodity markets in that the prices reflect the ability of the supply meeting the demand at any one time. When the demand for gas is rising, and prices rise accordingly, producers will respond by increasing their exploration and production capabilities. Being one of these producers, Triple Diamond Energy Corporation follows this straightforward economic strategy.

While many distribution companies maintain a monopoly status over their distribution region, many states are currently in the process of changing this by offering consumer choice options with respect to their natural gas distribution. In the United States there are over 1,200 natural gas distribution companies which own over 833,000 miles of distribution pipe.