Natural gas forms deep underground from the remains of ancient marine organisms buried under layers of sediment for millions of years. Most of the world’s supply is extracted from rock formations beneath the earth’s surface, with the United States producing more than any other country at roughly 39 quadrillion BTU in 2023. But the full answer covers everything from the geology that creates it to the modern techniques that bring it to the surface and the renewable alternatives now entering the market.
How Natural Gas Forms Underground
Natural gas begins as organic material, mostly microscopic ocean life like phytoplankton and other single-celled organisms that convert sunlight into energy. Plant material such as algae and pollen also contributes. When these organisms die, they settle on the ocean floor and get buried under layer after layer of sediment over millions of years.
As the layers pile up, the weight creates enormous heat and pressure. This transforms the organic material first into a waxy substance called kerogen, then eventually into oil or natural gas depending on the conditions. Lower temperatures and pressures tend to produce oil, while higher temperatures and pressures produce natural gas. The process isn’t all-or-nothing: a spectrum of hydrocarbons can form along the way, including ethane, propane, and butane.
Land-based plant deposits follow a similar path but are more likely to produce natural gas specifically. The key requirement is that the organic matter gets subjected to just the right combination of temperature and pressure for gas generation, something that only happens at significant depths over geological timescales.
Conventional Gas Reservoirs
In conventional deposits, natural gas migrates upward from the rock where it formed and collects in porous, permeable rock layers capped by an impermeable seal. Think of it like a sponge trapped under a dome of solid rock. These reservoirs are relatively discrete and accessible, which made them the primary target for gas drilling throughout the 20th century. A well drilled into one of these pockets allows gas to flow to the surface with minimal assistance.
Some conventional gas is “associated,” meaning it comes up alongside crude oil during oil production. This gas is typically separated from the oil at the wellhead. Non-associated gas, by contrast, exists in reservoirs that contain little or no oil.
Unconventional Sources: Shale, Tight Gas, and Coal
Unconventional natural gas has transformed global energy production over the past two decades. Unlike conventional reservoirs, these deposits are spread throughout wide geological formations rather than pooled in one spot, and they sit in rock that doesn’t let gas flow easily on its own. Three types dominate.
Shale gas is locked within fine-grained shale rock with very low permeability. It’s the source behind the U.S. shale boom that began in the mid-2000s. Tight gas is trapped in sandstone or carbonate rock that is similarly resistant to flow. Coalbed methane forms within coal seams, where gas is adsorbed onto the surface of the coal itself.
All three require advanced extraction techniques. The most common is hydraulic fracturing, often called fracking, typically combined with horizontal drilling. A well is drilled vertically to the target depth, then turned sideways to run through the gas-bearing rock layer horizontally. High-pressure fluid is then pumped in to create a network of fractures in the formation, giving the trapped gas pathways to travel through to the wellbore and up to the surface.
Top Producing Countries
The United States leads global natural gas production by a wide margin, producing roughly 39 quadrillion BTU in 2023, according to the U.S. Energy Information Administration. Russia comes second at about 23 quadrillion BTU, followed by Iran (10), China (8), and Canada (7). The massive gap between the U.S. and everyone else is largely a result of the shale gas revolution, which unlocked vast reserves in formations like the Marcellus Shale in Appalachia and the Permian Basin in Texas.
From Wellhead to Pipeline
Raw natural gas coming out of the ground isn’t ready for your furnace or stove. It contains water vapor, carbon dioxide, hydrogen sulfide, and other impurities that must be stripped out at processing plants before the gas enters the consumer pipeline. Hydrogen sulfide is particularly problematic because it’s toxic and corrosive. Processing plants remove it and convert it into elemental sulfur, a usable byproduct, using an industrial method called the Claus process.
Once cleaned, the gas is mostly methane and can travel through pipelines to homes, power plants, and industrial facilities. For international transport across oceans where pipelines aren’t practical, the gas is cooled to between negative 159°C and negative 162°C, condensing it into liquefied natural gas (LNG). This cooling shrinks its volume dramatically, making it economical to ship in specialized tankers. At the destination, the LNG is reheated back into gas form and distributed through local pipeline networks.
Renewable Natural Gas
Not all natural gas comes from fossil deposits. Renewable natural gas (RNG) is chemically identical to conventional natural gas but produced from organic waste that’s decomposing right now rather than millions of years ago. Three main sources supply it.
Landfills generate significant amounts of methane as buried waste breaks down. Capture systems collect this gas, which would otherwise escape into the atmosphere as a potent greenhouse gas, and process it into pipeline-quality fuel. Livestock operations use anaerobic digesters to break down animal manure in sealed tanks, stabilizing and optimizing methane production. Wastewater treatment plants follow a similar approach, digesting the solid material removed during sewage treatment to produce biogas.
In all three cases, the raw biogas is upgraded by removing carbon dioxide and other contaminants until it meets the same quality standards as conventional natural gas. RNG currently represents a small fraction of total supply, but production is growing as municipalities and farms invest in capture infrastructure.