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Natural gas explained
In this Canstar Blue guide, we explain how natural gas works, what it is most commonly used for in Australia and whether it could benefit your home energy usage.
14 Aug 2025
In this Canstar Blue guide, we explain how natural gas works, what it is most commonly used for in Australia and whether it could benefit your home energy usage.
KEY POINTS
- Natural gas is an odourless and colourless fossil fuel produced from millions of years of plant and animal matter decomposition.
- The benefits of natural gas include lower running costs, higher thermal efficiency and reduced carbon emissions
- Natural gas is supplied to homes directly via an underground pipe network, while LPG is pressurised and transported in cylinders.
Natural gas explained
Natural gas is an odourless and colourless fossil fuel produced from millions of years of plant and animal matter decomposition underground.
The immense heat and pressure beneath the Earth’s crust transform this dead matter into natural gas, which comprises 97% methane.
Natural gas is the second most popular fossil fuel behind coal, representing 17% of Australia’s total energy generation between 2022 and 2023.
Natural gas is used to power gas-specific appliances, such as:
- Ovens and stovetops
- Heaters and air conditioners
- Clothes dryers
- Hot water systems.
How is natural gas sourced?
Because natural gas is formed underground, natural gas must be extracted from these subterranean gas wells.
In Australia, natural gas can be split into two categories: conventional and unconventional. Both types share a near-identical chemical composition. The difference lies in how and where they are extracted.
Conventional gases are extracted from deep, watertight sandstone formations called ‘reservoirs’ through vertical or directional drilling.
Conversely, unconventional gases (i.e. coal seam gas, shale gas) may require advanced extraction techniques:
- Coal seam gas (CSG): Coal seam gas is found closer to the surface, trapped by pressure from underground water known as ‘formation water’. To extract CSG, formation water must be pumped out.
- Shale gas: Shale gas is found trapped in shale rock formations. Hydraulic fracturing is used to release trapped shale gas.
Currently, there are 12 conventional gas reserves and nine unconventional gas reserves, both onshore and offshore.
In both cases, the extracted gas is refined to remove impurities. Because natural gas is odourless, mercaptan is also added for its distinct rotten egg scent, allowing people to detect gas leaks through smell.
The refined natural gas is then exported or supplied to homes through Australia’s vast gas network.
What are the benefits of natural gas?
For customers, natural gas has a handful of natural advantages:
- Lower running costs: Gas (measured in megajoules or MJ) is generally cheaper than electricity (measured in kilowatt hours or kWh) on a per unit basis. However, gas isn’t as powerful as electricity, with 3.6 MJ of gas equalling one kWh of electricity.
- More efficient: Gas-powered appliances such as hot water systems, stovetops and heating are typically cheaper to run and more efficient than their electricity counterparts.
- Reduced carbon emissions: Natural gas power plants emit about half as much carbon dioxide (CO2) into the atmosphere as coal-fired power plants. However, the methane, propane and butane found in natural gas still contribute to the world’s increasing greenhouse gas levels.
- Cheaper to produce: Unlike electricity and oil, which increase in price during peak demand periods, gas prices can sometimes decrease in times of demand because gas is easier to distribute in larger quantities.
- Lifestyle preferences: Some Aussies prefer gas over electricity for subjective reasons. One such example is the preference for cooking on gas stovetops over their electric counterparts.
For more information about the differences between electricity and gas, please visit Canstar Blue’s electricity and gas guide.
How do I get natural gas?
There is a step-by-step process to secure a gas connection:
- You’ll have to contact the distributor network servicing your area to organise a gas connection for a fee ranging between hundreds or thousands of dollars.
- Your distributor may ask about a preferred gas meter location. Ensure that your preferred spot is safe and easily accessible.
- Contact a qualified gas fitter to install your gas appliances and connect them to the meter and network.
- Once a connection is established, shop around for a gas provider or plan that’s suited to your lifestyle. Try comparing your options with Canstar Blue’s gas comparison tool.
- Once you’ve signed up for a plan, start enjoying your gas-powered home.
Keep in mind that a gas connection is only possible if your home is situated close to a gas mains network. In this case, the only alternative is liquified petroleum gas (LPG).
What is the difference between natural gas and LPG?
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| Natural gas | LPG | |
|---|---|---|
| Form | A colourless and odourless gas (mostly methane) produced from millions of years of plant and animal matter decomposition. | A propane gas byproduct extracted from fossil fuels through a refining process. |
| Transportation | Natural gas is much more stable, making it lighter and safer to constantly transport through pipelines to people’s homes. | LPG is safely pressurised into liquid form before being transported in cylinders. |
| Availability | For homes situated close to a gas main. | For homes both urban and rural, as well as portable use. |
| Appliance compatibility | Only compatible with LPG-powered appliances.
However, a licensed gasfitter may be able to convert a gas-powered appliance to be compatible with LPG for a fee. |
Only compatible with LPG-powered appliances. |
| Heating | Natural gas doesn’t burn as high. | LPG burns at a higher heat because of its higher energy density. |
| Cost | Cheaper usage rates than LPG per MJ of natural gas*. | More expensive usage rates than natural gas per MJ*. |
*The final amount you’re billed for your LPG or natural gas usage depends on your personal consumption habits, your natural gas supply charges or LPG refills, delivery and equipment fees.
If you’re considering LPG as an option, you can pay a visit to Canstar Blue’s best LPG suppliers ratings page, which ranks some of the country’s leading LPG providers based on factors such as overall satisfaction.
Natural gas plans in your state
Here are some of the cheapest gas deals on our database for NSW. These estimated annual costs are based on the Jemena Gas Network in Sydney and yearly gas usage of 18,800 MJ/year, but prices will vary depending on your own circumstances. The products are listed in order of lowest estimated price/year (including conditional discounts), then by the highest value rank (out of 10), then by highest brand satisfaction rating. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Distributed By Jemena Gas
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12 month energy plan with no exit fees
Glossary
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No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
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12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By Jemena Gas
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Here are some of the cheapest gas deals on our database for VIC. These estimated annual costs are based on the AGN – VIC network in Melbourne and yearly gas usage of 40,500 MJ/year, but prices will vary depending on your own circumstances. The products are listed in order of lowest estimated price/year (including conditional discounts), then by the highest value rank (out of 10), then by highest brand satisfaction rating. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Distributed By AGN - Vic
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - Vic
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Here are some of the cheapest gas deals on our database for QLD. These estimated annual costs are based on the AGN – QLD in Brisbane and yearly gas usage of 8,300 MJ/year, but prices will vary depending on your own circumstances. The products are listed in order of lowest estimated price/year (including conditional discounts), then by the highest value rank (out of 10), then by highest brand satisfaction rating. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Distributed By AGN - QLD
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - QLD
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - QLD
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - QLD
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Outstanding Value - Gas Plans QLD
Distributed By AGN - QLD
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Outstanding Value - Gas Plans QLD
Distributed By AGN - QLD
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Outstanding Value - Gas Plans QLD
Distributed By AGN - QLD
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - QLD
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Here are some of the cheapest gas deals on our database for SA. These estimated annual costs are based on the AGN – SA network in Adelaide and yearly gas usage of 14,800 MJ/year, but prices will vary depending on your own circumstances. The products are listed in order of lowest estimated price/year (including conditional discounts), then by the highest value rank (out of 10), then by highest brand satisfaction rating. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Distributed By AGN - SA
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By AGN - SA
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Here are some of the cheapest gas deals on our database for WA. These estimated annual costs are based on the ATCO network in Perth and yearly gas usage of 6,300 units/year, but prices will vary depending on your own circumstances. The products are listed in order of lowest estimated price/year (including conditional discounts), then by the highest value rank (out of 10), then by highest brand satisfaction rating. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Distributed By ATCO
PROMOTED
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Conditional discounts: 35% off the usage charge with direct debit & e-billing
Glossary
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
PROMOTED
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
-
Conditional discounts: 35% off the usage charge with direct debit & e-billing
Glossary
-
12 month energy plan with no exit fees
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
-
Conditional discounts: 25% off the usage charge with direct debit & e-billing
Glossary
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Distributed By ATCO
-
Conditional discounts: 12.50% off the usage charge when paid on time
Glossary
-
Ongoing energy plan with no renewal required
Glossary
-
No lock in contract with variable rates
Glossary
Is natural gas a renewable energy source?
Put simply, no, natural gas is not a renewable energy source. While natural gas is one of the cleanest fossil fuel sources, as it produces less carbon emissions than oil and coal, the methane, propane and butane found in natural gas still contribute to the world’s increasing greenhouse gas levels.
Which companies supply natural gas in Australia?
The following retailers offer natural gas in Australia.
Note: Keep in mind that some of these companies may only offer gas to customers who have an electricity account with them.
Should I get natural gas for my home?
There are benefits to using natural gas. However, it pays to do your research first.
Before committing to natural gas as an energy source, it’s important to carefully assess the following:
- Appliances: Natural gas can only be used to power select appliances in your home. If you only intend to power a small number of gas-powered appliances, a gas connection may not be worthwhile.
- Usage habits: If you do not intend to use much natural gas, the amount you’re paying in supply charges may outweigh any savings gained from switching from electricity to gas.
If you intend to use both electricity and gas, some providers may allow customers to bundle their electricity and gas for a discount – this is often referred to as dual fuel.
However, one provider may offer competitive electricity rates, but a steeper rate for gas. In this case, it would be more cost-effective to split your energy and gas needs between different retailers.
If you have gas at home but haven’t compared suppliers for a while, it might be time to review your existing plan. You can compare some of the cheapest gas plans in your area using our comparison tool below.
Compare Gas Plans and Prices
This article was reviewed by our Utilities Editor Tara Donnelly before it was updated, as part of our fact-checking process.
- Natural gas explained
- How is natural gas sourced?
- What are the benefits of natural gas?
- How do I get natural gas?
- What is the difference between natural gas and LPG?
- Natural gas plans in your state
- Is natural gas a renewable energy source?
- Which companies supply natural gas in Australia?
- Should I get natural gas for my home?
