Natural gas stovetop alight

What is Natural Gas?

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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.

Natural gas is one of the leading sources of energy in Australia, yet not many of us know how it’s made or produced. But with a slow transition from coal-powered stations and the number of gas-powered stations on the rise, it’s important to understand the benefits, cost efficiencies and environmental impacts of natural gas as an energy source. To help you get your head around this precious commodity, Canstar Blue breaks down everything you need to know about natural gas in Australia, including how it could benefit you!

What is natural gas and how does it form?

Natural gas is an odourless, colourless energy source, made up of methane and a mix of combustible hydrocarbon gases. It’s sometimes referred to as a fossil fuel because, like coal and other fossil fuels, it was created over millions of years as decomposed animal and plant remains mixed with silt and were subjected to intense heat and pressure, causing a gas (or coal or oil) to form. Natural gas is typically found deep underground in between layers of rocks and stones.

How is natural gas sourced?

Natural gas is accessed by drilling into the underground reservoirs of rock and stone within which the gas has naturally formed. Natural gas reservoirs are usually then connected to an underground pipeline distribution network that has been built to supply the gas to homes and businesses.

What is the difference between natural gas and LPG?

LPG cylinder The main difference between natural gas and liquefied petroleum gas (LPG) is the way they are supplied to customers. LPG is mostly made up of propane and as a by-product of fossil fuels – typically natural gas and crude oil – it’s extracted from fossil fuels through a refining process that makes it a denser gas. This makes it much slower to dissipate into the atmosphere, so as a result, LPG needs to be safely pressurised in liquid form (hence the ‘liquefied’) before being transported in cylinders to your home.

Natural gas, on the other hand, is a natural product sourced straight from the earth, not through a refining process, and that makes it much lighter and safer to be transported through pipelines to homes and businesses.

Because it’s transported in cylinders, LPG is more suited to household appliances with a specific connection point, such as barbeques or stovetops, whereas natural gas is usually used for larger home systems such as heating and hot water, which are fed via a connection to the gas mains, a network of underground gas pipes.

What are the benefits of natural gas?

There are a few notable advantages of using natural gas. These are:

  • Reduced carbon emissions: According to the US National Energy Technology Laboratory, natural gas power plants emit about half as much of carbon dioxide (CO2) into the atmosphere as coal plants emit.
  • ‘Cleaner’ fossil fuel: As it’s a natural fuel source and consists of mainly methane, natural gas is generally considered a ‘cleaner’ fossil fuel option, which may explain why gas use in Australia has increased over the last 20 years, according to the Australian Pipelines and Gas Association (APGA).
  • Safer to transport: As a lighter gas product that collects in natural reservoirs underground, accessing natural gas is quick, easy and efficient through drilling and pipeline installation.
  • Cheaper to produce: Natural gas is generally more accessible than other energy sources, making it cheaper to produce and distribute to households and businesses. Unlike electricity, which increases in price during peak demand periods, gas prices can sometimes decrease in times of demand because gas is easier to distribute in larger quantities.

Is natural gas a renewable energy source?

Despite its reduced carbon emissions, natural gas isn’t considered a renewable energy source. While it does contain mostly methane and is produced by nature, it contains other gases such as propane and butane that aren’t as environmentally friendly. Also, it takes about 300-400 million years for natural gas to form through the decomposition, missing and heating process we explained above, meaning that replacing the natural gas we have used is far from a quick process.

Is natural gas cheaper than electricity? Find out in our Natural Gas vs Electricity Guide.

Natural gas use in Australia

According to Australian energy statistics, natural gas is Australia’s third largest energy resource, after coal and oil. With such an abundance of natural gas at our disposal, Australians are able to use natural gas in two significant ways; electricity generation and household energy.

Electricity generation

Natural gas-powered plant

Australian energy statistics showed that natural gas accounted for 27.1% of energy consumption in Australia in 2020-2021, and that percentage could grow as the country adds more natural gas-powered stations to the energy grid. Natural gas-powered stations have an advantage on coal-powered stations as they don’t take as long to begin operation. This is because the natural gas-powered station uses steam from heated water to push the turbines and generate electricity, whereas coal-powered stations use magnets and electrons to power the turbines and generate electricity that way.

The water used in a natural gas station is what sets it apart from coal-stations, allowing the station to generate electricity, more quickly and efficiently than coal-fire as it is less reliant on electric currents. Because of this, natural gas stations are better equipped to handle peak electricity demand periods, making them desirable for areas with high seasonal power usage, like Australia.

Household energy

Natural gas heater warming feet

As we mentioned above, natural gas is also used in Australia as a household energy source, usually for heating, hot water and cooking. Thanks to the nation’s distribution pipeline network underground, most Australian households have direct access to natural gas as an energy source. However, customers living in some remote areas of Australia may not have access to natural gas.

Assuming your property is connected to the distribution network, you can connect gas in your home by contacting an energy provider that offers natural gas. Before setting up natural gas in your home, it’s worth asking the supplier how much a gas connection is going to cost and if there are any additional charges.

Which companies supply natural gas in Australia?

The following retailers offer natural gas in Australia. Keep in mind some of these companies may only offer gas to customers who have an electricity account with them.

Check out the best-rated gas suppliers in Australia:

Should I get natural gas for my home?

There are benefits to using natural gas as a reliable energy source; it’s generally cheaper to purchase, easily accessible if your home is connected to the gas mains, and you’ll likely be lowering some of your carbon emissions.

It’s important to keep in mind, though, that natural gas can only be used to power a select few appliances in your home, not your entire home. Some providers allow customers to bundle their electricity and gas too – often referred to as dual fuel – but it’s important to do a little research before signing up to the same company for both energy sources. Why? Well, one provider may offer competitive electricity rates but for gas, it could be a different story. This isn’t to say that you can’t find a cheap bundled deal either, as some duel fuel suppliers offer discounts for bundling household utilities.

If you haven’t compared natural gas suppliers in a while, then maybe it’s time to review your existing gas plan. Whether you check out any of our gas provider ratings pages, or you just want to compare prices in your area by using our comparison tool below, the power is yours.

Compare Gas Plans and Prices

Image credits: Elgub/, Oleksiy Mark/, Factory_Easy/, Yevhen Prozhyrko/

Kelseigh Wrigley
Energy Specialist
Kelseigh Wrigley covers Australia's retail energy market, growing her industry specific expertise over the last 2 years. She holds a Bachelor of Journalism at the Queensland University of Technology and has contributed her skills to online publications Hunter & Bligh and local radio station 4ZZZ.

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