Natural Gas Equivalent

What Is Natural Gas Equivalent?

Natural gas equivalent (NGE) alludes to the amount of natural gas expected to approach the energy delivered from one barrel of crude oil, as measured in British warm units (BTUs). The natural gas equivalent for a barrel of crude oil is calculated to take into consideration a comparison between natural gas and crude oil prices.

Natural gas equivalent is utilized for the most part inside the oil and gas industry. In the world of finance, notwithstanding, it is more normal rather to talk in terms of barrel of oil equivalent (BOE).

Figuring out Natural Gas Equivalent

In the oil and gas industry, barrel of oil equivalent and natural gas equivalent are basically exactly the same thing — the amount of natural gas it takes to deliver similar British warm units as a barrel of oil, as well as the other way around. Of course, barrel of oil equivalent can be calculated and applied to other energy sources also.

Many oil companies produce both oil and gas, among other petroleum products, yet the unit of measure for each is unique. Oil is measured in barrels and natural gas is measured in cubic feet. To assist with working with like-for-like comparisons, the industry standardized natural gas production into "equivalent barrels" of oil or "equivalent units of gas."

One barrel of oil is generally considered to have a similar amount of energy content as 6,000 cubic feet of natural gas. So this quantity of natural gas is "equivalent" to one barrel of oil.

Ascertaining Natural Gas Equivalent

The calculation for the natural gas equivalent of a barrel of oil is genuinely straightforward. As both oil and gas can be measured in Btu, the initial step is to change over a barrel of oil. There are standard transformations for both a barrel of oil and 100 cubic feet of natural gas. A standard barrel of oil is 42 gallons of crude and equals 5.8 million Btu, while 100 cubic feet of natural gas comes in at 103,700 Btu.

To wipe out the disparity in energy, natural gas is measured in 1,000s cubit feet units (Mcf) with an energy of 1.037 million Btu. So there is very nearly six times the energy in a barrel of oil than there is in 1000 cubic feet of natural gas. By custom and for the purpose of clean, round numbers, the natural gas equivalent of a barrel of oil basically rounds out to 6,000 cubic feet or 6 Mcf.

How Natural Gas Equivalent Is Used

Natural gas equivalent is really intended to help investors as opposed to befuddle them. By standardizing energy into equivalents of a barrel of oil, energy companies make comparisons of production, proven reserves, probable reserves, etc a lot simpler for investors and industry analysts.

Of course, with regards to energy, there is still some changing over required to get a global picture, as some regional reporting across the world just gives metric units. Mcf is the standard way for reporting natural gas inside the United States, however billions of cubic feet (Bcf) may likewise be utilized. In Europe, natural gas is reported by the metric ton.

Furthermore, of course, natural gas equivalent can be utilized in a more personal manner to measure the difference between housing heating systems (heating oil versus natural gas for instance) in view of the market prices for their fuel.

Features

• Natural gas equivalent is involved by energy market traders as well as inside the oil and gas industry, in spite of the fact that barrel of oil equivalent (BOE) is more predominant.
• Natural gas equivalent is an approach to standardizing the energy stored in a barrel of crude oil and other energy resources into units of natural gas.
• One barrel of crude oil generally has around a similar energy content as 6,000 cubic feet of natural gas, so this quantity of natural gas is "equivalent" to one barrel of oil.