Natural gas is mostly methane, a colourless, odourless gas with the chemical formula CH4. Of all fossil fuels, it is the one that contains the least carbon (C) and the most hydrogen (H). Thus, the carbon dioxide emissions and the contribution to the greenhouse effect caused when methane is burned are only slightly over half of those caused by burning coal, and one quarter less than those of oil. The natural gas deposits that we use today are the residue from the decomposition of microorganisms in deep sedimentary formations, under very special conditions, over millions of years. Because of their low density, light hydrocarbons such as methane tend to escape from their source rocks and migrate upwards. Where the geological conditions are favourable (due to the presence of an anticline), this upward migration encounters an obstacle in the form of impermeable layers that trap the hydrocarbons. The resulting accumulation of hydrocarbons in reservoir rocks leads to the formation of the conventional gas and oil deposits of today. These deposits can be exploited using conventional recovery methods. Sometimes, the storage rock is insufficiently permeable, and the hydrocarbons remain trapped. This is the case for shale oil and shale gas. The sophisticated technology referred to as fracking was developed to extract such deposits. Fracking was introduced in the United States and Canada shortly after 2000, as oil prices began to consistently surpass the 50 dollar a barrel mark.
While methane can be extracted from natural gas, it can also be produced industrially. In the 19th century, coal gasification made it possible to produce coal gas, which was used primarily for street lighting. Coal gas was supplanted by natural gas in the 1960s and 1970s. Methane production continues to this day, mostly taking the form of biogas produced by the fermentation of renewable biological matter. Natural gas and biogas are transported either using gas pipelines or, following liquefaction, in liquefied natural gas (LNG) tankers. Natural gas is widely used as an energy source for residential and business heating, to provide process energy for business and industry, and to generate electricity. It is also used in the chemical industry for the production of plastics. On current global consumption patterns, proven reserves of natural gas (some 60% of which are located in Russia, Iran, Qatar or Turkmenistan) should last for at least another 50 years, according to the BP Statistical Review of World Energy 2016. The same statistics show that natural gas consumption worldwide increased by 43% between 2000 and 2014 (corresponding to an annual growth rate of 2.5%). In 2015, the annual growth rate was 1.7%. The biggest users of natural gas are the USA (with a share of 22.8%), followed by the EU (11.5%), Russia (11.2%), China (5.7%) and Iran (5.5%). The OECD countries' share of world natural gas consumption in 2015 dropped to 46.5% (from 46.7% in 2014 and 52.6% in 2004). The biggest natural gas producers were the USA (22.0%), Russia (16.1%), Iran (5.4%), Qatar (5.1%) and Canada (4.6%). The International Energy Agency forecasts (in the IEA's Medium-Term Gas Market Report 2016) that gas use will continue to grow by some 1.5% per year until 2021, compared with 1.2% for oil and 0.8% for coal. In 2015, gas prices dropped dramatically across all regional markets. In Europe, this was attributed primarily to the correlation with crude oil prices and to the unusually mild temperatures. In the USA, overproduction from the shale gas boom forced gas spot prices on the NYMEX to their lowest level since the start of the millennium. The eastern Asian market saw massive growth in LNG supply (particularly from Australia) in a period of cooling demand.
In Switzerland, gas manufacturing started in the middle of the 19th century. At the beginning, it was produced by wood distillation and later by coal distillation and by cracking light oil products. Gas works dotted the plains of the country, in a decentralised configuration that characterises the gas distribution industry to this day. Connections to the European transport network and the resulting conversion to natural gas took place in the 1970s. The importance of natural gas on the Swiss heating market received powerful impetus from the dramatic increase in oil prices resulting from the crises of 1973 and 1978-79. Another main factor was the construction of the TENP gas pipeline ("Trans Europa Naturgas Pipeline", running between the Netherlands and the Swiss border) and Transitgas (running between Wallbach, on the German border, and the Gries Pass leading to Italy). The Transitgas pipeline, owned by the company of the same name, was expanded massively between 1998 and 2003 to meet growing demand for gas in Italy, and, with a new link in Oltingue (southwest of Basel), was connected to the French transport network. The Transitgas pipeline has a transport capacity of 18 billion cubic metres per year, of which 2.5 billion are reserved for Switzerland. This makes Switzerland an important country of transit, in the heart of the European internal market for gas. By 2018, Transitgas will acquire reverse flow capability, allowing gas to be transported from Italy towards Germany and perhaps France. This capability will improve the security of the gas supply not only for Switzerland, but also for all of Western Europe. Currently Switzerland has 16 cross-border transfer posts, the majority of which act purely as entry points. The remainder act as exit points for at least part of the time. Within Switzerland, the high-pressure transport network consists of 2253 kilometres of pipeline, and the low-pressure distribution network has an additional 17 200 kilometres of pipeline, according to the Swiss gas industry association VSG. Some 40% of the 2350 communes in Switzerland, with 70% of the population, are supplied with natural gas. Consumer use increased tenfold between 1973 and 1996, most of that growth taking place at the expense of fuel oil. In the past two decades, growth has averaged only 1.3 % per year, because of milder weather conditions. The official overall energy statistics for Switzerland show that gas made up 13.5% of total consumer energy use in 2015. Residential use makes up the biggest component, accounting for some 40% of gas consumption, followed closely by industry with some 35%.
Switzerland obtains practically all of its natural gas from imports: domestic production of biogas covers less than one-tenth of one per cent of total demand. Domestic deposits of natural gas are believed to exist, but the only commercially exploitable deposit found to date was the tiny Finsterwald deposit in the canton of Lucerne. Between 1985 and 1994, it produced 74 million cubic metres of natural gas, 2.1% of total Swiss consumption for just one year, 2015. The Swiss gas market, at 3.5 billion cubic metres per year, is a minor player on the international scene, making up less than one per cent of demand in Europe. Most of the Swiss gas demand is met under long-term contracts with reliable partners from four European Union countries (Germany, the Netherlands, France and Italy). With the exception of the Netherlands, these countries cover their gas needs with imports from Russia, Norway and Algeria. However, spot market purchases are gaining in importance, as they make it possible to take advantage of short-term price fluctuations.
Continuity of supply is guaranteed even during cold spells or in the event of major disruptions in the supply infrastructure. An important backup capability is provided by dual-fuel furnaces, which make up approximately 30% of Swiss annual gas consumption, a much higher share than in most other countries. In an emergency, the Federal Office for National Economic Supply (FONES) can demand that these plants switch to fuel oil, if they have not already done so. In this way, the more inflexible sectors such as households and small businesses can continue to be supplied under a reduced regime. To be prepared for an emergency even in a situation where supplies of natural oil and fuel oil are both affected simultaneously, it is necessary to store reserves of fuel oil. Storage is coordinated by Provisiogas, an organisation established by the gas industry under the supervision of FONES. These mandatory reserves must be sufficient to keep the dual-fuel furnaces functioning on oil (in the absence of a gas supply) for at least four and a half months. Separately, the regional gas company Gaznat (in western Switzerland) and, to a lesser extent, the regional gas company GVM (in the northwest of the country) have their own storage capacities (amounting to 5% of the annual consumption for Switzerland) in the form of a natural gas storage facility that they helped to finance in the region of Lyons. An agreement between Switzerland and France enables the two Swiss companies to make use of these capacities in an emergency on the same terms as French gas companies. All the Swiss gas industry's partner countries have major storage facilities that can be called upon subject to appropriate delivery terms, thereby adding to the flexibility of the Swiss gas supply. In the future, liquefied natural gas (LNG) will gain in importance on the European gas market. LNG will serve not only as additional protection against supply interruptions but also as a factor in the globalisation of the gas market.
The Swiss natural gas landscape is dominated by regional suppliers, each of which supplies all the gas within its region. This natural monopoly needs to be seen in the context of highly competitive conditions on the heating market. Furthermore, large customers have the option of choosing their supplier. The Swiss gas industry has accordingly developed a private-law agreement with the major industrial users, which governs access to the high-pressure network on the basis of uniform, simplified rules. Notwithstanding these rules, some legal problems have yet to be resolved in the gas market. It is expected that this will be achieved by means of the forthcoming Gas Supply Act. The Swiss Federal Office of Energy (SFOE) intends to produce a draft bill before the end of 2017.