Natural Gas Distribution
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 2,400 natural gas local distributors in the US supply gas for residential usage, commercial usage, industrial usage, and electric power generation. The operations and financial performance of a natural gas distributor are highly dependent on the regulatory structure in which the company operates.
Industry size & Structure
A typical local distribution company has 48 employees and annual revenues of $73 million.
- About 2,400 local distribution establishments provide natural gas distribution services in the US and employ 114,000 workers.
- The natural gas distribution industry is concentrated with the 20 largest firms representing 64% of revenue.
- Large natural gas distribution firms include: ATMOS Energy, NiSource, New Jersey Resources, and Energy Transfer.
- Entry into the business is difficult as a built out pipeline infrastructure (valued in the billions of dollars), approval of the public utility commission, and a demonstrated competence in safety and environmental compliance is required to provide service.
Industry Forecast
Natural Gas Distribution Industry Growth
Recent Developments
Jan 24, 2025 - Rising Electricity Demand Draws Interest of Oil, Gas Firms
- Some oil and gas majors are considering entering the electricity generation market amid the rapid uptick in energy demand by the data centers used to power AI, according to The Wall Street Journal. Chevron and Exxon Mobil are both in conversations with data center operators about providing natural gas-fired power generation with carbon capture. Large oil and gas companies have experience building gas-fired plants to support their various operating activities, including refining, petrochemical production, and natural gas liquefaction. Oil and gas majors may also have more recent plant construction experience than independent power producers, some of which have not built a new plant since the early 2000s. Oil firms can also site plants near their own fuel production sites and power data centers without connecting to the grid.
- Average US natural gas prices are expected to remain elevated through the remainder of the 2024/2025 heating season, according to the US Energy Information Administration (EIA). The average price of natural gas is forecast to be about 40% higher through the rest of the winter compared to November 2024 levels, despite projections that inventories will remain above average through the heating season. At the beginning of the winter, natural gas in storage was about 6% above average, and the EIA expects inventories to be about 2% above average by the end of the winter. While natural gas prices are rising as inventories draw down amid a colder winter, the EIA said prices are still well below the high levels in 2021 and 2022.
- In December, the US’s eighth and newest liquified natural gas export terminal shipped its first cargo, according to the US Energy Information Administration (EIA). The facility, Plaquemines LNG, was developed by Venture Global LNG. The firm is bringing the project online in two phases that will eventually have a nominal capacity of 2.6 billion cubic feet per day (Bcf/d). The EIA estimates that once both phases of Plaquemines LNG are online and another facility project – Corpus Christi NLG Stage 3 - begins exports, total US LNG export capacity will be 15.4 Bcf/d. By 2028, US LNG export capacity is expected to reach 21.2 Bcf/d, according to an EIA forecast.
- In its Winter Reliability Assessment in November, the North American Electric Reliability Corp. (NERC) said that while industry and regulators have made headway in improving winter readiness, some parts of the bulk electric power system still face potential energy shortfall risks from extremely cold weather. In 2021, Winter Storm Uri caused widespread electricity outages in Texas, some stemming from producers’ inability to deliver natural gas to power plants. Since the storm, Texas regulators have taken steps to weatherize generation, but NERC said it was unaware of similar initiatives in other parts of the US. In response to the NERC report, the Natural Gas Supply Association released a statement arguing that the organization’s members “take a multitude of proactive measures to prepare for winter weather so that we can provide safe and reliable service to our customers.”
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