First Research US Industry Profile

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Natural Gas Distribution & Marketing
SIC Codes: 4924
NAICS Codes: 221210
Last Quarterly Update: 4/22/2019
Companies in this industry operate natural gas distribution systems that serve customer locations, broker the sale of gas to distributors, and buy natural gas and directly distribute it to customers. Major companies include Sempra Energy, CenterPoint Energy, and NiSource (all based in the US); Gas Natural (Spain); GasTerra (the Netherlands); Gazprom (Russia); Centrica (the UK); and Engie (France); as well as the natural gas distribution subsidiaries of US companies such as Dominion Energy and Duke Energy.
Global consumption of natural gas totals about 124 trillion cubic feet (Tcf). Natural gas consumption is expected to be more than 40% higher in 2040 than it was in 2015 due to abundant resources, robust production, and strong demand in the power generation and industrial sectors, according to the US Energy Information Administration. Growth in natural gas consumption is strongest in emerging markets, including China and India.
The US natural gas distribution and marketing industry includes about 2,600 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $110 billion.
Natural gas producers are covered in the Oil & Gas Exploration & Production industry profile. Companies primarily engaged in pipeline transportation of natural gas from production sites to distribution systems are covered in the Natural Gas Pipelines industry profile.
Competitive Landscape
Demand for natural gas is driven by energy use, which in turn is influenced by overall economic activity. The profitability of natural gas distributors depends largely on the efficiency of their operations, because prices typically are fixed by public utility commissions (PUCs). Companies that operate multiple distribution networks may enjoy economies of scale in purchasing. Small companies can compete effectively through a strong regional presence. The US industry is highly concentrated: the 50 largest companies account for about 90% of revenue.
Distribution utilities have limited exposure to competition due to natural monopolies and high barriers to entry. Utilities are awarded long-term franchise contracts by counties and municipalities, allowing them to operate gas transmission and distribution facilities in a given service territory. Infrastructure maintenance is a major expense. In deregulated markets, consumers are able to shop for a gas supplier, though distribution duties remain with the local utility. A majority of US states have some form of gas deregulation, though it may be restricted to certain territories or offered only to large consumers. Some states with deregulated markets have little to no participation.
Due to domestic production increases, the US became a net exporter of natural gas in 2017 for the first time in 60 years. The US exports natural gas to nearly 30 countries, primarily by pipeline to Mexico and Canada; a portion of exports consist of LNG (liquefied natural gas) or CNG (compressed natural gas) exported on ships or trucks. Nearly all imports of natural gas come by pipeline, primarily from Canada. LNG, mainly from Trinidad and Tobago, accounts for about 3% of natural gas imports to the US.
Products, Operations & Technology
Distribution of natural gas directly to consumers accounts for about 60% of industry revenue; wholesale distribution and marketing accounts for about ... plus:
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