DEFINITION of 'Natural Gas Equivalent'
The amount of energy used by the burning of natural gas versus that of crude oil. The term natural gas equivalent is used in the oil and gas industry and represents a comparison between natural gas and crude oil. 6,000 cubic feet of natural gas is equivalent to one barrel of oil. "Billions of cubic feet equivalent" (BCFE), a term commonly found in the annual reports of natural gas and oil companies, is used to measure the amount of natural gas that is being pumped and delivered over an extended period of time, or that is untapped in reserves. BCFE is used to quantify the energy that is being produced, or that could potentially be produced, by an oil company's reserves. Investors can compare the production and/or reserves of oil and gas companies by looking at the natural gas equivalent figures.
BREAKING DOWN 'Natural Gas Equivalent'
Natural gas is a naturally occurring mixture of hydrocarbon gases from underground sources. These gases are composed mostly of methane (greater than 85% in certain instances), ethane, propane, butane, pentane and impurities such as carbon dioxide, hydrogen sulfide, helium and nitrogen. Natural gas liquids (NGLs) are natural gas components that are liquid at surface conditions. This includes ethane, propane, butane, pentane and condensates; it does not include methane, which remains gaseous at surface conditions.