Current Market Price of Raw Natural Gas Containing
CO2 and H2S
The market valuation of raw natural gas containing carbon dioxide (CO2) and hydrogen sulfide (H2S)commonly known as "sour gas" or "acid gas"-reflects a complex interplay between standard natural gas pricing
benchmarks and the substantial discounts applied due to necessary processing requirements. As of early May
2025, while clean natural gas commands premium prices, raw gas with acid components trades at variable
discounts depending on contaminant levels and required treatment costs.
Current Natural Gas Market Benchmarks
The Henry Hub natural gas spot price, which serves as the primary U.S. benchmark for pipeline-quality natural
gas, has demonstrated significant volatility and upward momentum in recent months. As of April 28, 2025, the
Henry Hub spot price stood at $2.96 per million British thermal units (MMBtu), representing a 9.23% increase
from the previous trading day ($2.71) and a remarkable 111.4% increase year-over-year[1]. More recent data
indicates that natural gas futures have risen past $3.5/MMBtu in early May 2025, marking a 15% weekly gain
driven by production declines and record LNG exports[2].
The U.S. Energy Information Administration (EIA) has revised its price forecasts upward in its latest short-term
energy outlook. The agency now projects Henry Hub prices to average $4.19 per MMBtu throughout 2025 and
$4.47 per MMBtu in 2026[3]. This represents a significant increase from previous forecasts, with the EIA noting
that "U.S. natural gas prices have been higher this winter than we forecast in our Winter Fuels Outlook" as
consumption exceeded expectations[3].
The recent price trajectory shows considerable fluctuation, with prices reaching as high as $7.15 per MMBtu in
February 2025 during a period of high demand, before settling to current levels[1]. This volatility underscores the
importance of timing and market conditions when valuing raw natural gas resources.
Price Trend Analysis (Q1-Q2 2025)
The Henry Hub spot price has shown a declining trend since February 2025 peaks, with April 2025 prices
averaging lower than March figures. Daily spot prices during April ranged from $4.21 at the beginning of the
month to $2.96 by April 28, representing substantial intra-month volatility[1]. This decline occurred despite EIA's
upward revision of its annual price forecast, highlighting the distinction between short-term price movements
and longer-term expectations.
Raw Natural Gas with CO2 and H2S: Market Valuation Factors
Raw natural gas containing significant concentrations of CO2 and H2S trades at a substantial discount to
pipeline-quality natural gas. This discount fundamentally reflects the additional processing costs required to
meet pipeline specifications and ensure safe transport and use.
Pipeline Specifications and Quality Requirements
For natural gas to enter the commercial pipeline system, it must meet stringent quality specifications. Standard
pipeline specifications typically limit acid gas content to approximately 4.0 parts per million (ppm) H2S and
1.0% CO2[4]. These requirements are imposed for safety, infrastructure protection, and downstream product
quality reasons.
In contrast, raw natural gas from certain reservoirs may contain significantly higher acid gas concentrations.
Some natural gas reserves contain high CO2 and H2S contents that require reduction to no more than 2-3 mol%
and 4-5 ppm respectively to meet commercial requirements[5]. Gas streams with particularly high acid gas
content-sometimes referred to as "ultra-sour gas"-can contain H2S concentrations as high as 40%, creating
substantial treatment challenges[5].
Price Discount Determinants for Sour Gas
The market price of raw natural gas containing CO2 and H2S is typically calculated by subtracting treatment
costs from the benchmark price of pipeline-quality gas. Several factors determine the magnitude of this discount:
1.
Contaminant Concentration: Higher concentrations of CO2 and H2S require more extensive and costly
treatment processes, increasing the discount applied to the raw gas.
2. Treatment Technology Requirements: Different acid gas compositions may require specialized
treatment technologies. The SPREX process mentioned in the search results, for example, was specifically
designed for gas streams with H2S content up to 40%[5].
3. Geographic Location and Infrastructure Access: Proximity to treatment facilities and pipeline
infrastructure significantly impacts the economic viability of developing sour gas resources.
4. Potential By-Product Recovery: In some cases, extracted acid gas components can be utilized or sold,
partially offsetting treatment costs.
Treatment Technologies and Associated Costs
Several technologies exist for treating sour and ultra-sour natural gas, each with different cost implications that
directly affect the market value of raw gas resources.
Conventional and Hybrid Treatment Approaches
Conventional acid gas treatment typically employs amine absorption processes using aqueous alkanolamines as
absorption agents[4]. For gas streams with particularly high acid gas content, hybrid technologies may offer more
cost-effective solutions.
The SPREX process, developed by TOTAL and IFP, represents one prominent hybrid technology designed
specifically for high-H2S content gas (up to 40%). An extension of this technology, SprexCO2, addresses highCO2 content gas streams[5]. These processes enable the separate recovery of acid gas components, potentially
allowing for their individual re-injection into gas wells or other beneficial uses.
According to field test results from the Plains CO2 Reduction (PCOR) Partnership, gas streams containing high
levels of both CO2 and H2S can be safely used for carbon capture and storage (CCS). A four-year field test
demonstrated that a gas stream composed of 70% CO2 and 30% H2S could be successfully injected at depth,
simultaneously sequestering CO2, disposing of H2S, and enhancing oil recovery[4].
Carbon Capture and Utilization Potential
The feasibility of carbon capture and storage/utilization for high-CO2 content natural gas may provide additional
value streams that partially offset treatment costs. In some cases, captured CO2 can be utilized for enhanced oil
recovery operations, potentially improving the economics of sour gas development.
Conclusion
The current market price of raw natural gas containing CO2 and H2S reflects a significant discount from
benchmark Henry Hub prices of approximately $3.5-4.2/MMBtu (as of May 2025). The specific discount varies
widely based on contaminant levels, required treatment technologies, and geographic considerations.
While pipeline-quality natural gas prices have shown strong recovery in 2025, with year-over-year increases
exceeding 100%, raw sour gas commands substantially lower prices due to treatment requirements. Producers
and investors evaluating sour gas resources must carefully assess the economics of treatment costs against
prevailing and projected natural gas prices to determine commercial viability.
The development of more efficient treatment technologies and potential integration with carbon capture
utilization and storage (CCUS) initiatives may improve the economics and market valuation of sour gas
resources in the future, particularly as natural gas prices trend upward and carbon reduction incentives become
more significant.
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1.
https://ycharts.com/indicators/henry_hub_natural_gas_spot_price
2. https://tradingeconomics.com/commodity/natural-gas
3. https://www.rigzone.com/news/usa_eia_boosts_henry_hub_natural_gas_price_forecasts-18-mar-2025-179955-article/
4. https://www.sciencedirect.com/topics/engineering/pipeline-gas-specifications
5. https://re.public.polimi.it/bitstream/11311/1255899/1/2023_Spatolisano et al (c).pdf