1. Natural Gas Overview in India and challenges

Natural gas is a combustible, gaseous mixture of simple hydrocarbon compounds, usually found in deep underground reservoirs formed by porous rock. Natural gas is a fossil fuel composed almost entirely of methane, but does contain small amounts of other gases, including ethane, propane, butane and pentane. Methane is composed of a molecule of one carbon atom and four hydrogen atoms.

Natural gas is used extensively in residential, commercial and industrial applications. India had 159.1 trillion cubic feet of proven natural gas reserves as on May 2014. Almost 70% of India’s natural gas reserves are found in the Bombay High basin and in Gujarat. Offshore gas reserves are also located in Andhra Pradesh coast (Krishna Godavari Basin) and Tamil Nadu coast (Cauvery Basin). Onshore reserves are located in Gujarat and the North Eastern states (Assam and Tripura).

2. How Does the Natural Gas Delivery System Work?

Gas flowing from higher to lower pressure is the fundamental principle of the natural gas delivery system.  The amount of pressure in a pipeline is measured in pounds per square inch.

The Natural Gas Delivery Network


From the well, the natural gas goes into “gathering” lines, which are like branches on a tree, getting larger as they get closer to the central collection point.

Gathering Systems

A gathering system may need one or more field compressors to move the gas to the pipeline or the processing plant.  A compressor is a machine driven by an internal combustion engine or turbine that creates pressure to “push” the gas through the lines.  Most compressors in the natural gas delivery system use a small amount of natural gas from their own lines as fuel.

The Transmission System

From the gathering system, the natural gas moves into the transmission system, which is composed of about 272,000 miles of high-strength steel pipe ranging from 20 inches to 42 inches in diameter.They move large amounts of natural gas thousands of miles from the producing regions to local distribution companies (LDCs).  The pressure of gas in each section of line typically ranges from 200 pounds to 1,500 pounds per square inch, depending on the type of area in which the pipeline is operating.  As a safety measure, pipelines are designed and constructed to handle much more pressure than is ever actually reached in the system.  For example, pipelines in more populated areas operate at less than one-half of their design pressure level.

Compressor Stations

Compressor stations are located approximately every 50 to 60 miles along each pipeline to boost the pressure that is lost through the friction of the natural gas moving through the steel pipe.  Many compressor stations are completely automated, so the equipment can be started or stopped from a pipeline’s central control room.  The control center also can remotely operate shut-off valves along the transmission system.  The operators of the system keep detailed operating data on each compressor station, and continuously adjust the mix of engines that are running to maximize efficiency and safety.

Gate Stations

When the natural gas in a transmission pipeline reaches a local gas utility, it normally passes through a “gate station.”  Utilities frequently have gate stations receiving gas at many different locations and from several different pipelines.  Gate stations serve three purposes.  First, they reduce the pressure in the line from transmission levels (200 to 1,500 pounds) to distribution levels, which range from ¼ pound to 200 pounds.  Then an odorant, the distinctive sour scent associated with natural gas, is added, so that consumers can smell even small quantities of gas.  Finally, the gate station measures the flow rate of the gas to determine the amount being received by the utility.

The Distribution System

From the gate station, natural gas moves into distribution lines or “mains” that range from 2 inches to more than 24 inches in diameter.  Within each distribution system, there are sections that operate at different pressures, with regulators controlling the pressure.  Some regulators are remotely controlled by the utility to change pressures in parts of the system to optimize efficiency.  Generally speaking, the closer natural gas gets to a customer, the smaller the pipe diameter is and the lower the pressure is.

3. Problems with Natural Gas

Not a renewable source of energy. India has only limited reserves of natural gas, though further discoveries are being made from recent explorations.

Owing to the high percentage of methane in natural gas, it is highly combustible.

The process of extraction of natural gas involves making large cavities in the ground.

Natural gas requires highly complex treatment plants and pipelines for its delivery.

Natural gas occupies four times the space of a gasoline-equivalent energy.

4. CNG network In India

Compressed Natural Gas (CNG): is natural gas compressed to a pressure of 200-250 Kg/cm² (g) (due to its low density) to enhance the vehicle onboard storage capacity. Thus, the compressed form of natural gas is used as a fuel for transportation purposes.

Network In India

At present CNG Retail Outlets of GAIL and Its JVCs are available in Delhi, Maharastra, Uttar Pradesh, Gujarat, Andhra Pradesh, Tripura, and Madhya Pradesh States with more than 400 CNG Retail outlets catering to approximately 6,80,000  vehicles. 

Indraprastha Gas Ltd, a JV of GAIL (India) Ltd, has 209 CNG Retail outlets and Mahanagar Gas Ltd another JV of GAIL (India) Ltd has set up 148 CNG stations.
Similarly, other JVCs like MNGL has 13 Outlets, BGL has 14 outlets , GGL with 10 outlets each,  and AGL &  CGUL with 9 retail outlets each and TNGCL with one outlet.

GAIL Gas Limited, a wholly owned subsidiary of GAIL (India) Limited has currently 17 CNG outlets at Dewas, Sonepat, Kota, Meerut, Vijaipur, Dibiyapur, Firozabad, Vadodara and Panvel. It will be commissioning its other outlets very soon.

5.  SAP Solution for Natural Gas CNG

Indraprastha gas limited, GAIL, Petronet LNG all are on SAP which supplies CNG. Either R/3 can be implemented or SAP IS Utilities, or SAP IS OIL depending upon the nature of business.

SAP Industry Business processes can have implementation challenges across all SAP Modules like SD, FI and CO, HR, MM, PM and EHS.

The following business scenarios are mapped to SAP Solution:

Natural Gas can be created as Pipeline Material with negative stock. There are meters installed for consumption of gas, but in SD there is no concept of Meter Reading. Either an enhancement has to be worked out or simply can integrate it with PM where Meter Reading is available along with Location, Equipment as a standard concept. As CNG is used as a Transportation fuel and is supplied through gas stations, we can treat Gas Stations as Sold to Customers and One time Customers as Ship to. Plant is the compressor Station from where we get the gas to main station. After taking the meter reading for consumption, a sales Order can be created with the meter reading Quantity and Material and it would be Standard Order Flow. The Outbound Delivery is created and accordingly the Invoice is generated.

There is no Inventory as the Gas is continuously supplied through Pipelines, so no WHM and there is no PP as we are purchasing Gas through Vendors.

SAP has also provided with SAP IS OIL where we can use downstream process which is an integration of SD, MM, and PM.

We can also use SAP IS UTILITIES where we have to generate billing for many customers where natural gas like PNG (Kitchen gas) is used by millions of households.



Sales & Distribution

• Standard sales process

• One time customer concept

• Pricing, Country India Version for Taxes

• Billing

Material Management

•      Pipe Line Material

Plant Maintenance

•      Location, Equipment, Meter Reading

• Preventive and breakdown maintenance for all Equipment’s

Master Data

•      Material Master

•      Customer Master

•      Pricing Condition Records

• Output Condition Records


•     General Ledger

•     Accounts Payable and Receivables

6. References






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1 Comment

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  1. Rahul Prakash

    Hi Deepak,

    Good articulation CNG distribution overview in Indian context. “SD there is no concept of Meter Reading”- how this was done, a gist of that could be help for the audience.




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