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The following is the transcript of a video that can be viewed here.

Nicholas Grove: Many investors have an exposure to the oil and gas industry in their portfolio, but may not actually understand what it is they have bought or what it is that makes it a good oil and gas investment.

Here to help us to get a better understanding of the Australian oil and gas industry, I'm joined by Morningstar's Mark Taylor. Mark, thanks very much for joining us.

Mark Taylor: Thanks, Nick.

Grove: First of all Mark, what sort of products are produced in the Australian oil and gas industry?

Taylor: The oil and gas sector produces a range of products, the most obvious being oil, which is liquid at room temperature. It has high utility and high value and is highly sought after and priced accordingly.

But in addition to oil, you also have gas and gas liquids. Gas liquids are produced and associated with the gas, but they just happen to be that portion of the gas that condenses at the temperature at which daily life is lived. So it's a liquid fraction of the gas. It exists in liquid form at normal temperatures and pressures, commonly called condensate.

Then you have some products that are sort of in between that like LPG (liquid petroleum gas), which is propane, and which liquefies at a temperature of about minus 43 degrees celsius. So you don't need to drop the temperature very much to cause it to become a liquid, which then has much higher utility. It doesn't require the same amount of pressure. So, propane gas is something that's sold quite readily into the market. It is used for camping and cooking supplies, lighting and that sort of thing.

And then you have the other extreme, the most gaseous phases, which are methane ethane, butane and that sort of thing, which are highly volatile and most usually transported through pipes for cooking and energy generation, electricity generation, but can also be chilled to the point where they will liquefy, allowing them to be transported globally. This is known as LNG.

Grove: Who are the key players in the listed oil and gas space?

Taylor: Of the main three or four, number one would be BHP Billiton (BHP) with its Bass Strait interest and North West Shelf interest and also its Gulf of Mexico interest. They're led by Woodside (WPL) with its North West Shelf joint venture interest. It is mainly oil and gas, conventional oil and gas, and is the country's lead producer of liquid natural gas at its North West Shelf joint venture and Pluto projects.

Behind Woodside, you're looking at Santos (STO), which has conventional oil and gas interests in the Cooper Basin, but also increasingly coal seam gas.