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If you have ever shopped for a gas grill, gas fireplace logs, a gas stove, a gas dryer, etc., you know that you are always asked to specify whether you plan to use it with natural gas or LPG (liquefied petroleum gas). The reason you have to get it right is because LPG and natural gas have different properties.
Natural gas is just that -- natural. If you sink a well in the right spot, natural gas flows out of the ground. It is mostly methane, or CH4.
Liquefied petroleum gas, on the other hand, is a product of crude oil distillation (see this Question of the Day for details). It contains mostly propane, or C3H8. Propane has the nice property that, when you compress it, it condenses into a liquid. This means that it is much easier to store in a tank than natural gas, which does not easily compress.
You can see the difference between natural gas and LPG most easily when you buy a gas stove. Normally, you are supplied with two sets of jets, one set for natural gas and one set for LPG. You install one jet in each burner. The jet is simply a little screw-in cap with a hole drilled into it. The difference is that the hole in the jet for natural gas is bigger -- about twice as big -- as the hole in the jet for LPG.
The reason for this difference is because LPG contains much more energy than natural gas. A cubic foot of natural gas contains something like 1,000 BTU (British thermal units) of energy. A cubic foot of propane contains perhaps 2,500 BTU. You can see that if you take a gas appliance set up for natural gas and then run it on LPG, the appliance is going to run more than twice as hot. In the case of a water heater, it is apparently hot enough to start a fire.These links will help you learn more: