Methanotrophs are well known for their ability to grow on methane in natural gas environments; however, these environments also contain low concentrations of longer-chain-length gaseous alkanes. This mixture of alkanes poses a problem for organisms that might otherwise grow on alkanes ≥ C2 because methane could inhibit oxidation of growth substrates and lead to an accumulation of toxic C1 metabolites. Here, we have characterized the growth of a C2–C9 alkane-utilizing bacterium, Thauera butanivorans, in conditions containing high concentrations of methane and small amounts (< 3% of total alkane) of C2–C4. During such growth, methanol accumulates transiently before being consumed in an O2-dependent process that leads to the formation of a proton gradient and subsequent ATP generation. In contrast, formaldehyde-dependent O2 consumption is insensitive to uncouplers and does not lead to significant ATP production. This efficient C1 oxidation process that regains much of the energy loss inflicted by oxidizing methane, coupled with an alkane monooxygenase effective at limiting methane oxidation, allows T. butanivorans to grow uninhibited in natural gas environments. Although longer-chain-length gaseous alkane-utilizing organisms have been previously identified to grow in natural gas seepages, the data presented here represent the first detailed characterization of the physiological effects associated with inadvertent methane oxidation by a non-methanotroph, and suggest the presence of a well-evolved series of biochemical processes that allow them to grow in natural gas deposits without the need for developing the unique metabolic machinery characteristic of methanotrophs.