From Halopedia, the Halo wiki
Methane is a chemical compound with the molecular formula CH4. It is the simplest alkane, and the principal component of natural gas. Methane's bond angles are 109.5 degrees. Burning one molecule of methane in the presence of oxygen releases one molecule of CO2 (carbon dioxide) and two molecules of H2O.
Methane is a relatively potent greenhouse gas with a high global warming potential of 72 (averaged over 20 years) or 25 (averaged over 100 years). Methane in the atmosphere is eventually oxidized, producing carbon dioxide and water. As a result, methane in the atmosphere has a half life of seven years (every seven years, the amount of methane halves). Methane's relative abundance and clean burning process makes it a very attractive fuel. However, because it is a gas (at normal temperature and pressure; see STP), methane is difficult to transport from its source. In its natural gas form, it is generally transported in bulk by pipe or LNG carriers.
The only known species that uses methane instead of oxygen in respiration are the Unggoy. Their home planet, Balaho has an atmosphere which is mostly methane. Because of this, the Unggoy use methane tanks and breathing apparatus when operating outside their native environment. While methane is needed for a Grunt to live, Grunts enjoy another gas, benzene, as a drug, calling it "lovely lung gold" and "sacred aromatic". Additionally, the Unggoy frequently mix narcotics called infusions into their methane supplies. The lungs of the SPARTAN-IVs are augmented to process a variety of toxins and foreign gases, potentially allowing them to breathe methane for around an hour.
Methane is highly flammable, and as such the Covenant's methane containers - including the Unggoy's methane tanks - explode when shot. During the Second Ark Conflict, the Unggoy Yapyap would utilise Methane as a weapon, deploying it from Methane Wagons to choke enemy troops and enhance his own Unggoy forces.