peter wrote:
When I stand right next to the water heater, I smell a little bit of gas at
certain height. If I move to 1 foot away, I no longer can smell it.

See this photo:
http://www.smugmug.com/gallery/990857
The red ellipse shows where I smell the gas. I smell some at lower spots,
but it's not continuous, meaning when I go lower, I don't smell it, then I
smell it, ...

I assume it has been like this during the last year, and there is no
cumulation of natural gas (like I said, only can smell it within a foot). So
I wonder, is it normal for a water heater with pilot light to emit some
natural gas odor, or should I try to seal all the pipe joints?

I installed a new gas waterheater and for weeks later kept getting a
faint smell of gas odor. Rechecked my connections and they were tight.
Finally checked the internal connections and found a loose one - came
that way from the factory. Tightened it and never smelled gas again.

Bob