We demonstrate a compact mid-infrared (mid-IR) radiation source based on difference frequency generation (DFG) in periodically poled lithium niobate (PPLN) crystal. The system incorporates a dual-wavelength master oscillator power amplifier (MOPA) source capable of simultaneous amplification of 1064 nm and 1548 nm signals in a common active fiber co-doped with erbium and ytterbium ions. Two low-power seed lasers were amplified by a factor of 14.4 dB and 23.7 dB for 1064 nm and 1548 nm, respectively and used in a nonlinear DFG setup to generate 1.14 mW of radiation centered at 3.4 μm. The system allowed for open-path detection of methane (CH(4)) in ambient air with estimated minimum detectable concentration at a level of 26 ppbv.