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Greater Reliance on Gas for Power Generation Seen in Pacific Northwest

Declining hydropower availability in the Pacific Northwest points to a higher reliance on natural gas in the future, according to a new report by the Northwest Gas Association (NWGA), a group that includes the major gas distribution and transmission companies in the region, which includes 44,000 miles of gas pipelines and about 2.5 million gas consuming homes, businesses and industry.

"Ensuring that the region is served with adequate, safe, reliable and financially sound natural gas infrastructure is also vital if the Pacific Northwest is to continue to sustain a competitive and growing economy," the NWGA report, titled "Natural Gas Outlook: Natural Gas Demand, Supply and Service Capacity in the Pacific Northwest" said. It concluded that natural gas is the most likely fuel to play a continuing bigger role in power generation but pipeline infrastructure, while adequate, needs to be upgraded, and gas from Alaska via pipeline or liquefied natural gas (LNG) eventually will be needed.

"Projects required to link...stranded supplies to consumption (pipelines, LNG terminals, etc.) are complex, expensive and often controversial undertakings. It is crucial that the approval processes required to authorize these incremental supplies be reasonable, timely and certain," the report stated.

In all three scenarios from low- to high-growth, electric generation in the Pacific Northwest leads the pack in projected future natural gas demand, according to the report.

While overall demand is projected to grow on average at 2.5% annually through 2010, the NWGA report noted that on average demand from electric generation will more likely grow at 5.9% annually. The overall regional demand figures show a reduction from last year's report that projected a 3% average annual gas demand growth.

"Sustained high and volatile natural gas prices have made other forms of generation (wind, coal) more competitive in the region," the report said. "However, low emissions, relatively low up-front capital costs and the ability to quickly switch generation on and off are among the benefits that keep natural gas viable as a fuel for new electrical generation."

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