Not without challenges regarding increased inter-regional supply competition, price and peak demand capacity, natural gas in the Pacific Northwest faces the next five years in "good health," with annual demand growth expected at 1.9%.

A robust market for gas is predicted throughout Idaho, Oregon, Washington and British Columbia, according to the Northwest Gas Association's 2007 Gas Outlook. Not surprisingly, climate change is keeping gas in the forefront of the region's energy mix.

The rosy outlook assumes "normal conditions," the report said. Extreme peak demand for gas "could approach the capacity limits of the region's infrastructure." Market options also are growing for producers in the traditional supply basins serving the Northwest. Increasingly, they can take their supplies elsewhere.

"To meet future regional and continental demand growth -- particularly in response to climate change policies -- North America will require new incremental supplies.," the report said. "Sources of additional natural gas are plentiful and include imported liquefied natural gas (LNG) from overseas and new supply sources closer to home such as Alaskan gas." The report also cited Canadian frontier gas (Mackenzie River Delta), offshore resources and unconventional resources such as coalbed methane, shale and biogas.

Broadly, the key longer-term conclusions inherent in the gas association's latest regional industry outlook are that the Northwest will continue to benefit from, but have to compete more fiercely for, Canadian and U.S. Rockies supply; gas demand will grow by at least 20% by 2030; LNG imports will play a "vital role" throughout the United States; and more exploration and development will be needed to keep the current supply-demand balance the region now enjoys.

Pipeline capacity and supplies look to be adequate for the period through 2012, the report confirmed, but not without challenges in both areas. Needed are new supply sources to offset increased competition for supplies from traditional basins in western Canada and the U.S. Rockies, as well as expansions of pipelines and storage close to the end-use market.

Speaking for the industry, the Northwest Gas group's report concluded that the Northwest gas industry is "committed to do its part," but it emphasized the unknown is the fact that "policymakers can have a significant impact on the availability and price of natural gas in the future." Parts of the annual five-year report assess how the energy policies on both sides of the U.S.-Canadian border are driving gas demand.

Citing climate change, the report noted that U.S. and Canadian governments already are developing aggressive policies to encourage emission reductions," citing the $35 billion in tax incentives that have been invested to promote cleaner energy sources and emission-reducing technologies in the United States. Canada has set federal targets for greenhouse gas (GHG) emission reductions for major industries.

In the Pacific Northwest each state and British Columbia have taken further actions to begin to set limits on GHG emissions and future targets for allowable levels.

In a region that a decade ago was still dominated by cheap hydroelectric supplies, the biggest shift for natural gas has been the proportional growth in gas-fired power generation. Since 1999, the portion of natural gas used for generation has gone from 11% to 20% at the end of last year, with industrial use of gas declining from nearly half (48%) to a little more than a third (37%).

"Power generation demand has been volatile, reflecting the many variables that can affect it (weather severity, hydropower availability, gas costs, etc.)," the report said.

There are currently 57 gas-fired generation facilities in the three states and province making up the region, delivering in excess of 6,400 MW. According to the report, more than half of that capacity, 3,800 MW, has been added since 2001 and the western wholesale energy market meltdown.

©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.