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Gas Exec: Shale Impact in NW Cools LNG Imports

Shale gas so far has not impacted prices and supplies in the Pacific Northwest other than to make more remote the possibility of liquefied natural gas (LNG) imports and to increase the chances of exporting supplies from British Columbia (BC), Northwest Natural Gas Co. gas supply director Randy Friedman told the audience at "LDC Forum: Rockies and the West" conference Wednesday in Los Angeles.

While in recent years the Northwest was the center of LNG proposals, the interest has cooled considerably, and a lot of it is due at least partially to the rise in shale gas production and the advent of the El Paso Natural Gas Ruby Pipeline and other proposals for piping in more U.S. Rockies supplies, Friedman said.

"At one time there were five LNG proposals [counting Kitimat in British Columbia], but now two projects are dead and two others barely have a heartbeat," Friedman said. "The one project that looks like it may go is Kitimat and it is now proposed as an export terminal. The shale situation in BC is what turned that around."

Friedman said he would not handicap what project -- if any -- eventually gets built, but the shales moving the Kitimat project forward is what has changed the Northwest market.

"You're going to have a part of the market in British Columbia that is looking at a Japanese-impacted price as their bogey. That is the only place that shale is affecting the Northwest market. Otherwise, prices in the Rockies and other places are not directly affecting us." Friedman added that eastern shales could back out eventually some of the Rockies gas going east, which would make more supplies available in the West, perhaps at lower prices.

"Right now the shales in BC are a big thing, but our conventional wisdom a couple of years ago was that gas imports from Canada were going to be dwindling over time. That is what all the experts were saying, and I get very leery when they are all saying one thing or the other." As a result, for a while Northwest Natural was looking at reversing its historic mix of 60% Canadian and 40% Rockies supplies.

What does all this mean for the future? Friedman said there should continue to be availability of Rockies gas, but he thinks the prices are going to begin to rise.

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