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Oregon Regulators Approve NW Natural Canadian Reserves Buy

Oregon regulators on Thursday approved an all-parties settlement for Portland, OR-based NW Natural, allowing the natural gas distribution utility to proceed with its joint venture to develop gas reserves with a U.S. subsidiary of Calgary-based Encana Corp. (see Daily GPI, April 21).

The settlement parties had sought approval from the Oregon Public Utility Commission (PUC) by May 1. The joint venture announced earlier this year is to be with Encana Oil & Gas (USA) Inc.

Oregon's PUC spokesperson said the cost of the gas supplies will be flowed through to utility customers this fall when the regulatory panel makes an annual rate adjustment to reflect changes in wholesale prices. Also as part of the settlement NW Natural will make a general rate case filing by the end of the year to the PUC, something it has not done for nine years.

Parties to the deal include PUC staff, Oregon's Citizens' Utility Board, Northwest Industrial Gas Users and the utility.

Based on the Feb. 25 joint agreement, NW Natural and the Encana U.S. unit will develop gas reserves in the Jonah Field in Wyoming, located north of Rock Springs. The utility will invest in the reserves for its utility customers with the investment being put in its rate base, on which a pre-set profit margin is earned.

In February NW Natural signed a 30-year, $250 million deal with the Encana unit, noting that it expects the deal to provide long-term supplies for the vast majority of its 674,000 customers in western Oregon. Its customers in southwest Washington state will not be involved.

NW Natural will pay $45-55 million annually for a five-year period, or a total of $250 million, to cover expected drilling costs, in exchange for working interests in specific Encana-owned sections of the Jonah Field. The sections include both future and currently producing wells, a utility spokesperson said.

"NW Natural expects to receive enough gas from the fields during the first 10 years to meet 8-10% of its gas needs annually," the PUC spokesperson said.

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