Economics in the Western Canadian Sedimentary Basin and the movement of increasingly more Rockies supplies east is being felt more in terms of wholesale price and supply pressures in the Pacific Northwest, according to Northwest Natural Gas Corp.’s CEO Mark Dodson. As a result, the need for siting a liquefied natural gas (LNG) terminal in the region is growing, he said.
Dodson made the observations in responding to financial analysts’ questions on an earning conference call Thursday in which he stressed that Northwest Natural intends to build up the region’s gas infrastructure with well-placed pipeline and storage projects that eventually can interconnect to imported supplies from LNG.
“One of the reasons that the [220-mile, 36-inch-diameter joint venture] Palomar Pipeline is important to us is that we need to draw from as many Canadian reservoirs as we can and have access to that interstate pipeline,” said Dodson, referring to Northwest’s proposed pipeline joint venture with TransCanada.
Dodson called the Canadian reserves “a little shallower than they were in the past,” so the expectation is fewer supplies — at least at current prices — longer term. “We anticipate we are going to see a little less gas out of Canada,” he said.
In response to a questions on the Rockies supplies, Dodson said the Rockies Express Pipeline (REX) is “going to put some pressure on the Northwest in terms of price, but it is a little hard to know what it is going to do in terms of supply.”
Northwest Natural gets about 75% of its supplies from Western Canada and the rest from the Rockies, and Dodson said the dependence on those two areas is “another reason why LNG is an option for this region.”
Northwest Natural COO Gregg Kantor said he was on a tour of Canadian production areas Wednesday, and the producers there clearly indicated price was the only barrier to added western Canadian supplies. “They are quick to remind anyone that while reserves are declining, there is still lots of supplies to purchase up there — it is just a matter of price,” Kantor said.
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