The Value of Natural Gas in the Pacific Northwest

The Value of Natural Gas in the Pacific Northwest

Natural gas is a crucial part of the Pacific Northwest’s energy mix providing heat and power to 10 million people and more than 300,000 businesses across the region. The direct use of natural gas for cooking, heating, and producing a variety of goods (e.g. toilet paper, cement, steel, glass, french fries, etc.) helps reduce global and regional emissions paving the way to a cleaner environment for future generations. In order improve the public’s understanding of the vital role of natural gas, the NWGA will produce a series of blogs to help readers understand how the natural gas industry works, how it differs from other energy sources, and how one size fits all policies affect energy choice and affordability for the region’s residents and the businesses many of them work for.

What does natural gas offer to the region?

  • Warmth and comfort to 10 million people
  • Efficient and affordable space heating, water heating, and heat for cooking and laundry (gas heat is about one-third the cost of electric heat in the Northwest)
  • More than half of the total energy consumed in the region – either used directly for space and water heat or in industrial processes or as gas-generated electricity. (Excludes transportation uses.)
  • A low carbon footprint – natural gas used for space and water heat in 3.2 million homes and more than 300,000 non-industrial businesses accounts for less than 10 percent of the region’s total carbon emissions, according to EIA data and state and provincial emissions inventories
  • 128,000 miles of installed pipeline infrastructure that safely and reliably delivers energy, supplemented by underground and above-ground storage facilities capable of delivering up to 40 percent of required energy during the coldest days
  • An invaluable input to some industrial processes for which there is no suitable substitute, including glass recycling and the manufacture of perlite (a common soil additive), steel and aluminum, paper products and food processing, among many others
  • An alternate fuel source for medium and heavy-duty vehicles is both more economical and cleaner than diesel engines.
  • Reliable 24/7 electricity production to replace retired coal plant generation and balance the region’s growing sources of intermittent renewable power, such as wind and solar

And our source of natural gas is increasingly renewable itself – market forces and government policy are driving the development of renewable natural gas, which transforms human and agricultural waste into useful energy. This provides even greater prospects for a cleaner mix of natural gas resources to contribute to our energy and environmental future.

Let’s start with some basics: where do we get our natural gas in the Pacific Northwest?

The Pacific Northwest’s natural gas comes from supply basins in Northern British Columbia and Alberta, Wyoming and Western Colorado, and Northwest New Mexico (the Western Canadian Sedimentary Basin, the Rocky Mountain Basin, and the San Juan Basin respectively). British Columbia and Alberta provide two-thirds of the region’s natural gas and Wyoming, Colorado, and New Mexico supply the remaining one-third. This gas is moved to British Columbia, Washington, Oregon, and Idaho by a network of inter-connected interstate pipelines.

The ability to draw gas supply from three areas provides consumers in the Pacific Northwest stability in pricing and reliability. For instance, a rupture in the Enbridge pipeline in British Columbia in 2018 impacted the ability to move Canadian gas south to the U.S., raising the price of Canadian gas. To compensate, Northwest gas utilities and gas shippers drew more from the San Juan Basin in New Mexico, which is very low-cost gas, thereby reducing the potential price impacts to consumers while the Enbridge pipeline was repaired and returned to service.

The inter-connected gas system in the Pacific Northwest also means the security of supply in the future. While U.S. Rocky Mountain and San Juan production is forecast to remain relatively flat through 2040, production in the Western Canadian Sedimentary Basin is projected to grow. This dynamic will help ensure continued access to a reliable and low-cost energy source.

BC Drives Projected 35% WCSB Production Growth from 2020-2040

Notes: WCSB production is forecast to decline for a few years, before growing to 21 Bcf/day by 2040 to meet expected rising demand for LNG exports. Most of that growth will come from the Montney formation that spans BC and Alberta.

Rocky Mountain Production Predicted to Remain Flat

Notes: As shown, Rockies’ production is generally flat through 2040. The San Juan Basin in northwest New Mexico is located below the Piceance play shown in the map above and is the southern terminus of the Williams NW Pipeline that serves the Pacific Northwest.

Compared to some areas of the United States and many countries, the Pacific Northwest is fortunate to have large nearby supply basins and a developed pipeline infrastructure to deliver gas safely and efficiently, and which can react to supply disruptions.

In our next segment, we’ll examine gas prices.

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