What We’ve Been Reading This Month

Each month numerous natural gas related stories cross our desks, here are a few that piqued our interest:

  • In late July Colorado State University rolled out a study measuring methane emissions from the natural gas transportation and storage sector, part of a series being performed in partnership with the Environmental Defense Fund. The study found nationwide emissions from this sector to be 27% lower than EPA estimates. Don Santa, President of the Interstate Natural Gas Association of America, explains what that means for the industry going forward.


  • Dr. Michael Levi, a top energy thinker for the Council on Foreign Relations, authored an interesting long-read, “Fracking and the Climate Debate.” The article delves into the history of shale gas in the climate conversation: from partnerships between producers and the Sierra Club’s “Beyond Coal” campaign, to the role of natural gas in climate policy, and concluding with the potential for increased producer regulation.


Key Takeaways from the CSU Methane Emissions Study

Last week Colorado State University released the results of an in-depth study of methane emissions from natural gas transmission and storage facilities. The study is another in a series performed by academic institutions and the Environmental Defense Fund (EDF) seeking to gain a better idea of the scale of methane emissions from natural gas infrastructure.

Some of you may remember our discussion of the LDC edition of this study, performed by Washington State University researchers, on our May webinar.

Much like previous studies Colorado State’s research indicated that actual methane emissions from pipelines and storage facilities are far lower than EPA estimates, 27% lower on average across the nation. Why does this matter? Don Santa, President of the Interstate Natural Gas Association of America (INGAA) broke it down in a recent blog:

 “This finding is important. It underscores why the EPA needs to update the emissions factors it uses to estimate its inventory to reflect more accurately how the transmission and storage sector operates today.  EPA largely relies on data from a nearly 20-year-old study to calculate its greenhouse gas inventory. While EPA has appropriately updated emission factors and estimation methods in select cases for other industry sources, including wells in the exploration and production sector, it has not for transmission and storage sector sources.”

Click here to read Don Santa’s blog, where he breaks down some of the other key takeaways from the study.

Outlook Spotlight: Elements of Responsible Natural Gas Production

We’re highlighting some of the sidebars featured in our 2015 Outlook here on the blog. The following is a discussion on the elements of responsible natural gas production. To access the full Outlook study please click here.

The arrival of new and abundant natural gas supplies has changed the nation’s energy picture. It also has brought new attention to gas production methods. Fracking – an abbreviation for hydraulic fracturing – is now a common term in our country’s energy debate.

In fact, hydraulic fracturing isn’t new: oil and gas developers have been using it for more than 60 years. Hydraulic fracturing uses water, sand and small amounts of chemicals to break open solid rock, releasing trapped fuels. According to the U.S. Department of Energy (DOE), more than 2 million wells have been hydraulically fractured to date and about 95 percent of new wells drilled today are fractured.

So, why are we only hearing about it now?

In the last 10 years, engineers learned how to combine hydraulic fracturing with another time-tested construction practice: horizontal drilling. Conventional drilling uses fracturing along the length of a vertical well. Now it’s possible to send fracturing equipment horizontally along a shale deposit, releasing natural gas in larger volumes than ever before.

The combination of these technologies has helped the U.S. become the world’s largest natural gas producer.

As with any industrial process, gas producers experienced a learning curve in terms of environmental protection. But as the industry and regulators have learned more about these processes, drillers are continually improving their operations. Some areas of interest are:

Water use. Increasingly, gas producers are recycling the water they use to fracture rock. Some are starting with non-potable water, and the industry is studying ways to eliminate water entirely from the fracturing process.

Groundwater. Groundwater protection is one of the highest priorities of drilling engineers. Without proper well casings, drilling fluids and natural gas can leak into the groundwater. That’s why the American Petroleum Institute has established detailed standards for well casings, and state regulators closely inspect well construction. It’s important to note that hydraulic fracturing itself has not been associated with groundwater contamination.

Disposal. The industry and regulators have established practices to prevent spills from water emerging from wells and to protect municipal water treatment facilities.

Methane. The industry has been working hard to reduce methane emissions from gas production. A recent U.S. Environmental Protection Agency (EPA) study found that total methane emissions from gas production are 38 percent lower than they were in 2005 – although gas production grew by 26 percent during that time.

Earthquakes. Increased gas production has been associated with new earthquake activity. Scientists have determined that injection wells used to dispose of water from drilling sites have caused earthquakes in some locations. Most of these earthquakes are so mild they can’t be felt on the earth’s surface.

The technology exists to help well developers avoid earthquakes. Additionally, the industry already has backed new regulations in gas-producing states to reduce earthquake potential, and a new working group through the Interstate Oil & Gas Compact Commission and the Ground Water Protection Council is now focusing on this evolving issue.

The rapid growth of gas production has spurred regulators and academics to learn more about the environmental impact of gas development. NWGA looks forward to emerging information and continued cooperation between the natural gas industry and state and federal regulators.

Sources: FracFocus, Energy In Depth, U.S. Department of Energy

Released annually, the Gas Outlook provides a detailed 10-year overview of expected natural gas demand, supply availability, infrastructure development and prices in the Northwest. The Outlook represents a consensus view of the regional natural gas market developed by industry participants that directly serve natural gas consumers in Washington, Oregon, Idaho and British Columbia. 

To access the full 2015 Outlook study along with a recording of our recent webinar with NWGA Executive Director, Dan Kirschner, please click here.

Revisiting the Recent WSU/EDF Methane Emissions Study

The American Gas Association has a great infographic highlighting some of the key takeaways from the recently published study on methane emissions and local distribution companies (LDCs). We’re excited to see the results of a study performed in part by the Northwest’s own Washington State University getting so much traction.

Click on the image below to access the AGA methane emissions landing page or read on for more information on our May webinar with Dr. Brian Lamb of WSU, who headed up the research effort.


Source: American Gas Association, click on the image to be directed to the AGA methane emissions homepage with more information.

Click below to watch a recording of our May webinar with Dr. Brian Lamb of Washington State University for more information on the study’s methodology and findings:

You can access a copy of the study on LDC methane emissions, performed by the Environmental Defense Fund and Washington State University by clicking here.

About the Presenter:
Brian Lamb is a Regents Professor and the Boeing Distinguished Professor of Environmental Engineering in the Laboratory for Atmospheric Research and the Department of Civil and Environmental Engineering. He has been at Washington State University since 1979 where he has directed a wide range of atmospheric chemistry, pollutant transport, and air quality field programs. Dr. Lamb has a special interest in biosphere-atmosphere interactions and in regional air quality modeling, particular at the intersection of global change and atmospheric chemistry. Under his direction, WSU has completed several research projects focused on the impacts of global change on regional air quality. Dr. Lamb has also been involved in national field programs to measure methane emissions from natural gas systems and landfills, and he pioneered the use of tracer ratio methods for these measurements. Dr. Lamb received his Ph.D. in 1978 from the California Institute of Technology and his B.S. in Chemistry in 1973 from Idaho State University.

Where’s the Economy Heading? The 2015 Outlook Has Some Hints

We’re highlighting some of the guest posts featured in our 2015 Outlook here on the blog. The following is an economic outlook sidebar by Avista Corp. Chief Economist, Dr. Grant Forsyth. To access the full Outlook study please click here.

GDP growth in the U.S. and Canada over the last several years can be called many things, but nothing that can be printed in a family friendly economic outlook.

Looking across forecasters, 2015 is still predicted to be the high water mark for U.S. GDP growth, which is expected to be around 3%.  The sharp drop in oil and natural gas prices is expected to have a net negative impact on Canada’s GDP growth—in recent months average GDP forecasts for 2015 have fallen from around 2.5% to 2%.  Inflation forecasts for 2015 are averaging below the 2% central target of the Federal Reserve (the Fed) and the Bank of Canada (BOC).

After 2015, a majority of forecasters expect U.S. GDP growth to slowly decelerate, largely reflecting a reversal of the Fed’s low short-term interest policy.  At the time of this writing, futures contracts for the Federal Funds interest rate predict a policy change in the mid- to latter-half of 2015.  Given the expected timing of the Fed’s move, which is predicted to come before any BOC tightening, a growing number of forecasters (including U.S. futures markets as of April 2015) expect a continued depreciation of the loonie against the dollar in 2015.  Given an improving U.S. economy, this should boost Canada’s non-oil export growth.

In the Pacific Northwest (PNW), Idaho, Oregon, Washington, and British Columbia (B.C.) will largely follow the fortunes of the U.S. and Canadian economies in 2015.  On the U.S. side, although the majority of growth will occur in the Puget Sound, Portland, and Boise metro areas, employment growth is expected to pick-up in smaller MSAs.  In 2015, U.S. PNW employment growth will likely exceed U.S. growth, which forecasters expected to be in the low 2% range.  Similarly, Canadian forecasters see B.C.’s employment growth in same range as Canada’s growth, which is expected to be 1% or less.

The primary external risks to North American growth include slowing growth in China, recessionary growth in Japan, and near-recessionary growth in Europe.  Ongoing political instability in Greece, the Ukraine, and the Middle East also offer potential drags to growth.  Risks internal to North America include larger than expected declines in U.S. consumer and business spending caused by Fed interest rate increases and Canada’s historically high household debt levels.

Sources: Bank of Canada, Bank of Montreal, B.C. Stats, Bloomberg.com, CIBC, Canada Department of Finance, Canada Mortgage and Housing Corporation, Scotiabank, Statistics Canada, RBC, T.D. Economics, The Economist, U.S. Bureau of Labor Statistics, U.S. Federal Reserve. 

Released annually, the Gas Outlook provides a detailed 10-year overview of expected natural gas demand, supply availability, infrastructure development and prices in the Northwest. The Outlook represents a consensus view of the regional natural gas market developed by industry participants that directly serve natural gas consumers in Washington, Oregon, Idaho and British Columbia. 

To access the full 2015 Outlook study along with a recording of our recent webinar with NWGA Executive Director, Dan Kirschner, please click here.

First Look at the 2015 Natural Gas Outlook

We’ll have a more robust announcement and landing page for the 2015 edition of our annual Natural Gas Outlook Study next week, but it’s already here so we’re sharing it early.

Please click on the image below to download a copy of the Outlook. Stay tuned for a webinar on June 18 from noon-1 pm (PT) with NWGA Executive Director, Dan Kirschner, where we’ll discuss some of the key developments in this year’s version.

{Click Here To Download The 2015 Outlook}

 Screen Shot 2015-06-04 at 10.07.07 AM

Last Chance: Register for our Webinar “Understanding The Northwest’s Primary Source of Natural Gas Supply”

The majority of the natural gas consumed in the Pacific Northwest comes from Alberta and British Columbia, a producing region referred to as the Western Canadian Sedimentary Basin (WCSB).

Very Limited space remains! Join the Northwest Gas Association for a free webinar tomorrow (Thursday, April 23) discussing the current scale of natural gas supply available in the Western Canadian Sedimentary Basin (WCSB) with our guest Brian Morse, Manager, Gas Supply for Spectra Energy in Calgary, Alberta.

The webinar will begin promptly at 12 pm (PDT) with a 45 minute presentation followed by 15 minutes of Q&A. Registrants will receive a link via email to directly access the webinar the morning of Thursday, April 23.

Space is limited to the first 90 registrants so RSVP today to ensure your place!

What:   Free NWGA Natural Gas Webinar

Where: Online Only-Link Will Be Emailed Directly to Registrants

When:  Thursday, April 23, 2015

Noon-1 pm (PDT)

To Register: wcsbwebinar.eventbrite.com

World’s First LNG Powered Container Ship Launches in San Diego

Tote Inc. launched the world’s first LNG powered container ship last weekend in San Diego. While this one won’t be plying the waters of the Puget Sound (it’s headed for Jacksonville, Florida), the launch bodes well for efforts in our region to expand the use of LNG in marine applications.

ANGA featured the ship in it’s “Think About It” ad campaign earlier this year, you can check out their video below:


Key Takeaways From The WSU Emissions Study

Important news in the natural gas utility world last week with the release of a study published in the journal, Environmental Science and Technology, detailing a dramatic decrease in methane emissions from US local distribution systems when compared to prior estimates.

The study was led by the Northwest’s own Washington State University, with the support of the Environmental Defense Fund (EDF), Conestoga-Rovers and Associates, an engineering and environmental consulting firm, and major natural gas utilities from across the US.

Check out the video below for a review of study’s justification and methodology:

Three key takeaways from the study (you can access the entire study by clicking here):

“The researchers found that upgrades in metering and regulating stations, changes in pipeline materials, better instruments for detecting pipeline leaks as well as regulatory changes have led to methane emissions that are from 36% to 70% lower than current Environmental Protection Agency estimates when the data gathered for this study is combined with current pipeline miles and the numbers of facilities.”

  • When returning to sites identified as large methane emitters in a study performed by the Gas Research Institute (GRI) in 1992, the researchers found significant emissions reductions in facilities that had been upgraded or replaced with newer equipment:

“To understand the large reductions found in this work relative to the GRI/EPA results, we identified nine facilities from among the larger emitting sites measured during the GRI/ EPA 1992 program to resample with our high-flow and tracer- ratio techniques. These results show substantial reductions in emissions from each individual station (factors of 2 to 50) from 1992 to the present, with one exception. In two cases, the local operator indicated that significant equipment changes had occurred at the site; while at a third site, the local operator indicated that there had been no equipment upgrades at the site in the past 20 years. This particular site was the only site without a significant reduction in emissions.”

  • While emissions nationwide were lower than prior estimates, utilities located in the Western US were responsible for emissions rates even lower than the national average:

“We also examined how emissions from pipeline leaks varied on a regional basis in the U.S. due to differences in pipeline type and miles by region (see SI Section S4.3; there was no statistical difference in EFs by region). The eastern region accounts for 34% of the total U.S. CH4 from pipeline leaks, while the western region contributes less than 20% (Figure 1). In the eastern region, emissions are dominated by leaks from cast iron and unprotected steel characteristic of older systems. As such, leaks from cast iron and unprotected steel pipe account for 70% of the eastern emissions and almost half of total U.S. emissions. In the western region, systems are newer with more miles of plastic and protected steel pipe, and leaks from these systems contribute less than 5% of the total U.S. emissions. These regional variations and the low emissions associated with plastic pipes are significant as the U.S. moves toward replacement of older pipelines with plastic and uses plastic for new distribution expansion.”

This study was the third in a series reviewing methane emissions from throughout the natural gas supply chain. In each case the research was performed with the cooperation of the EDF, an academic institution, and relevant natural gas facility owners and operators.

Stay tuned for a blog in the coming weeks where we’ll discuss some of the parallels between each of the three studies.

Understanding Your Natural Gas Bill

We’ve all been there, opening the mailbox (be it physical or online) to see that monthly utility bill waiting to be opened. While the general notion of what makes up a natural gas bill is pretty intuitive (use more gas, pay more money), things are a bit more complicated than that. Here’s a quick video by the American Gas Association that breaks it all down:

There are three components driving a residential customer’s bill: the cost of the natural gas consumed, the utility’s system charge and additional taxes and fees.

The cost of the natural gas you consume is passed through to you with little or no markup by your gas utility . A mechanism called a Purchased Gas Adjustment (PGA) requires natural gas utilities to periodically adjust their prices to reflect their actual acquisition costs during that period. Those adjustments occur annually in Idaho, Oregon and Washington; quarterly in British Columbia. The Washington Utilities and Transportation Commission has a good explanation (click here to read it) of what the PGA process entails:

Companies buy gas from producers in Canada and the United States, and the price fluctuates over time. The PGA allows gas companies to periodically adjust their prices to reflect the increasing or decreasing cost of gas. Gas companies must file PGAs at least every 15 months, or within 13 months of the effective date of their last PGA they must file documents to show that a rate change is not necessary at that time (Washington Administrative Code 480-90-233). The total cost of gas is passed through to customers. This means that the company does not earn a return on or lose any money on the cost of prudently incurred gas costs.

Customers have enjoyed rate reductions and even credits to their bill via the PGA process thanks to the historic reduction in natural gas prices since 2009. A 2014 joint study by the American Gas Association and IHS CERA calculated an increase of $2,000 in disposable per-household income thanks to natural gas price reductions. A large portion of that extra cash was passed on directly to residential natural gas customers via lower utility bills.

The other component of your natural gas bill is the amount your utility charges to operate and maintain their delivery system, plus a fair return as determined by their regulators. Here’s an explainer by the Oregon Public Utility Commission that details what goes into your utility charge.

Taxes may vary from state to state, or even city-to-city, so lets not get into them here. However, the nature of those charges will likely be called out directly on your bill.

What’s Going on with Natural Gas Transportation? Plenty!

Conventional wisdom seems to index interest in natural gas as a vehicle fuel against the price of gasoline and diesel. With this in mind, we opened 2015 with our eye on the surprising crash in the price of oil, wondering whether enthusiasm for natural gas in either its compressed (CNG) or liquefied (LNG) form would wane with lower prices at the pump.

Turns out there’s still plenty of enthusiasm out there. Much of last week at the NWGA was spent engaging in conversations around the opportunity natural gas offers to help reduce transportation sector emissions, promote energy independence, and potentially save operators money in the long term.

Here are three interesting developments in the natural gas transportation sector from recent weeks:


1. Legislators are recognizing the benefits of natural gas for transportation:

Last Wednesday, we were in Olympia testifying before the Washington House and Senate transportation committees in support of House Bill 1396 and Senate Bill 5325. These bills aim to speed the adoption of natural gas, and other alternative fuels, in commercial fleets via incentives, rather than the punitive effects of a low-carbon fuel mandate.

Our testimony focused on the health benefits of conversion to natural gas. Transportation is the largest emissions producing sector in Washington. Natural gas vehicles can reduce CO2 by up to 30%, NOX by up to 88%, and particulate matter by as much as 30%.  Both NOX and particulate emissions aggravate breathing conditions, especially in the young and elderly.

Both bills enjoy bipartisan support and we’re looking forward to seeing how they progress.


2. More opportunities for natural gas fueling infrastructure are on the way:

Avista was granted the authority to sell compressed natural gas to individual customers in Oregon by the Oregon Public Utility Commission. What does this mean? Natural gas fleet operators will not have to build, own, operate and maintain the equipment required to compress natural gas for vehicle refueling. Instead, they can pay Avista to provide compression services as well as delivering natural gas to their location:

The service offering allows Avista to construct, own and operate dedicated CNG infrastructure that would be located on an individual customer’s premises for the purpose of refueling a commercial fleet of natural gas-powered vehicles. The costs related to the service offering would be borne by the CNG customer and will not impact the rates of Avista’s regular residential, commercial and industrial natural gas customers.

This agreement mirrors an arrangement the OPUC approved for NW Natural in January of 2014; Puget Sound Energy has similar approval in Washington. These agreements help remove one more hurdle as we work toward greater regional natural gas transportation adoption.


3. Fred Meyer’s LNG fleet has been a success:

Fred Meyer, a Pacific Northwest grocery chain, received plenty of positive press last year for their decision to convert a number of their Oregon based trucks to LNG. Last Thursday we had a chance to hear an update on their experience first-hand at a fleet management conference hosted by the Oregon Department of Energy and North American Fleet Association.

Ashley White, of Fred Meyer parent company Kroger, detailed some of the highlights from their first six months operating the LNG trucks:

  • Drivers love the quieter LNG engines and no more coming home smelling like diesel.
  • In terms of payload and operating range, LNG required little to no tradeoffs when compared to diesel, aside from the higher upfront vehicle purchase cost.
  • Until late in 2014 Fred Meyer was enjoying a significant LNG cost-benefit over diesel; however, the crash in oil prices and the expiration of the federal fuel excise tax credit for CNG and LNG have tilted things back in favor of diesel. Despite the recent price shifts, Fred Meyer is still beating the initial fuel cost projections made when the fleet deployed last year.


Stay tuned for more developments on natural gas transportation, especially as our region’s legislative sessions continue.

What We’re Watching This Week: LNG in Northwestern BC

Check out this great video by LNG Canada detailing some of the outreach efforts going on in Northwestern BC around the development of Liquefied Natural Gas (LNG) facilities.

It’s easy to be afraid of something unfamiliar. This video is an excellent demonstration that while LNG needs to be respected, it’s cold (-260 fahrenheit!) and burns under the right conditions, it also offers plenty of opportunities, both economic and environmental.

What 2015 Holds for Natural Gas in the Pacific Northwest: Three Trends We Are Watching in the New Year

2015 is here and while it doesn’t look much like the creators of “Back to the Future II” predicted (no hoverboards!), we’re living in an exciting time for energy industry observers and stakeholders.

Here are three questions we’re particularly intrigued by at the start of the year. Stay tuned as we seek out answers throughout 2015:

1. Will we see firm investment decisions on big regional demand projects?

We’ve spent the past couple of years talking about the potential for large new industrial natural gas loads in the Pacific Northwest. Proposals include:

  • Three methanol plants. The combined demand from all three facilities would approach one million dekatherms per day, almost half of the entire region’s average daily load.
  • Two LNG export facilities in Oregon and as many as six in British Columbia continue to work toward approval.
  • Numerous smaller-scale projects, including new food processing facilities, a fertilizer plant, and L/CNG for transportation.

Signals of definite intent to move forward on some or all of these projects would serve as an inflection point, kicking off serious discussions on the expansion of natural gas transmission and storage infrastructure to serve the region. In a virtuous circle, large infrastructure development could open the door to additional smaller-scale demand projects.

We’ll go into more depth on these dynamics with the release of our 2015 Natural Gas Outlook Study this spring.

2. What do low oil prices mean for natural gas?

Since June 2014 oil prices have dropped by 57%, a slump largely attributed to growing supply from US shale plays, many of which also produce natural gas. Low oil prices have thrown the stock market into flux, raised concerns about geopolitical turmoil, and tightened the price differential between natural gas and oil.

Will 2015 see an increase in the commodity price of both oil and natural gas as shale producers idle drilling rigs in response to market conditions? These concerns are old hat to natural gas industry observers. Skeptics have been wringing their collective hands over a sudden increase in prices since at least 2011.

The reality has been three years of relatively stable natural gas prices as the US continues to produce more and more natural gas. In fact, US production hit an all-time record in December of 2014. Will oil enjoy the same dynamic? We don’t know. The US Energy Information Administration is projecting 2015 average prices for Oil at $56/barrel and natural gas at $3.44/mmbtu. We are especially interested in the impact of low oil prices on natural gas prices.

3. Will discussions on climate policy embrace or shun natural gas?

2015 brings long legislative sessions in Oregon and Washington with climate change on the agenda in both states. Will legislators recognize the role natural gas can play (and has already played) in reducing CO2 emissions?

Natural gas has proved an effective tool in reducing CO2 emissions, displacing coal while largely enabling the addition of renewable generation. A recent Breakthrough Institute report notes new natural gas additions to the US generating fleet since 2007 have served to avoid almost as many tons of CO2 per megawatt-hour as new wind power installations.

Co2 Avoided

Opportunities exist to reduce regional emissions via the use of natural gas use for transportation, through innovative emission reduction programs like Oregon’s recent Senate Bill 844, and by increased direct use of natural gas for in home use. We’ll be paying close attention throughout the session.

Join us for a Free Lunch & Learn on 12/11 in Olympia

Join the NWGA on Thursday, December 11 in Olympia, Washington for our final lunch and learn of 2014. We’ll be at the Association of Washington Business Headquarters discussing opportunities for the innovative use of natural gas, particularly small-scale LNG.

Lunch is provided, registration is free, and space is limited so sign up today at the following link: www.natgaslunch.eventbrite.com

Dan Kirschner, Executive Director, Northwest Gas Association will provide attendees with an update of the current natural gas outlook in the Pacific Northwest. Ian Burkheimer, Director of Business Development, Plum Energy will give an overview of the opportunities for development of small-scale Liquefied Natural Gas (LNG) as a means of reducing fuel costs and environmental footprints. 

What:   Free NWGA Lunch & Learn

Where: Association of Washington Business

1414 Cherry St. SE

Olympia, WA 98501

When:  Thursday, December 11, 2014

Noon-1 pm

To Register: natgaslunch.eventbrite.com


About the Presenters:

Ian Burkheimer, Director of Business Development, is responsible for marketing, sales and relationship management for Plum Energy. He works with multiple domestic and international industries to develop strategic business development opportunities for Plum, introducing LNG solutions for mining, E&P, and many other off-grid customers. 

Dan Kirschner has been the Executive Director of the Northwest Gas Association (NWGA) since 2002. An expert on natural gas matters in the Pacific Northwest, Kirschner works to foster understanding among opinion leaders and informed decision-making by governing officials on issues related to natural gas in the region.


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