The Value of Natural Gas in the Pacific Northwest: Demand

In today’s blog, we’ll discuss natural demand in the Pacific Northwest.

The overall demand for natural gas in the Pacific Northwest is forecast to grow at nearly the same rate as reported over the last few years: a modest 1.0 percent per year (see forecast demand growth by sector in Table 1). Natural gas as a fuel to generate electricity paces overall expected to increase in regional gas use (see Figure 2), in part due to the retirement of coal generation units in 2021-2022. Meanwhile, residential and commercial customers continue the decades-long trend of using gas more efficiently (see Figure 3), dampening growth in those sectors.

Figure 1 (below) shows how regional demand has fluctuated over the past two decades. Figure 4 shows forecast peak and average day demand. It is important to keep in mind that utilities and pipeline operators must design their systems to deliver energy on “peak” days, which are typically in the winter in the Pacific Northwest.

Unless otherwise noted, the source of charts and tables in this blog is the NWGA.

Figure 1: Historic Regional Demand by Sector (Source: EIA and Statistics Canada Consumption Tables)

NOTES: While regional residential and commercial consumption has remained relatively flat over the past decade, industrial usage has declined considerably, in part due to the “Great Recession” that cost the region more than 20 percent of its industrial gas load between 2007 and 2012. The industrial sector is still the largest regional user; however (see Figure 2).

As noted above, the region is using increasingly more natural gas to generate electricity. However, year-to-year variations occur because gas is typically used when other resources (hydro, nuclear, wind, solar) are unavailable in sufficient quantities. In other words, gas is the last generation fuel on and the first fuel off. In that way, natural gas provides a critical role in ensuring the reliability of the electricity system here as the region transitions to more renewable but intermittent resources.

Table 1: Forecast Annual and Cumulative (through 2028/2029) Demand Changes by Case

NOTES: This demand forecast is a compilation of the planning conducted by NWGA member-companies, including the integrated resource plans each natural gas utility is required to file with their respective state/provincial regulator. Low and high demand cases are driven by various economic and policy factors, including growth, commodity cost, cost of carbon, etc.

Figure 2. Expected Case Forecast by Economic Sector

NOTES: Residential, commercial, and industrial demand for natural gas is expected to grow at a slightly slower pace than forecast in last year’s Outlook, while generation demand is anticipated to grow at a slightly greater rate. The forecast step increase in gas demand for generation shown in 2021-2022 coincides with the retirement of several coal-fired generation units currently serving the region, including Boardman in Oregon (end of 2020), Centralia Boiler 1 in Washington (end of 2020), and Colstrip Units 1 & 2 in Montana (mid-2022). This forecast demonstrates the expectation that natural gas will play an increasingly important role in maintaining system reliability and affordability as policymakers drive the region toward a cleaner energy future.

Figure 3: Declining Per Capita Consumption in Residential and Commercial Sectors

NOTES: While the number of residential and commercial natural gas consumers in our region has grown 124 percent since 1990, per capita usage of natural gas has dropped 32 percent due to energy efficiency efforts, including more efficient gas appliances.

Figure 4: Peak and Average Day Demand Forecast

NOTES: The Pacific Northwest uses the least amount of gas during May. The gas used to generate electricity for air conditioning typically ramps up in June before tailing off during the fall. January is the month during which our region typically uses the most gas to heat space and water for homes and businesses.

Natural gas utilities design their systems to serve demand on the coldest day likely to occur in the territories they serve. Figure 4 illustrates that demand for natural gas on those days can nearly double the demand experienced during an average winter day. While each company approaches its planning standard a little differently, “peak” or “design,” days are typically based on actual 24-hour average temperatures recorded at representative locations.

Click here to review the data table in Appendix A of the 2020 Outlook.

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