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Winter Gas Supply Outlook

Winter Gas Supply Outlook. WUTC Briefing October 10, 2007 Randy Friedman Director, Gas Supply Northwest Natural Gas. Topics. Our Gas Supply Portfolio Forward Prices Winter Outlook Long-Term View. 2. Gas Supply Portfolio “Design” . 3. On the “Design” Peak Day. Firm Sales Record

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Winter Gas Supply Outlook

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  1. Winter Gas Supply Outlook WUTC Briefing October 10, 2007 Randy Friedman Director, Gas Supply Northwest Natural Gas

  2. Topics • Our Gas Supply Portfolio • Forward Prices • Winter Outlook • Long-Term View 2

  3. Gas Supply Portfolio “Design” 3

  4. On the “Design” Peak Day Firm Sales Record January 5, 2004 7,190,455 Therms 10ºF Warmer than Design 4

  5. How We Buy Gas Total Purchases for Calendar Year 2006 = 822 million therms 5

  6. Station 2 WCSB Sumas AECo Stanfield Rocky Mountain Basin Malin Opal San Juan Basin Topock Permian Basin 15% NW Natural 2007/08 Winter Supplies (Average Winter Day) 29% Flowing Supplies 2% Storage 27% NWN Avg. Day Winter Supply Volumes (MMBtu) British Columbia (Stn 2) 58,000 Alberta 115,000 Rockies 110,000 Jackson Prairie 10,000 Mist 107,000 Portland LNG 0 Newport LNG 0 Plymouth LNG 0 Total 400,000 27% Assumes that storage is 100% full on Nov 1. 6

  7. Looking for Patterns Source: Morgan Stanley Weekly Explorer dated 10/9/2007 7

  8. Regional Price Correlations 8

  9. Record Storage Levels…Again 9

  10. Winter Outlook • We are well-positioned • No problems lining up Canadian and Rockies supplies • Rockies production continues to grow and is bargain priced right now • Interstate Pipeline Bottlenecks will persist • Cause and effect • Bottlenecks can actually ease as it gets colder • Latest Mist Storage Expansion nearing Completion • Adds 75 MMcfd deliverability and 1.75 Bcf capacity • All for Interstate Storage Service Customers 10

  11. The Biggest Uncertainty - Weather 11

  12. Longer-Term Views • Stay Diversified • REX and other projects will increase Rockies prices • Growing LNG Imports helpful but not a panacea • Deliveries anywhere can affect PNW • Will not drive prices down but will be competitive with alternatives • The Return of Demand Growth • Current rate decreases good test of price elasticities • But will demand be “peakier”? 12

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