1. 2019 NATURAL GAS OUTLOOK WORKSHOP Presentation to the OPUC
Randy Friedman, Sr. Director, Gas Supply
July 16, 2019

2. Our Supply Portfolio’s Diversity
Malin
Sumas
Topock
Stanfield
Station 2
AECO/NIT
Opal
Permian
Basin
San Juan
Rocky
Mountain
WCSB 5%
20%
38%
NWN 2%
25%
10%
Average Winter Day
Flowing Supplies
Underground Storage
Mist
NW Natural also owns and operates two LNG Plants:
Portland LNG, in-service starting 1969
Newport LNG, in-service starting 1977
Key resources for peak days
Not shown on this chart because LNG usage is zero on an average winter day

3. Importance of Mist
Avoids year-round pipeline capacity from Supply basins
Filled in the summer when gas (usually) is cheaper
Supply/demand balancing on a near real-time basis
Investment in Oregon
Future expansions provide customer benefits
North Mist Expansion Project commenced service on May 24, 2019

4. Strong Supplies
Nationwide production continues to set new record levels
There’s so much natural gas that export projects - LNG and pipeline - continue to move forward
We lowered our Weighted Average Cost of Gas by roughly 15% last November
Winter 2018/2019 was challenging

5. Market Prices Last Winter
Source: Northwest Pipeline, 4/11/2019
Northwest Pipeline Canadian Border (Sumas) Daily Prices
$/Dth

6. Past Winter’s Bookends
Enbridge Pipeline incident on Oct. 9, 2018
3rd coldest February on record for Portland
KING 5
Seattle sees coldest February in 30 years
KREM
Feb 2019 Spokane
Second snowiest, fourth coldest

7. October 9 Response
Source: Northwest Pipeline, 11/9/2018

8. Capacity from B.C. has been highly variable…

9. …which is expected to continue
Canadian regulators working closely with Enbridge
Awaiting official report on root cause
T-South and T-North systems are being fully inspected/tested
Enbridge’s expectation is 100% capacity by winter
Lighter shaded areas represent high degree of uncertainty until plans are finalized.

10. Interruptible Sales Curtailment
Regarding February 2019
Interruptible Sales Curtailment
Dth/day

11. Mist Inventory
Total Mist inventory fell to its lowest level in 5 years on March 14, 2019

12. Other Storage Inventories Also Fell Quickly
Declining inventories, uncertain Enbridge capacity and persistent cold weather led to the interruptible sales curtailment decision

13. Some Good News System resiliency proved itself
Interruptible curtailments helped preserve service to firm customers
Prices clearly are back to more normal levels
Sumas and Rockies prices are around $2/Dth, and Alberta prices are below $1/Dth

14. Renewable Natural Gas (RNG)
RNG is on its way – we expect three new projects to become operational in the upcoming PGA year
Based on current estimates, these projects could produce up to 1,200,000 Dth/year RNG
ODOE Study indicates potential Oregon-derived RNG equals all Oregon residential gas use
SB 98 passed last month, rulemaking to come
Expect to begin purchasing RNG under the new law in 2020

15. Gas Cost Expectations Forward Prices aren’t looking too bad
Gas Cost Deferrals will swing from a small refund to a small surcharge