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MailTribune.com
  • Southern Oregon customers gain from natural gas boom

    Avista has cut prices thanks to extra supply from shale deposits
  • A seismic shift in the natural gas industry during the past five years has benefited Southern Oregon customers as much — or more — as anyone in the Northwest.
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  • A seismic shift in the natural gas industry during the past five years has benefited Southern Oregon customers as much — or more — as anyone in the Northwest.
    At the end of 2008, Avista residential users were paying more than Cascade Natural Gas and Northwest Natural customers, but the roles have reversed, a Chamber of Medford/Jackson County Forum audience learned Monday.
    "Through a lot of infrastructure improvements and playing of the economics we're now the lowest cost," Steve Harper, Avista's gas supply director said.
    Dan Kirschner, executive director of the Northwest Gas Association, said the transformation has changed the industry's outlook from lean to one that has boosted surrounding commercial and industrial sectors.
    "When I started this job 12 years ago, natural gas was a scarce resource," Kirschner said. "We didn't know how we were going to find the resources we needed to meet the needs we knew we were going to have. Suddenly we started hearing this term 'shale gas' and we had a revolution. We've moved from scarcity to today abundance."
    The shale discoveries in Canada, in the Rocky Mountain states and in the east didn't provide local access to natural gas, but the abundance has created other ways to reduce prices to the Northwest.
    "Most of our gas comes from Alberta," Harper said. "More gas is available for us in the Pacific Northwest, because other demand centers (especially in the Northeast) are being served with shale. We've seen huge benefits from those lower prices. Shale gas has fundamentally changed how gas flows."
    He said forecasts indicate price will be flat for years to come. Natural gas utilities are required to pass along to consumers any savings in the cost of the gas.
    With additional gas available, Avista has acquired a share in the Jackson Prairie underground cavern storage area near Chehalis, Wash., providing dedicated reserves for Southern Oregon.
    "We pump it in during the summer and displace water," he said. "Then we take it out and get summer-priced gas in the winter, when gas is usually the most expensive."
    The sudden abundance of the fuel comes primarily from a process known as "fracking," in which combinations of water, sand and chemicals are pumped into deep rock formations to fracture them and release the natural gas.
    Although the very nature of drilling for gas incurs risk, Kirschner said, the industry has developed measures to perform the fracking safely.
    The key is isolation from water, he said. By industry standards, fracking is supposed to occur more than a mile from the drinking water source. That didn't always happen in the early days of the new approach.
    "The states where production is occurring are catching up to that process. They struggled a little bit out of the gate, but they are getting pretty good at it now."
    He recommended those interested in finding out more about the process go to fracfocus.org on the Web.
    Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter @GregMTBusiness, and read his blog at www.mailtribune.com/Economic Edge.
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