The FINANCIAL — Calgary, Alberta (May 2, 2011) – Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corporation, has completed a benchmark upstream joint-venture development agreement with Northwest Natural Gas Company, a Portland, Oregon-based natural gas distributor. The Public Utility Commission of Oregon recently approved the agreement that will see Northwest Natural invest about US$250 million over the next five years to earn a working interest in certain sections of Encana’s Jonah field in Wyoming. The arrangement provides NW Natural with secure, reliable and economic supplies of natural gas for a portion of the needs of its 674,000 customers.
“This is a landmark agreement and regulatory step that we believe will open the door for future upstream investment by utilities seeking price stability for their customers – transactions that are backed by utility ratepayers and supported by regulators as prudent investments. As a leading producer, Encana has heard end-users’ requests for structures that provide long-term price security, and under this agreement, we are able to achieve both our customer’s goal and efficiently advance the development of a portion of the Jonah field,” said Renee Zemljak, Encana’s Executive Vice-President, Midstream, Marketing & Fundamentals.
Traditionally, utilities have purchased natural gas on short-term contracts from wholesale markets, with customers subject to fluctuating prices. Under this transaction, in order to reduce price uncertainty for consumers, NW Natural will invest approximately $45 million to $55 million per year for the next five years earning a working interest in certain sections of Jonah natural gas field. This direct producer-utility deal helps secure long-term natural gas supply for NW Natural at the cost of production rather than at future market prices.
“This agreement and the commission’s order represent a lot of hard work by a lot of parties over a short period of time, and we are pleased the commission approved the transaction,” said NW Natural President and Chief Executive Officer Gregg Kantor. “This is a terrific outcome for both customers and shareholders.”
“This transaction is another of Encana’s many joint-venture arrangements that provide attractive investment opportunities and reliable, economic supplies of natural gas to a variety of counterparties. These transactions help serve our customers’ needs and accelerate the value recognition of Encana’s enormous resource potential,” Zemljak said.
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