NW Natural Reports Results for the Quarter & Nine Months Ended Sept. 30, 2006.

Company Increases Dividends Paid for 51 ( st ) Consecutive Year & Reconfirms 2006 EPS Guidance

PORTLAND, Ore. -- Northwest Natural Gas Company, dba NW Natural (NYSE:NWN):

Financial & Operating Highlights

* Increased the quarterly dividend to 35.5 cents per share, payable Nov. 15, a 3 percent increase

* Customer growth continues on pace for the 20th consecutive year at 3 percent or more

* Improved overall customer service rating to 3rd best nationally, including 1st nationally for customer ease and satisfaction with billing and payment

* Exploring possibility of a new natural gas pipeline in Oregon to improve the reliability of natural gas deliveries into the region

* Reaffirmed earnings guidance for 2006 of $2.12 to $2.27 per share

Northwest Natural Gas Company, dba NW Natural (NYSE:NWN), reported a net loss for the third quarter of 2006 of $9.7 million, or 35 cents per diluted share, compared to a loss of $8.7 million, or 31 cents per diluted share, in the same quarter of 2005. NW Natural typically posts losses during the third quarter, reflecting low summertime use of natural gas, with stronger earnings performance expected during the winter months.

For the nine months ended Sept. 30, 2006, net income was $33.3 million, or $1.20 per diluted share, compared to $32.4 million, or $1.17 per diluted share, for the same period in 2005.

According to Mark Dodson, president and chief executive officer, "Our system is in excellent shape and we are ready for the winter heating season. Our underground gas storage and LNG facilities are full. We have also continued a company-wide restructuring of our business," he added, "to streamline work processes while cutting operating expenses and capital costs, yet still delivering excellent customer service. Our year-to-date financial results are also in line with our expectations and forecasts."

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Other developments

Proposed construction of new Oregon pipeline with TransCanada's Gas Transmission Northwest (GTN) system

In late September, NW Natural and TransCanada's GTN announced they are evaluating potential customer interest in a proposed pipeline that would connect GTN's interstate gas line near Madras, Oregon, to NW Natural's high pressure system near Molalla, Ore., southeast of Portland, and to other NW Natural facilities in northwest Oregon. If sufficient customer interest exists, GTN and NW Natural anticipate they would form a partnership to build and own the pipeline and NW Natural would be a large customer of the proposed line and GTN would become its operator. The pipeline would provide a more diversified delivery of gas supplies from the interstate system, improving customer reliability. The decision on whether to proceed with the development of the pipeline is expected to be made in early 2007. If constructed, commercial operation of the pipeline could commence by 2011.

Outlook for 2006

Despite warmer than average weather for the first nine months, NW Natural reaffirmed its prior estimate that its full-year earnings per diluted share in 2006 is expected to be in its stated range of $2.12 to $2.27. The company's earnings guidance assumes normal weather for the remainder of the year, continued customer growth, benefits from some cost reduction initiatives, and no significant changes in current regulatory policies. The company continues to target long-term earnings per share growth of 5 percent or more and to maintain a dividend payout ratio of 60 to 70 percent of earnings.

Dividend Declaration

On Oct. 3, 2006, the company declared a quarterly dividend of 35.5 cents per share, up from 34.5 cents per share, payable Nov. 15 to shareholders of record on Oct. 31, 2006. This year marks the 51st consecutive year in which NW Natural has increased dividends paid to shareholders. The annual indicated dividend rate is now $1.42 per share.

Presentation of Results

In addition to presenting results of operations and earnings amounts in total, NW Natural has expressed certain measures in this press release in cents per share on a diluted basis. These amounts reflect factors that directly impact the company's earnings. NW Natural believes this per share information is useful because it enables readers to better understand the impact of these factors on its earnings.

Conference Call Arrangements

As previously reported, NW Natural will conduct a conference call starting at 8:00 a.m. Pacific Time on Nov. 2, 2006 to review the company's financial results of operations. To participate in the conference call, please dial 866-356-4123 from anywhere in the United States, or 617-597-5393 from international points, including Canada. Participants will be asked for their name, company name, phone number and the name of the conference they will be joining (NW Natural). The participant pass code number is 82680195. A replay of the call will be available two hours after completion of the conference call until Nov. 17, 2006. To access the recording, call 888-286-8010, or 617-801-6888 from international points, and enter the conference replay pass code number 62447762.

To hear the conference by webcast, log on to NW Natural's corporate website at www.nwnatural.com and select the webcast icon on the home page. A replay of the webcast will be available two hours after the conference concludes.

Forward-Looking Statements

This report and other presentations made by NW Natural from time to time may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and other statements that are other than statements of historical facts. The company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis. However, each such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the factors described in Part I, Item 1A, "Risk Factors," and "Forward-Looking Statements" following Part II, Item 7A, in the company's 2005 Annual Report on Form 10-K and in "Forward-Looking Statements" following Part I, Item 2 and Part II, Item 1A, "Risk Factors," in the company's most recent Quarterly Report on Form 10-Q that could cause the actual results of the company to differ materially from those projected in such forward-looking statements.

All subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the company, also are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for the company to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

About NW Natural

NW Natural is headquartered in Portland, Ore., and serves over 623,000 residential and business customers in Oregon and southwest Washington. It is the largest independent natural gas utility in the Pacific Northwest. With customer growth on pace for a 20th consecutive year of more than 3 percent annual increase, it is also one of the fastest-growing local distribution companies in the nation. NW Natural has approximately $1.8 billion in total assets, which includes 14 bcf of underground gas storage capacity within its service territory at Mist, Ore. The company has in place rate mechanisms that help to protect revenues from warmer than average weather and declining consumption. NW Natural has increased its dividends paid on common stock for 51 consecutive years.

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