Northwest Natural begins marketing in Coos Bay.

Byline: Winston Ross The Register-Guard

Now for the sales pitch.

As construction crews and county officials have toiled to complete Coos County's natural gas pipeline, Northwest Natural has worked steadily to bring the product to market.

The state's largest natural gas provider will spend $12 million building the pipeline's distribution center in Coos Bay and will manage the pipeline - though it will remain under the county's ownership. Northwest Natural is one of three gas utilities in Oregon, but has 80 percent of the business.

The gas itself will come from British Columbia and Alberta in Canada and the Rocky Mountains in both countries via the Williams Northwest Pipeline System, a 4,120-mile system crossing Washington, Idaho, Oregon, Wyoming, Utah and Colorado. The pipeline moves 3.4 billion cubic feet of natural gas per day, or 12 percent of the resource consumed in the United States.

As the mainline has hit snags, Northwest Natural decided to hold off completing its portion of the project to avoid tying up its time and money on an unfinished job, said Cal Grimmer, the company's Coos Bay district manager. But the company will be ready to sell gas whenever the county can bring it to Coos Bay, Grimmer said.

Northwest Natural already has run lines to a handful of customers who want to be the first natural gas users in the bay area. Ideally, there would be thousands more ready to buy gas, but some have been skeptical about buying a product that isn't here yet, Grimmer said.

Late last year, Northwest Natural sent surveys to 9,000 users of propane in Coos Bay and North Bend. Of those, 50 percent said they wanted a gas furnace, Grimmer said. Sixty percent wanted more information about natural gas.

Last weekend, the company started advertising in local newspapers, telling people about how clean and cheap natural gas is compared with other energy sources such as electricity, oil, coal and wood.

"From there, we'll change the message as we need to," he said. "We may tell them how the whole process started and who's paying for what" to address any negative associations with the county's troubled attempt at building the pipeline.

A major focus of that effort will be on commercial customers because the line runs past many of the bay area's businesses, such as Burger King, Sizzler, Wal-Mart, Safeway, Albertsons and Fred Meyer.

"We've talked to most of them, and they're all very interested," Grimmer said.

According to the U.S. Department of Energy, 900 of the next 1,000 U.S. power plants will use natural gas because gas-fired generators are cheaper to operate than coal-fired generators. Consumption is expected to rise from 22.6 trillion cubic feet in 2002 to about 30 trillion cubic feet in 2025.

As problems in the global oil market continue to fester, with production at peak levels and prices steadily rising, the country is wholeheartedly embracing natural gas as a replacement, said Robert Michaels, a professor of economics at California State University-Fullerton. He has worked as a consultant for several natural gas producers over the years.

"It's going to be the fuel of choice for the next several decades," Michaels said. "What's forming now is a global gas market, with tremendous amounts of gas all over the world. We're discovering that gas can be moved, and it's less risky than oil because it's so much more diverse in sources."

Coos County's pipeline has other benefits as well, backers say. It will mean Northwest Natural can bring in an even cheaper energy source - liquefied natural gas - from markets around the world via the deep water port of Coos Bay.

As costs rise in the winter, the utility can keep consumer bills steady by relying on what's in storage instead of being forced to buy it on the open market, Grimmer said.

"You can store 640 times more gas in a liquid state than in a vapor state," he said.

The pipeline also means natural gas one day for cities in Reedsport and Florence - if they can attract enough of a business or residential customer base to fund an expansion.

And the pipeline provides another opportunity that could bring millions of dollars in annual revenue to county coffers in exploration of coal-bed methane, a resource long suspected to be in vast quantities where coal miners once toiled locally.

GAS FACTS

What is natural gas? It's made up of hydrocarbon gases, primarily methane, and is usually found deep below the earth's surface, often with deposits of oil. It's removed by wells that are drilled to access the petroleum deposits.

How is it processed? After it reaches the surface, the gas is separated from any oil or water that may have been present in the petroleum deposit. It is then processed to remove impurities, other gases such as propane and butane and any remaining water or water vapor.

How much do we use? Today, we consume about 22 trillion cubic feet of gas per year, which is about 25 percent of the energy consumed in the United States. Natural gas accounts for 19 percent of the energy used in Oregon, state figures indicate. Of that, 62 percent went to manufacturers, 22 percent went to home water and space heating and 16 percent went to businesses, schools, governments and others.

Three investor-owned gas utilities operate in Oregon, with Northwest Natural serving more than 80 percent of the state's consumers. Combined, the utilities reported operating revenues of $690 million in 2002. There were 630,398 natural gas customers in 2002, up from 611,418 the year before. Eighty-nine percent of the state's users are residential, the rest commercial and industrial.

How much cheaper is it than other energy sources? Northwest Natural claims that Coos Bay consumers could see their water and space heating bills drop by up to 50 percent annually, depending on electric service providers.

- Williams Natural Gas and Northwest Natural Gas