10. GAS RESERVES

Our gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits recorded as liabilities on the balance sheet.

We entered into our original agreements with Encana Oil & Gas (USA) Inc. (Encana) in 2011 to develop physical gas reserves to provide long-term gas price protection for utility customers. Encana began drilling in 2011 under these agreements. We hold working interests in certain sections of the Jonah Field. Gas produced in these sections is sold at prevailing market prices, and revenues from such sales, net of associated operating and production costs and amortization, are credited to the utility's cost of gas. The cost of gas, including a carrying cost for the rate base investment, is included in NW Natural's annual Oregon PGA filing, which allows us to recover these costs through customer rates. Our net investment under the original agreement earns a rate of return and provides long-term price protection for our utility customers.

On March 28, 2014, we amended the original gas reserves agreement in order to facilitate Encana's proposed sale of its interest in the Jonah field to Jonah Energy LLC (Jonah Energy). Under the amendment, we ended the drilling program with Encana, but increased our working interests in our assigned sections of the Jonah field. We also retained the right to invest in new wells with Jonah Energy.

We were notified by Jonah Energy of investment opportunities in the sections of the Jonah field where we have working interests. The amended agreements allow us to invest in additional wells on a well-by-well basis with drilling costs and resulting gas volumes shared at our amended proportionate working interest for each well in which we invest. We elected to participate in some of the additional wells drilled in 2014, and we may have the opportunity to participate in more wells in the future.

We filed an application requesting regulatory deferral in Oregon for these additional investments, which was granted in April 2015. Accordingly, we filed in 2015 seeking cost recovery for the additional wells drilled in 2014 and expect the OPUC to review and determine the prudence of this investment in the second half of 2015. Our cumulative investment of approximately $10 million in these additional wells has been accounted for as a utility investment. If regulatory approval is not received, our investment in these additional wells would follow oil and gas accounting.

The following table outlines our net investment in gas reserves:



	June 30,				December 31,
In thousands	2015		2014		2014
Gas reserves, current	$	18,214	$	20,373	$	20,020
Gas reserves, non-current	169,288		157,535		167,190
Less: Accumulated amortization	47,933		27,255		37,910
Total gas reserves⁽¹⁾	139,569		150,653		149,300
Less: Deferred tax liabilities on gas reserves	27,357		34,828		18,551
Net investment in gas reserves⁽¹⁾	$	112,212	$	115,825	$	130,749


⁽¹⁾	Gas reserves include our investments in additional wells, subject to regulatory deferral approval with the total gross investment of $10.1 million and $0.5 million at June 30, 2015 and 2014, respectively. Total gas reserves in the additional wells were $8.8 million and $0.5 million and the net investment was $7.9 million and $0.5 million at June 30, 2015 and June 30, 2014, respectively.