10. GAS RESERVES

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

On March 28, 2014, we amended the original gas reserve agreements in order to facilitate Encana's proposed sale of its interest in the Jonah field. Under the amendment, we ended the drilling program with Encana, but increased our assigned ownership interests in certain sections of the Jonah field. Our investment to-date will continue to earn a rate of return and provide long-term gas price protection for our utility customers. Although we retained the right to drill additional wells, we have not determined at this time whether we will seek to do so. Recovery of drilling costs through customer rates for these additional wells would require regulatory approval.

Gas reserves acted to hedge the cost of gas for approximately 4% and 3% of our utility's gas supplies for the three months ended March 31, 2014 and 2013, respectively. Our utility gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits recorded as liabilities on the balance sheet. The following table outlines our net investment in gas reserves:



	March 31,				December 31,
In thousands	2014		2013		2013
Gas reserves, current	$	21,990	$	14,286	$	20,646
Gas reserves, non-current	156,450		110,033		140,573
Less: Accumulated amortization	21,556		9,864		18,575
Total gas reserves	156,884		114,455		142,644
Less: Deferred tax liabilities on gas reserves	30,704		32,907		42,117
Net investment in gas reserves	$	126,180	$	81,548	$	100,527