NORTHWEST NATURAL GAS COMPANY
LONG TERM INCENTIVE PLAN

1.    Purpose. The purpose of this Long Term Incentive Plan (the “Plan”) is to
enable Northwest Natural Gas Company (the “Company”) to attract and retain the
services of selected employees, officers and directors of the Company or of any
subsidiary of the Company.

2.    Shares Subject to the Plan. Subject to adjustment as provided below and in
Section 9, the shares to be offered under the Plan shall consist of Common Stock
of the Company, and the total number of shares of Common Stock that may be
awarded under the Plan shall not exceed 850,000 shares. The shares awarded under
the Plan may be authorized and unissued shares, reacquired shares or shares
purchased on the open market for delivery to participants. If an option, Stock
Award or Performance-based Award granted under the Plan expires, terminates or
is cancelled, the shares subject to such option, Stock Award or
Performance-based Award shall again be available under the Plan. If any shares
delivered pursuant to a Stock Award or Performance-based Award under the Plan
are forfeited to the Company, the number of shares forfeited shall again be
available under the Plan.

3.    Duration of Plan. The Plan shall continue in effect until all shares
available for award under the Plan have been delivered to participants and all
restrictions on such shares have lapsed; provided, however, that no awards shall
be made under the Plan on or after the 10th anniversary of the last action by
the shareholders approving or re-approving the Plan. The Board of Directors may
suspend or terminate the Plan at any time except with respect to awards and
shares subject to restrictions then outstanding under the Plan. Termination
shall not affect any outstanding awards or the forfeitability of shares awarded
under the Plan.

4.    Administration.

(a)    Board of Directors. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to time
the individuals to whom awards shall be made, the amount of the awards and the
other terms and conditions of the awards. Subject to the provisions of the Plan,
the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The interpretation and
construction of the provisions of the Plan and related agreements by the Board
of Directors shall be final and conclusive. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect, and it shall be the sole and final judge of such
expediency.

(b)    Committee. The Board of Directors may delegate to a committee of the
Board of Directors (the “Committee”) any or all authority for administration of
the Plan. If authority is delegated to a Committee, all references to the Board
of Directors in the Plan shall mean and relate to the Committee except (i) as
otherwise provided by the Board of Directors, and (ii) that only the Board of
Directors may amend or terminate the Plan as provided in Sections 3 and 10.

5.    Types of Awards; Eligibility. The Board of Directors may, from time to
time, take the following actions, separately or in combination, under the Plan:
(i) grant Stock Awards, including restricted stock and restricted stock units,
as provided in Section 6; (ii) grant stock options as provided in Section 7; and
(iii) grant Performance-based Awards as provided in Section 8. An award may be
made to any employee, officer or director of the Company or any subsidiary of
the Company. The Board of Directors shall select the individuals to whom awards
shall be made and shall specify the action taken with respect to each individual
to whom an award is made.

6.    Stock Awards, including Restricted Stock and Restricted Stock Units. The
Board of Directors may grant shares as stock awards under the Plan (“Stock
Awards”). No more than an aggregate of 600,000 shares may be awarded under the
Plan pursuant to Stock Awards under this Section 6 and Performance-based Awards
under Section 8. Stock Awards shall be subject to the terms, conditions and
restrictions determined by the Board of Directors. The restrictions may include
restrictions concerning transferability and forfeiture of the shares awarded,
together with any other restrictions determined by the Board of Directors. Stock
Awards subject to restrictions may be either restricted stock awards under which
shares are delivered immediately upon grant subject to forfeiture if vesting
conditions are not satisfied, or restricted stock unit awards under which shares
are not delivered until after vesting conditions are satisfied. The Board of
Directors may require the recipient to sign an agreement as a condition of the
award, but may not require the recipient to pay any monetary consideration other
than amounts necessary to satisfy tax withholding requirements. The agreement
may contain any terms, conditions, restrictions, representations and warranties
required by the Board of Directors. The certificates representing the shares
awarded shall bear any legends required by the Board of Directors. The Company
may require any recipient of a Stock Award to pay to the Company in cash or by
check upon demand amounts necessary to satisfy any applicable federal, state or
local tax withholding requirements. If the recipient fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable to the
recipient, including salary, subject to applicable law. With the consent of the
Board of Directors, a recipient may satisfy this obligation, in whole or in
part, by instructing the Company to withhold from any shares to be received or
by delivering to the Company other shares of Common Stock; provided, however,
that the number of shares so withheld or delivered

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shall not exceed the minimum amount necessary to satisfy the required
withholding obligation. Upon the delivery of shares under a Stock Award, the
number of shares reserved for award under the Plan, and the number of shares
available for award under Sections 6 and 8 of the Plan, shall be reduced by the
number of shares delivered, less the number of shares withheld or delivered to
satisfy withholding obligations.
    
7.    Stock Options.

(a)    Option Grants. Options granted under the Plan may be Incentive Stock
Options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (“IRC”), or Non‑Statutory Stock Options. A Non‑Statutory Stock Option
means an option other than an Incentive Stock Option. The Board of Directors has
the sole discretion to determine which options shall be Incentive Stock Options
and which options shall be Non‑Statutory Stock Options, and, at the time of
grant, it shall specifically designate each option granted under the Plan as an
Incentive Stock Option or a Non‑Statutory Stock Option. In the case of Incentive
Stock Options, all terms shall be consistent with the requirements of the IRC
and applicable regulations. No Incentive Stock Option may be granted under the
Plan on or after the tenth anniversary of the last action by the Board of
Directors approving an increase in the number of shares available for issuance
under the Plan, which action was subsequently approved within 12 months by the
shareholders.

(b)    Limitation on Amount of Grants. No employee may be granted options under
the Plan for more than 200,000 shares of Common Stock in any fiscal year.

(c)    Option Price. The option price per share under each option granted under
the Plan shall be determined by the Board of Directors, but the option price for
an Incentive Stock Option and a Non‑Statutory Stock Option shall be not less
than 100 percent of the fair market value of the shares covered by the option on
the date the option is granted. Except as otherwise expressly provided, for
purposes of the Plan, the fair market value shall be deemed to be the closing
sales price for the Common Stock as reported by the New York Stock Exchange and
published in the Wall Street Journal for the date the option is granted, or such
other fair market value of the Common Stock as determined by the Board of
Directors of the Company.

(d)    Duration of Options. Each option granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the date
it is granted and no Non‑Statutory Stock Option shall be exercisable after the
expiration of 10 years plus seven days from the date it is granted.

(e)    Nonassignability. Except as otherwise provided by the Board of Directors,
each option granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee except by will or by the laws of descent and
distribution of the state or country of the optionee's domicile at the time of
death, and each option by its terms shall be exercisable during the optionee's
lifetime only by the optionee.

(f)    Option Agreements. The Board of Directors shall determine the employees
to whom options shall be granted and the number of shares, option price, the
period of each option, the time or times at which options may be exercised, and
any other term of the grant, all of which shall be set forth in an option
agreement between the Company and the optionee.

(g)    Effect on Shares Available. Upon the exercise of an option, the number of
shares available for issuance under the Plan shall be reduced by the number of
shares for which the option was exercised, without any adjustment for shares
surrendered in payment of the option price or surrendered or withheld to satisfy
withholding requirements.

(h)    No Repricing. Except for actions approved by the shareholders of the
Company or adjustments made pursuant to Section 9, the option price for an
outstanding option granted under the Plan may not be decreased after the date of
grant nor may the Company grant a new option or pay any cash or other
consideration (including another award under the Plan) in exchange for any
outstanding option granted under the Plan at a time when the option price of the
outstanding option exceeds the fair market value of the shares covered by the
option.

8.    Performance-based Awards. The Board of Directors may grant awards intended
to qualify as qualified performance-based compensation under Section 162(m) of
the IRC and the regulations thereunder (“Performance-based Awards”). No more
than an aggregate of 600,000 shares may be awarded under the Plan pursuant to
Stock Awards under Section 6 and Performance-based Awards under this Section 8.
Performance-based Awards shall be denominated at the time of grant either in
Common Stock (“Stock Performance Awards”) or in dollar amounts (“Dollar
Performance Awards”). Payment under a Stock Performance Award or a Dollar
Performance Award shall be made, at the discretion of the Board of Directors, in
Common Stock (“Performance Shares”), or in cash or in any combination thereof.
Performance-based Awards shall be subject to the following terms and conditions:

(a)    Award Period. The Board of Directors shall determine the period of time
for which a Performance-based Award is made (the “Award Period”).

(b)    Performance Goals and Payment. The Board of Directors shall establish in
writing objectives (“Performance Goals”) that must be met by the Company or any
subsidiary, division or other unit of the Company (“Business Unit”) during the
Award Period as a condition to payment being made under the Performance-based
Award. The Performance Goals for each award shall be one or more targeted levels
of performance with respect to one or

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more of the following objective measures with respect to the Company or any
Business Unit: earnings, earnings per share, stock price increase, total
shareholder return (stock price increase plus dividends), return on equity,
return on assets, return on capital, economic value added, revenues, operating
income, inventories, inventory turns, cash flows or any of the foregoing before
the effect of acquisitions, divestitures, accounting changes, and restructuring
and special charges (determined according to criteria established by the Board
of Directors). The Board of Directors shall also establish the number of
Performance Shares or the amount of cash payment to be made under a
Performance-based Award if the Performance Goals are met or exceeded, including
the fixing of a maximum payment (subject to Section 8(d)). The Board of
Directors may establish other restrictions to payment under a Performance-based
Award, such as a continued employment requirement, in addition to satisfaction
of the Performance Goals. Some or all of the Performance Shares may be delivered
to the participant at the time of the award as restricted shares subject to
forfeiture in whole or in part if Performance Goals or, if applicable, other
restrictions are not satisfied.

(c)    Computation of Payment. During or after an Award Period, the performance
of the Company or Business Unit, as applicable, during the period shall be
measured against the Performance Goals. If the Performance Goals are not met, no
payment shall be made under a Performance-based Award. If the Performance Goals
are met or exceeded, the Board of Directors shall certify that fact in writing
and certify the number of Performance Shares earned or the amount of cash
payment to be made under the terms of the Performance-based Award.

(d)    Maximum Awards. No participant may receive in any fiscal year Stock
Performance Awards under which the aggregate amount payable under the Awards
exceeds the equivalent of 50,000 shares of Common Stock or Dollar Performance
Awards under which the aggregate amount payable under the Awards exceeds
$1,000,000.

(e)    Tax Withholding. Each participant who has received Performance Shares
shall, upon notification of the amount due, pay to the Company in cash or by
check amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company or the Employer may withhold that amount from other amounts payable
to the participant, including salary, subject to applicable law. With the
consent of the Board of Directors, a participant may satisfy this obligation, in
whole or in part, by instructing the Company to withhold from any shares to be
received or by delivering to the Company other shares of Common Stock; provided,
however, that the number of shares so delivered or withheld shall not exceed the
minimum amount necessary to satisfy the required withholding obligation.

(f)    Effect on Shares Available. The payment of a Performance-based Award in
cash shall not reduce the number of shares of Common Stock reserved for award
under the Plan. The number of shares of Common Stock reserved for award under
the Plan, and the number of shares available for award under Sections 6 and 8 of
the Plan, shall be reduced by the number of shares delivered to the participant
upon payment of an award, less the number of shares delivered or withheld to
satisfy withholding obligations.

9.    Changes in Capital Structure. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of any stock split, combination of shares or dividend payable in shares,
recapitalization or reclassification, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for grants
under the Plan and in the number and kind of shares available for grants under
Sections 6 and 8 of the Plan. In addition, the Board of Directors shall make
appropriate adjustment in the number and kind of shares subject to outstanding
awards, and in the exercise price of outstanding options, so that the
recipient's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Board of Directors shall have
no obligation to effect any adjustment that would or might result in the award
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors shall be
conclusive.

10.    Amendment of Plan. The Board of Directors may at any time, and from time
to time, modify or amend the Plan in such respects as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason. Except as provided in Section 9, however, no change in an award already
granted shall be made without the written consent of the holder of such award.

11.    Approvals. The issuance by the Company of authorized and unissued shares
or reacquired shares under the Plan is subject to the approval of the Oregon
Public Utility Commission and the Washington Utilities and Transportation
Commission, but no such approvals shall be required for the purchase of shares
on the open market for delivery to participants in satisfaction of awards under
the Plan. The obligations of the Company under the Plan are otherwise subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to issue
or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws.

12.    Employment and Service Rights. Nothing in the Plan or any award pursuant
to the Plan shall (i) confer upon any employee any right to be continued in the
employment of the Company or any subsidiary or interfere in any way with the
right of the Company or any subsidiary by whom such employee is employed to
terminate such employee's

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employment at any time, for any reason, with or without cause, or to decrease
such employee's compensation or benefits, or (ii) confer upon any person engaged
by the Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation, contract,
or arrangement with or by the Company.

13.    Rights as a Shareholder. The recipient of any award under the Plan shall
have no rights as a shareholder with respect to any Common Stock until the date
the recipient becomes the holder of record of those shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date occurs prior to the date the recipient
becomes the holder of record.