NW Natural eyes open season for Mist in early 2010, awaits draft EIS for Palomar

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Related Companies Gill Ranch Storage LLC Northwest Natural Gas Co. (NWN) Pacific Gas and Electric Co. TransCanada Corp. (TRP)

Related Documents 8-K Northwest Natural Gas Co. 9/30/2009, filed on 11/3/2009 Transcript (ET) Northwest Natural Gas Co. 11/3/2009

Related Articles 10/29/2009 Gill Ranch wins CPUC approval, plans to begin storage operations in August 2010 10/16/2009 FERC to appeal US court's FOIA decision on Palomar Pipeline 10/6/2009 NW Natural Gas Storage names president 8/4/2009 NW Natural plans additional layoffs; storage, pipeline projects remain on track 2/13/2009 NW Natural eyes gas investment opportunities beyond Oregon base

While it moves forward with the development of the Gill Ranch storage project in California, Northwest Natural Gas Co. also is taking steps to expand its Mist gas storage facility in Oregon, company officials said Nov. 3.

During the third quarter, NW Natural completed 3-D seismic surveys and started engineering design work for a potential 3-Bcf to 4-Bcf expansion at the Mist storage facility. "Demand for gas storage capacity continues to be very strong in the Pacific Northwest and will likely grow even stronger as gas-fired electric generation increases in this region," NW Natural President and CEO Gregg Kantor said during the company's third-quarter earnings conference call. "We see the ability to grow our interstate storage services at Mist as a unique opportunity for Northwest Natural."

Pending a successful open season in the first quarter of 2010, NW Natural plans to move forward with the expansion at Mist, which has a storage capacity of 16 Bcf. If the company proceeds with the expansion project, Kantor said it expects total development costs to be about $45 million to $55 million. The target in-service date for the expansion project is late summer 2011, he said.

On Oct. 29, the California Public Utilities Commission approved Gill Ranch Storage LLC's application to build an underground gas storage facility near Fresno, Calif. A wholly owned subsidiary of NW Natural, Gill Ranch will have a 75% interest and Pacific Gas and Electric Co. will have a 25% interest in the project, and each will market its proportionate share of storage capacity.

During the conference call, Kantor also noted that NW Natural in October hired Richard Daniel to serve as president of its NW Natural Gas Storage LLC subsidiary. As part of his duties, Daniel will oversee the Gill Ranch storage project and the Mist storage facility. Daniel was previously president of EnCana Gas Storage. "We feel very fortunate to have someone with Rick's successful track record to help us grow our storage operations," Kantor said.

For the third quarter, NW Natural reported a net loss of $6.7 million, or 25 cents per share, compared to a net loss of $10.1 million, or 38 cents per share, in the same quarter of 2008. "Year-to-date earnings per share and net income are up 20% due mainly to this year's commodity cost savings," Kantor said during the call. "Lower wholesale gas costs continued to benefit our customers as well."

In terms of customer growth, Oregon's high unemployment rate and housing slowdown continue to be challenges for NW Natural, he said. The company's growth for the quarter was 0.7%.

Regarding its Palomar Pipeline project in Oregon, Kantor said the company continues to work on routing and permitting issues with landowners, environmental groups, and state and federal agencies. Palomar Pipeline is a joint venture between NW Natural and TransCanada Corp.

Kantor said Palomar expects FERC to release its draft environmental impact statement for the pipeline project by the end of 2009. "The issuance of the draft EIS is an important step in the citing process as it will help us define the next scope of work for the project," he said.