Portland, OR-based NW Natural said Tuesday its sometimes struggling merchant natural gas storage operations in Northern California were back on the profitable side in 2Q2016, while the expansion of its utility storage field in Oregon to serve a major gas-fired electric generation complex is on track for 2018.

Those were the highlights from a conference call in which new CEO David Anderson reported 2Q2016 earnings of $2 million (7 cents/share), compared to $2.2 million (8 cents) for the same period last year.

After showing net income of $1.4 million for its share of the Gill Ranch storage facility in California and other storage operations, CFO Greg Hazelton said future contracting at the merchant storage facility, which tends to be short-term and seasonal, “will be subject to the impacts of the California marketplace” following the shutdown of the Aliso Canyon storage facility.

For NW Natural’s Mist storage facility in Oregon, there is “sustained demand,” according to Hazelton, along with the ongoing plans to expand the facility by 2.5 Bcf to accommodate Portland General Electric Co.’s (PGE) expanded gas-fired Port Westward generation plant along the Columbia River northwest of Portland (see Daily GPI, Aug. 5, 2015).

“We have some long-term contracts there and they can fluctuate with market demand over time, so Mist doesn’t tend to be volatile year over year,” Hazelton said. “Gill Ranch has mostly contracts that we renew annually, along with a few multi-year deals.”

With the emphasis on short-term contracts for the California facility, Hazelton said future deals could be impacted by what happens with Southern California Gas Co.’s Aliso Canyon storage facility (see Daily GPI, May 16), weather and other factors.

Without tying it directly to future storage, Anderson emphasized the growing robustness in Oregon’s economy. “There are no guarantees, but there are all positive indicators out there,” he said.

Anderson said NW Natural has the Oregon Siting Council permit for the storage field expansion, and in May it released a request for proposals for contractors for the $125 million project, which is designed to provide no-notice storage services to PGE’s expanded Port Westward gas-fired complex. The company is still evaluating final bids that were gathered in June, he said.

“We intend to finalize the contractor selection soon,” said Anderson, who assumed his new role heading the company last Friday, succeeding Gregg Kantor, who retired after holding the top job since 2009.

The Mist expansion will involve developing a reservoir to provide the added 2.5 Bcf of storage, a compressor station to increase injection/withdrawal capacities by 120 MMcf/d, and a 13-mile pipeline connected to the generation plant.

NW Natural is now updating all of its cost estimates and financing plans for the project, and it is working with PGE to obtain a final notice to proceed with the project from state regulators, Anderson said.

“We anticipate getting that notice this fall, after receiving additional permits,” he said. “Achieving that milestone will allow the project to remain on track for an in-service date during the winter of 2018.”