Now free of its oil/natural gas exploration/production (E&P) business after selling it late last year (see Daily GPI, Nov. 3, 2015), Bismarck, ND-based MDU Resources Group’s senior executives are touting the growth in the utility holding company’s substantial stake in the construction services/materials business.

The construction materials/services businesses for MDU at the end of the third quarter had a combined business backlog of $1.1 billion

In a 3Q2016 earnings conference call last week, CEO David Goodin reported solid profit growth in the quarter that included 9% and 53% earnings growth for construction materials and services, respectively. MDU has now streamlined its business lines into two primary areas — construction materials/services and multi-state regulated energy delivery businesses, including a series of distribution utilities.

Construction materials reported record 3Q2016 earnings of $69.5 million, slightly above the $68.8 million earnings for the same period last year. The business saw higher construction margins with increased construction activity in the Pacific Northwest. Backlog was up 9% in the quarter to $580 million, Goodin said.

Construction services’ profits were $7.2 million for the quarter, an increase of $2.5 million over the 3Q2015. The backlog for services increased 13% to $518 million.

As part of energy delivery, MDU’s pipeline and midstream business was back in the black, slashed its operating costs, and boosted earnings from storage. In the quarter, the unit began the permitting process with federal regulators for the $60 million, 38-mile Valley gas pipeline expansion project in eastern North Dakota and western Minnesota (see Daily GPI, June 14).

Construction of the pipeline, which eventually can be expanded beyond its initial 40 MMcf/d capacity, is expected to begin and be completed in 2018.

In addition to new pipeline enhancements and compression stations that have been completed this year or will be early next year, Goodin said that as a result of lower natural gas prices and wider seasonal pricing spreads, MDU’s interruptible gas storage services injections increased the first half of this year.

“Storage balances are up some 83% this year compared to 2015,” Goodin said.

In response to questions from analysts, the heads of the MDU construction sector businesses said the private-sector growth varies among regions nationally with the strongest growth for materials in the West, specifically the Pacific Northwest, California, Alaska and Hawaii. With the low commodity price environment in the energy sector, equipment sales and rentals have been slow, but that is expected to accelerate in the months ahead, according to Jeff Thiede, CEO of the MDU construction services group.

For 3Q2016, MDU reported earnings of $88.2 million (45 cents/share), compared to $73.7 million (38 cents) for the same period in 2015.