An additional 2.5 Bcf of natural gas storage in the Northwest is now under construction as custom, very fast storage dedicated to local power generation needs, NW Natural senior executives said during an earnings conference call.

While storage demonstrated a turnaround financially last year, contributing 16 cents/share to Portland, OR-based NW Natural’s earnings, compared to 1 cent/share the previous year, the gas-only utility also began an exclusive storage expansion effort in conjunction with the region’s major electric utility, Portland General Electric (PGE).

CEO David Anderson called the North Mist Storage Field expansion “a key growth initiative” as part of the utility’s steady build up of margins and customer growth last year. Total customers increased by more than 10,000 and margins grew by more than $5 million, Anderson said.

The Northwest economy, particularly in the Portland metropolitan area, continues to be strong in both employment and housing growth, said Anderson, adding that the region’s 3.3% employment growth was the highest in the nation.

In addition to the $128 million North Mist storage expansion for PGE, NW Natural also is in the midst of refurbishing and upgrading two liquefied natural gas (LNG) storage facilities in Portland and along the Pacific Coast at Newport, OR. A $25 million upgrade ongoing at Newport is slated to be finished next year, and the $10 million makeover at the Portland plant will continue through 2018, Anderson said.

Anderson called the North Mist expansion “one the most significant projects in our company’s history,” citing the unprecedented agreement with PGE last year. “As Oregon moves toward more renewable electricity, NW Natural will support the grid’s reliability by providing innovative, no-notice storage service that can be drawn on at any time,” Anderson said.

The expansion involves the creation of a new reservoir and 13-mile gas pipeline. The utility drilled the first well and began constructing the main well pad for the project in 4Q2016. This year the other wells will be completed, along with a new compressor station, according to Anderson. “Finally, in 2018 we plan to inject gas and test the facility, prior to having it in service for the winter of 2018-2019. When we place the facility in service, it will be immediately rate based on a tariff schedule already approved by the Oregon Public Utility Commission.”

Anderson stressed the uniqueness of the North Mist project and its “segregated” operations for PGE. Currently, Mist is a 16-Bcf capacity underground storage facility in which 5 Bcf is dedicated to interstate services for customers such as PGE, but those are more traditional and relatively slow gas storage services.

“The new project is real-time storage with its own dedicated pipeline and a compressor station, and with it PGE will be able to follow the hydroelectric load much quicker,” Anderson said. “It will act almost exactly like a pipeline with no injection or withdrawal delays whatsoever; this will be very fast storage service.”

For 4Q2016, NW Natural reported net income of $28.2 million ($1/share), compared with $29.7 million ($1.08) for the same period the previous year. For all 2016, it reported net income of $58.8 million ($2.12), compared to $53.7 million ($1.96) for all of 2015.