Additional natural gas storage capacity in the Pacific Northwest to serve electric generation plants is on track to be in service for the winter of 2018-2019, according to NW Natural CEO David Anderson, who updated the project during a 3Q2016 earnings conference call on Wednesday.

The bulk of the estimated $128 million cost of the Mist Gas Storage project expansion will come next year. NW Natural thus far has spent $14 million since getting the formal agreement with Portland General Electric (PGE) to proceed with the gas storage expansion tied to PGE's expansion of its gas-fired Port Westward generation plant (see Daily GPI, Oct. 3).

Storage for PGE has become more of a key component with the advent of more wind power in its portfolio, which prompts the need for more gas-fired generation to smooth out wind's inherent variability. Thus, NW Natural and PGE have an agreement on a long-term, no-notice underground storage deal.

NW Natural CEO David Anderson calls the North Mist Gas Storage project "one of the most significant" expansions in his gas-only utility's history, noting that the underground storage field has been integral to the utility since its start up in 1989. "The expansion underscores the worth of the project in supporting Oregon's move to 50% renewables by 2040," Anderson said.

The northern section of Mist would be expanded to include a new 2.5 Bcf reservoir, along with an added compressor station with design capacity for nearly 120 MMcf/d. A 13-mile pipeline will be built connecting the PGE generation plants at Port Westward and Beaver, near Clatskanie, OR.

Anderson said NW Natural will spend an additional $8-$10 million on the expansion this fall, constructing well pads, ordering equipment and purchasing materials for the pipeline. Next year the bulk of the money -- $80-90 million -- will be spent as construction ramps up.

Along with drilling new wells, NW Natural’s contractor will be completing injection and withdrawal wells, building and testing the new compressor station and laying the new pipeline.

"In 2018, if all goes well, we expect to inject base gas into the facility," Anderson said.

For 3Q2016, NW Natural reported a net loss of $8 million (minus 29 cents/share), compared with a net loss of $6.7 million (minus 24 cents/share) for the same period in 2015, reflecting the impact of decreased heating load in the summer months.