After bucking a tough merchant natural gas storage market, Portland, OR-based NW Natural has thrown in the towel, selling its majority interest in the Gill Ranch storage project in Northern California near Fresno to seasoned private equity investors.
During a 2Q2018 earnings conference call, CEO David Anderson said the sale of NW Natural's 75% interest in the 15 Bcf capacity underground storage facility to investment partnership eCorp Storage is expected to be completed next year.
"This quarter we took significant steps to focus all of our efforts on regulated earnings streams, and we are happy to find a buyer that excels in this environment and is an experienced gas storage operator with a laser focus on safety," Anderson said.
Dating back to 2007, as a joint venture with California utility Pacific Gas and Electric Co., Gill Ranch turned out to be mostly problematic, even as it pursued the successful expansion of its North Mist storage facility in Oregon. Two years ago, Gill Ranch turned a profit, but market conditions generally have not been favorable for merchant operations.
CFO Frank Burkhartsmeyer said the company has not disclosed earnings numbers on the storage operations in the past, and the data was not disclosed as Gill moves toward discontinued operations.
After close collaboration for years by NW Natural and Portland General Electric (PGE), a unique natural gas storage service is scheduled to begin in December, according to Anderson. He said the $132 million addition of 2.5 Bcf capacity exclusively for gas-fired electric generation is in the process of finishing the compressor station followed by final injections before the start of service to PGE.
"We're in the crucial final stages and our team is driving hard to make sure we meet our year-end goal," Anderson said. He said added capacity is contracted to PGE for an initial 30-year period with extensions available for another 50 years.
For 2Q2018, NW Natural reported a net loss of $1 million (minus 3 cents/share), compared with profits of $2.7 million (10 cents) for the second quarter of 2017.