A proposed 20 Bcf underground natural gas storage facility in Northern California drew strong interest in a recently completed open season, said its two principal backers, a subsidiary of Portland, OR-based Northwest Natural Gas Co. and San Francisco-based Pacific Gas and Electric Co. (PG&E).

The partners said they will now file to be permitted by the California Public Utilities Commission (CPUC). The proposed Gill Ranch storage facility would be about 25 miles west of Fresno in the northern end of the state's vast central valley. The storage field would be interconnected with PG&E's backbone transmission pipeline system.

Gill Ranch Storage LLC is a subsidiary of Northwest Natural, and it proposes to develop the new CPUC-regulated storage operation in conjunction with PG&E. The $150 million storage facility is slated to be developed by late 2010 by Gill Ranch, which estimates that there will be $10 million in various project permitting and development investments in the project during 2008.

Northwest's Gill Ranch initially will operate the storage facility, and it will own 75% of the capacity in its first phase, with PG&E holding 25%.

"Gill Ranch and PG&E will each own a portion of the overall project, holding undivided interests in the proposed facility," the two companies said in a joint announcement. "Each owner separately will market its own share of storage capacity in the project, which includes the storage field, a 25-mile pipeline to the PG&E utility transmission pipeline system, compression equipment and other facilities."

Current plans by the two companies call for a filing to the CPUC in the midpart of this year, contracts signed with major storage customers in late 2008, and CPUC approval for the project by mid-2009. Construction would then begin in late 2009.

"We were extremely encouraged by the level of interest we received from potential customers toward this new storage facility, which was considerably greater than the project's capacity and clearly confirms the strong need for storage in this region," said Keith White, Gill Ranch president. "Given the strong response, we will take the next step of filing for a permit and proceed with development."

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