With profits steady and local economic growth picking up, Portland, OR-based NW Natural senior officials said Friday they remain bullish about the California natural gas storage market longer term. They spoke during a conference call reporting essentially flat 1Q2014 profits.

The company’s gas-only utility — the state’s largest — NW Natural reported net income for 1Q2014 of $37.9 million, or $1.40/share, a near-mirror image of the same quarter last year ($37.6 million, or $1.40/share). “We are executing well on many fronts,” said CEO Gregg Kantor.

Kantor said that the growing renewable energy dependence in California, along with the state’s resurgent economy, should boost the market for gas storage in coming years.

“Particularly in California, I believe the market for storage is being driven by the state’s very aggressive goals related to renewables,” Kantor said. “We have heard discussions that [California] may up its [renewable portfolio] goals from 33% to 50%, and they are already zooming in on 33%.”

With the big push in rooftop distributed generation solar, the state is already past the 33% by 2020 goal, according to NW Natural’s latest analysis.

“When you consider not just the utility portfolios, the state is getting more than 33%, maybe as high as 40% in renewables, and that creates this peaking need and the need to backup those renewables when the sun isn’t shining and the wind isn’t blowing.

“That need really puts the spotlight on storage because you’re really focused on the least-cost way of supporting peaking facilities, and having storage to support it rather than pipeline capacity is usually a lot less expensive.”

Kantor said NW Natural’s outlook is for that trend to grow in California, and that storage will increasingly be in demand, not just for the renewables build out, but also in response to the closing of the San Onofre Nuclear Generating Station, and as the economy continues to pick up in the nation’s most populous state.

“We think [this combination] is going to create an environment where storage has an opportunity to be successfully integrated in [the state’s] gas system,” Kantor said. “I am very optimistic about it, and in Oregon we continue to be focused on the Mist Storage facility expansion (see Daily GPI, April 16, 2012) because of the lack of storage capacity overall in the Pacific Northwest.”

The difference in Oregon, Kantor said, is that the storage needs are driven more by electric utility needs, while California’s demand is more market-driven. “I expect this will continue into the future,” he said.