Pacific Gas and Electric Co. (PG&E) and a newly formed unit of Portland, OR-based Northwest Natural Gas Co. jointly announced last Wednesday they are planning to develope a new 20 Bcf underground natural gas storage facility at Gill Ranch near Fresno in the northern end of California’s central San Joaquin Valley.

Northwest’s unit, Gill Ranch Storage LLC, will provide more details on the proposed project when it initiates an open season to assess market interest in the next few weeks. Initial completion of the project is expected in 2010.

Gill Ranch and PG&E plan to file an application for the project with the California Public Utilities Commission (CPUC) in the spring of 2008. The project will require a CPUC permit and an environmental assessment under the California Environmental Quality Act.

The facility will use depleted sandstone natural gas reservoirs more than a mile below the surface, the utilities said. The storage field has the potential to support additional capacity development in the future if market conditions are favorable, they said.

Northwest’s Keith White, vice president for business development and energy supply, said the facility will be located “where additional natural gas storage capacity is needed. It made sense for use to work with PG&E to develop a storage project in the most cost-effective manner.”

White said the project’s being the southernmost of several independent gas storage facilities in the PG&E service territory “offers potential location-related benefits to prospective customers.”

PG&E’s Bob Howard, vice president for gas transmission and distribution, said the utility’s participation in the new storage project will bolster natural gas competition to benefit California’s retail customers. “The project represents an innovative and cost-effective way to expand California’s vital natural gas infrastructure.”

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