So far its effort to reach outside the regulated utility structure with a new natural gas storage field in Northern California is not paying off for Portland, OR-based NW Natural, but CEO Gregg Kantor expressed confidence that things will turn around during a conference call Wednesday announcing second quarter earnings that were down quarter over quarter.
After taking a one-time $4.4 million after-tax charge related to the repeal of Oregon’s utility tax ratemaking law, NW Natural reported net income for the second quarter of $2.2 million, or 8 cents/share, compared to $6.9 million, or 26 cents/share, for the same period last year. For the first six months this year, profits were $42.9 million, or $1.61/share, compared with $50.4 million, or $1.90/share, for the first half of 2010.
Nonutility natural gas storage contributed $1.3 million to earnings in the second quarter, compared to $2.2 million in the same period last year, according to CFO David Anderson. Net operating revenues were about $7.2 million from storage, he said.
“These results primarily reflect first year operations at our Gill Ranch storage facility in California, including start-up operations, depreciation and continued low storage prices in the state, and a decrease in optimization revenues at the company’s Mist storage operations in Oregon,” said Anderson, noting that 7% higher operating/maintenance expenses in the quarter were primarily due to the Gill Ranch facility start-up costs.
“Storage values remain weak,” according to Kantor. “Those conditions created less-than-ideal conditions for the start of our Gill Ranch facility in California.”
Nevertheless, Kantor said his company is continuing to “make progress on the commercial side,” and he likes the way the project is operating. “Less than a year after completing construction we have contracted 70% of our available 15 Bcf capacity and we committed the rest of the capacity to our optimization partner [Pacific Gas and Electric Co.].”
Gill is fully staffed and should be fully used by its next injection period in the spring next year, Kantor said. At the utility-run Mist field in Oregon operations are “solid,” he said.
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