Northwest Natural Gas Co. said Friday that the biggest pipeline operator in the Northwest has signed on as a prospective partner in the controversial Palomar pipeline project.
The utility told analysts during its third quarter earnings conference call that it had signed a memorandum of understanding for Williams Northwest Pipeline to become a part owner in the project and to consolidate the respective companies' efforts to build more cross-Cascades gas capacity.
The project is still tentative, but if the companies can drum up enough shippers, their cooperation would breathe new life into a controversial project that has been hamstrung by the bankruptcy of its biggest shipper and fierce opposition among landowners and environmentalists.
NW Natural originally formed Palomar with TransCanada Corp. to build two sections of pipe, one over the Cascades to connect TransCanada's interstate gas pipeline through central Oregon with the utility's gas hub in Molalla; the second to haul gas to Molalla from a proposed liquefied natural gas terminal on the Columbia River.
When backers of the proposed Bradwood Landing LNG terminal on the Columbia River declared bankruptcy in May, Palomar stalled, although NW Natural said it remained committed to the eastern portion of the line.
The bulk of NW Natural's gas supply today is sent through the Columbia River Gorge on a pipe owned by Northwest Pipeline. The utility has long sought an additional cross-Cascades route but has never been able to make the economics work. Likewise, Northwest Pipeline's proposal to build another pipe through the gorge faced similar barriers.
Environmentalists have long opposed Palomar's proposed route, which cuts a wide swath through Mt. Hood National Forest.
In October, Palomar cut a deal with the Confederated Tribe of the Warm Springs Reservation for a right-of-way that would shorten Palomar's route and reduce its environmental impact, NW Natural chief executive Gregg Kantor told analysts Friday. Palomar will hold meetings with regulators in Oregon and Washington early next year to discuss the project, Kantor said.
NW Natural lost $7.42 million, or 28 cents per diluted share, on revenues of $95.07 million, in the quarter ended Sept. 30. That compared to a net loss net loss of $6.73 million, or 25 cents per diluted share, on revenues of $116.85 million,, in the third quarter of 2009.
Results from utility operations are typically low during the third quarter due to reduced use of natural gas in summer months. The company's utility operations recorded a loss of $9.1 million, or 34 cents per share, in the quarter, compared to a net loss of $9.2 million, or 35 cents per share, in the third quarter of 2009.
NW Natural reaffirmed its full year earnings forecast of between $2.50 to $2.75 per share.
The company released earnings before the opening of financial markets. Its shares, traded on the New York Stock Exchange, closed at $49.62, down 47 cents, or 0.9 percent.
Copyright (c) 2010, The Oregonian, Portland, Ore. Distributed by McClatchy-Tribune Information Services.