MDU Resources Group Inc. expects to secure a power purchase agreement for its Thunder Spirit Wind Farm expansion in February, after receiving advance determination improvements from the North Dakota Public Service Commission.
During the company's Feb. 7 earnings call, MDU executives discussed several organic growth opportunities for its utility segment, including the wind farm expansion, a 345-kV transmission line and several pipeline expansion projects.
The Thunder Spirit wind project can generate 107.5 MW and will be expanded to a total generation capacity of approximately 155 MW. Expected to go online in late 2018, the project will boost the company's share of renewable capacity in its generation portfolio to approximately 27% from about 22%. Meanwhile, MDU's 160-mile, 345-kV transmission line from Ellendale, N.D., to Big Stone City, S.D., has secured all easements required for construction and is expected to be completed in 2019, the company said.
In the pipeline business, the company anticipates completing two additional expansion projects in 2018: the 38-mile, 16-inch Valley Expansion Project that will deliver natural gas to eastern North Dakota and far western Minnesota; and the 13-mile, 24-inch Line Section 27 project in the Bakken producing area in northwestern North Dakota. The pipeline expansion will increase MDU's natural gas transportation capacity to over 1.8 billion cubic feet per day.
During the presentation, MDU Resources also initiated 2018 guidance of $1.25 per share to $1.45 per share, reflecting normal operating conditions and weather. The company expects to revise the guidance range in the future to reflect impacts of the 2017 federal Tax Cuts and Jobs Act, which lowered the federal corporate income tax rate to 21% from 35%.
On the construction side, the company initiated 2018 guidance for its construction services revenues of $1.45 billion to $1.6 billion. "We are confident of continued opportunities for earnings growth at our construction services segment with a backlog now standing at $708 million at the end of 2017. We certainly see that we have momentum that will carry us into 2018," President and CEO David Goodin said.
MDU also expects to achieve construction material revenues of $1.8 billion to $1.9 billion. "We are well positioned with nearly 1 billion tons of aggregate reserves in strong markets across the country. And we're looking at acquisition opportunities presented by the current market," he said.
