Gill Ranch Storage LLC, a unit of Northwest Natural Gas Co. (NWN), and a PG&E Corp. (PCG) unit agreed to develop a new underground natural gas storage facility at Gill Ranch near Fresno, Calif.

Financial terms weren't disclosed.

Pacific Gas and Electric Co., a unit of PG&E, California, and Northwest Natural, of Oregon, said the project will provide about 20 billion cubic feet of underground gas storage once the initial phase is completed, likely in 2010.

Gill Ranch Storage and Pacific Gas will each own a portion of the overall project, holding undivided interests in the proposed facility.

The companies said each owner will market its own share of storage capacity in the project.

The project consists of the storage field, a pipeline connecting the storage field to Pacific Gas' gas transmission system, compression and other facilities.

The companies said Gill Ranch Storage will serve as initial operator of the storage facility.