Natural gas poised to expand to communities far removed from pipeline

Posted Dec. 21, 2012, at 4 p.m.

ELLSWORTH, Maine — Municipalities, businesses and even homeowners will be happy to know the market for natural gas in eastern Maine, and beyond, is about to get a lot more competitive.

For years, the most practical way for a community to bring natural gas — renowned as a low-cost alternative to crude oil or electrical heat — to its residents and businesses was to extend a pipeline from the existing Maritimes and Northeast Pipeline. That’s fine for communities near the line, but access grows exponentially more expensive the farther away the customer.

Now, a Massachusetts-based company is poised to extend natural gas access to municipalities and industries far removed from the pipeline by delivering compressed natural gas by truck.

Xpress Natural Gas won approval from the Maine Public Utilities Commission to build a compressed natural gas facility in Baileyville in Washington County. The company said that from that point, truckloads of compressed natural gas can be delivered to towns and businesses.

“This holds the promise of opening up gas for a lot of Maine,” said Matt Smith, executive vice president of sales and marketing for XNG. “Compressed gas is a solution for places where it’s not cost-effective to run a pipe.”

Compressed natural gas is essentially the inverse of liquid natural gas. With the liquid product, gas is cooled to cryogenic levels, lower than minus-238 degrees, but is pressure neutral, and expensive equipment is necessary to use the fuel.

Compressed gas is stored at room temperature, but under high pressure. And there’s no need for the costly machinery required to store and use its frigid counterpart.

“It’s basically like a large scuba tank,” Smith said, noting the technology has been used in Maine for years, including the Metro bus system in Portland. His company has been providing compressed natural gas by truck to paper and tissue mills in Maine for about two years.

Smith said the company is proud of its record of success with the mills, which require about five times more natural gas than an average Maine town.

“I think our ability to stand up a paper mill without tripping is what will give towns the confidence that we could bring up their system without disruption,” he said Friday.

Bangor Gas Co. — which currently provides natural gas to parts of Bangor, Brewer, Veazie, Orono, Old Town and other Bangor-area communities — also plans to build the state’s first public compressed natural gas station on Maine Avenue in Bangor.

But that facility is of a much smaller scale than the one being built in Baileyville. The Bangor station, which will be open to the small number of private vehicles that run on natural gas, will be used mostly to fuel the city and company’s fleet of natural gas-powered vehicles.

“The facility in Bangor is a lower-pressure, smaller scale,” said PUC Chairman Tom Welch. “It does appear that the XNG facility is a little more expansive in what markets it can serve.”

Bangor Gas Co. was closed Friday, and representatives were unavailable for comment.

Smith said the company is engaged in preliminary conversations with about a dozen municipalities in Maine interested in trucked natural gas. A town opting for this delivery method would build an isolated pipeline to service its community, which would be replenished by XNG in regular deliveries. Smith claimed trucked natural gas will save the average customer 25-30 percent compared to fuel oil.

There are no plans in the works, yet, to deliver compressed gas to isolated residential customers, Smith said, because it’s not yet cost-effective for the company.

But there’s already a growing interest from some towns in Hancock County for natural gas solutions that don’t involve a pipeline. Bucksport, after years of fruitless negotiations with Bangor Gas to extend a pipeline into town, admitted recently that it is “pursuing other options” if plans with the Bangor utility continue to flounder. One of those options is XNG, said Town Manager Mike Brennan on Friday.

And Ellsworth is in the early stages of exploring possibilities for bringing natural gas to the city, which Economic Development Director Micki Sumpter said is crucial to attracting businesses. The city’s go-to engineering firm, Woodard & Curran, gave a presentation on natural gas at the last City Council meeting. Compressed natural gas was one option on the table.

Sumpter said she suspects that with Ellsworth’s municipal, residential and commercial core so far away from the pipeline, trucked natural gas may be the most cost-effective option.

Xpress Natural Gas still must get one more round of PUC approval before it can begin filling trucks, but Welch said he didn’t expect any regulatory hiccups. If everything goes according to plan, the company says it could have its first off-pipeline municipal operation up and running next year.

Welch, the PUC chairman, said that trucked natural gas may not be competitive in areas already served by the pipeline. A trucking infrastructure will always be slightly more expensive than pumping gas directly into a home or business, if both options are available.

But the option of trucking will surely be alluring to potential customers far from the pipeline.

“This does introduce some competition,” he said. “It’s very encouraging to see the creativity people are bringing to the market in Maine.”

Follow Mario Moretto on Twitter at @riocarmine.

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