SOUTH PORTLAND, Maine — Dead River Co. is partnering with Xpress Natural Gas to make compressed natural gas, or CNG, available to commercial customers in Maine for the first time using cutting-edge technology that’s new to North America, according to company officials.
Boston-based Xpress, which was founded in early 2011 and currently trucks liquified natural gas to two paper mills in Maine, has built Maine’s first CNG compression station, or “mother facility,” in Baileyville, according to John Nahill, CEO of Xpress.
CNG is easier to store and transport via tractor-trailers, and can reach customers in areas that aren’t currently served by traditional pipeline infrastructure. The CNG comes off the Maritimes and Northeast pipeline in Baileyville, where it is compressed at Xpress’ “mother facility,” and then trucked to clients, Nahill said.
While Xpress will continue to serve its industrial customers with LNG, Dead River Co. will sell and supply CNG from Xpress’ terminal to commercial and institutional customers that typically use at least 75,000 gallons of heating oil annually.
Dead River, founded in 1909, provides a wide portfolio of energy options to clients throughout Maine, including oil and propane. In October, the company also began offering electricity.
Natural gas is an attractive energy option because it’s much cheaper than heating oil, which currently costs on average $3.74 a gallon in Maine. But its availability is limited. Currently, the only businesses in Maine that have access to natural gas are those in the service territories of the three existing natural gas distributors: Bangor Gas Co., which serves Bangor, Brewer, Old Town, Orono and Veazie; Unitil, which serves customers in southern Maine, including Greater Portland, Kittery, Sanford, Lewiston and Auburn; and Maine Natural Gas, which serves Gorham, Westbrook, Windham, Brunswick, Topsham, Freeport and Pownal.
Using CNG will save customers between 25 and 45 percent, Nahill said Tuesday.
“With the number of commercial clients in this market, we didn’t have the bench or the capacity or the capability to go after that market and we needed someone who knows how to service that market, understands that segment’s needs, and Dead River has been doing that for over 100 years, so they were a very logical partner,” Nahill said.
Preceding the partnership, Xpress has already signed up several clients for its CNG service, including Great Northern Paper’s East Millinocket mill, which is investing $1.5 million to replace its oil burner with one that will burn natural gas; The Aroostook Medical Center in Presque Isle; and Naturally Potatoes in Mars Hill.
The payback of transitioning to natural gas tends to take less than a year, Nahill said.
For example, The Aroostook Medical Center in Presque Isle is spending $300,000 to convert its 89-bed A.R. Gould Memorial Hospital to run on CNG. Once the conversion is complete, which it’s expected to be by early spring, the organization estimates it will save as much as $500,000 in annual heating costs, according to Andy Soucier, a hospital spokesman.
“It gives us immediate savings and there’s really no energy conversion that would pay for itself so quickly,” Soucier said.
Nahill said the GNP mill in East Millinocket is looking at savings around 40 percent on energy costs.
Moore said CNG will offer Maine businesses more inexpensive energy options and make them more competitive.
“Our elected leaders talk about all the time how do we make this state competitive, how can we stay in the game with rest of country given the extraordinary energy needs we have?” Moore said. “And I think this represents a major step toward making us more competitive so we can keep these places in business and attract businesses and grow the businesses we have here in Maine.”
Going forward, Moore hopes to add between 10 to 25 clients within the service area that will be served by the Baileyville station by the end of the first year. As interest grows, Xpress plans to build additional compression stations to spread service throughout the state.
While this will be a first for business customers in Maine, the technology being used is also a first for North America, Nahill said. While supplying CNG by truck is common in China, Nahill said the company’s operations in Maine are unique on this side of the globe.
“CNG is more prevalent in Asia, but in North America this really is a first, and it’s kind of cool that it’s happening in northern Maine,” he said.
While Xpress is based in Boston, the majority of its operations are in Maine, including 18 of its 22 employees, Nahill said. The company got its start supplying LNG to the Woodland Pulp mill in Baileyville, which since has been connected directly to the Maritimes and Northeast pipeline. Xpress now supplies LNG by truck to Lincoln Paper & Tissue and the paper mill in Madison. Nahill said the company has invested $20 million in its Maine operations.
Correction: An earlier version of this story incorrectly stated that the Woodland Pulp mill now runs on compressed natural gas. The mill actually is connected directly to the Maritimes & Northeast pipeline.