Maine needs to catch up, take advantage of natural gas, officials say

By Nick McCrea, BDN Staff
Posted April 30, 2013, at 3:43 p.m.

BANGOR, Maine — It’s cheap, it’s proven, it’s under U.S. soil and there’s a lot of it, but Maine has fallen well behind in the natural gas business, state and industry officials said Tuesday.

“We are literally a baby in the natural gas businesses,” Jerry Livengood, general manager of Bangor Natural Gas, said during an Action Committee of 50 event held at Husson University. He said that’s true of both his company and the state as a whole.

Action Committee of 50 is a nonprofit economic development corporation geared toward improving trade and logistics in Maine as a way of attracting and retaining jobs in the region. The committee also backs infrastructure projects, such as the east-west corridor, expansion of rail services and port development to open up shipping opportunities.

Maine is well behind other states in use of natural gas. Nationally, about 60 percent of U.S. households are heated with natural gas, while oil still dominates the Maine heating market, according to Patrick Woodcock, director of Gov. Paul LePage’s energy office. Just 5 percent of Mainers use natural gas to heat their homes.

There is an estimated century’s worth of natural gas in U.S. shale deposits, federal and industry officials have said, including a vast supply in Marcellus Shale, which stretches from Central New York, through Pennsylvania and Ohio, and into West Virginia. The gas is extracted from the rock through a controversial drilling process called hydrofracking, in which a hole is drilled vertically down to the rock and then turns horizontally to access more of the deposit. A mixture of water, sand and chemical slurry is pumped into the hole to extract the gas and draw it to the surface, a process that has drawn some opposition in parts of the country where natural gas is prevalent because of health and environmental concerns.

It’s getting that gas to Maine that becomes the problem. There is plenty of supply, but Maine’s two current interstate pipelines aren’t providing enough capacity to the Pine Street State, said Thomas Welch, director of the Maine Public Utilities Commission.

Getting natural gas to Maine markets can be expensive, Welch said. In winter months, when demand for natural gas is high in places such as Boston, the price in Maine tends to rise because Marcellus Shale gas is sent to population centers to meet demand. In the winter of 2012, the price of natural gas narrowly avoided surpassing the cost of heating oil.

Still, state officials say it’s a better alternative than relying on increasingly unstable and depleting foreign and domestic oil supplies. More infrastructure to bring natural gas across Maine borders from New York and Canada would help prevent increases based on market demands, Welch said.

Woodcock said the average Mainer spends about $250 per month pumping gasoline into their vehicle and another $250 per month on heating oil.

“We’re approaching about 10 percent of disposable income,” Woodcock said. “You just think about how much of a barrier this is for households.”

“This is all about money,” Welch said. “This is about how Maine can drive down its energy costs in a way that will be helpful.”

Maine’s four natural gas companies are growing. Bangor Natural Gas, for example, hooked up 1,000 new homes and businesses in 2012, but is still under 5,000 total customers, according to Livengood. The company plans to expand service to Bucksport and north to Lincoln and Medway.

Xpress Natural Gas has its niche delivering compressed natural gas by the truckload to isolated customers who don’t have access to a pipeline. One of its newest customers is Great Northern Paper in East Millinocket.

Maine Natural Gas, a subsidiary of Iberdrola USA, is building a 10.5-mile, 12-inch-diameter steel pipeline to serve the Kennebec Valley area. Summit Natural Gas also has plans to expand to the Kennebec Valley, building an 88-mile transmission pipe, to provide Sappi Fine Paper North America of Skowhegan and Huhtamaki of Waterville to natural gas. Other residents and businesses in the region will be allowed to hook up to these lines.

Natural gas also carries implications for transportation. The U.S. has about 112,000 vehicles running on compressed natural gas, mostly in bus fleets. That’s in stark comparison with Iran, which has nearly 3 million compressed natural gas-powered vehicles on its streets, said Livengood, who drove a Bangor Natural Gas natural gas vehicle to the event. His company announced plans in late 2012 to build the state’s first public compressed natural gas fueling station. Livengood said it costs about half as much to fuel a vehicle with natural gas as it does to fill it with gasoline.

Several bills before the Maine Legislature are aiming to shape the future of Maine energy policy, reduce energy costs and advance alternatives to oil.

LD 1425, An Act to Create Affordable Heating Options for Maine Residents and Reduce Business Energy Costs, originated with the LePage administration. It would divert some revenue to the Efficiency Maine Trust, which is dedicated to helping Mainers’ weatherization and energy-efficiency projects in their homes and businesses, to fund conversions from oil to cheaper forms of heating fuels such as wood pellets, natural gas and propane. It also would authorize the Public Utilities Commission to use some of the trust’s revenue to provide rebates of electricity expenses for targeted businesses and industries. The bill does not specify how much revenue would be diverted nor which businesses or industries it would benefit.

Woodcock said it costs about $3,000 to retrofit the average Maine home to use natural gas heat. That’s an initial cost many Mainers can’t afford, he said, despite the fact that energy savings typically pay for the new equipment and installation in about two years.

Another bill, LD 1187, would establish a three-member Maine Energy Cost Reduction Authority, which would be able to enter into energy cost-reduction contracts with natural gas generators by selling capacity in natural gas pipelines. The authority also would be able to designate corridors for pipeline construction and, if needed, use eminent domain to reserve a corridor for pipeline construction.

The other bill, LD 1262, would give the state authority to issue bonds — through the Finance Authority of Maine — to buy additional natural gas pipeline capacity and assist other states in pipeline projects that could benefit Maine.

Even if a contract were signed tomorrow to build a new natural gas pipeline to Maine, it would still take about four years to complete, according to Welch.

“When you can see something that should happen and it’s not happening, that’s frustration,” Welch said.

http://bangordailynews.com/2013/04/30/news/bangor/maine-needs-to-catch-up-take-advantage-of-natural-gas-officials-say/ printed on August 27, 2014