April 06, 2020
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Lincoln mill bankruptcy could complicate Bangor Gas expansion

Nick Sambides Jr. | BDN
Nick Sambides Jr. | BDN
Lance Dionne (right) and Tim Williams of Sullivan and Merritt Constructors work on a low-pressure natural-gas pipeline on West Broadway in Lincoln in this August 2014.

The bankruptcy of the Lincoln Paper and Tissue mill raises a new variable in Bangor Gas’ expansion plans in town, though a company spokesman said planning is moving ahead as normal.

“Right now, we’re just waiting to see how everything will pan out through the bankruptcy,” Andrew Barrowman, the company’s director of sales and marketing, said Tuesday.

The company on Tuesday afternoon submitted an objection to Lincoln Paper and Tissue’s arrangement to expand its credit from Siena Lending Group, a deal that would give the lender superpriority in claims to the mill’s accounts and property, up to $6.6 million.

The mill argues the money is required to preserve it as a going concern until a buyer can be identified. Creditors, including Bangor Gas and the Finance Authority of Maine, argued Tuesday the deal would interfere with their rights to collect utility and loan debts.

Barrowman said the company continues to evaluate its expansion plans as if the mill were to continue operating. The owners of the mill said Monday that they expect to sell it at a bankruptcy auction within 45 days, which would have a bearing on Bangor Gas’ plans.

If the mill stops operating, Barrowman said, the broader economic effect on business could mean fewer customers in the area.

The company has begun work on Phase Two of its expansion plan, connecting one business on River Road and 11 businesses on West Broadway to Phase One gas lines installed between the Chester town line and the Lincoln mill. The $7.5 million gas pipeline to the Lincoln mill was completed last year.

“We just need to wait and see how that all pans out and see how that affects the expansion moving forward, but at this point we’re evaluating that as if the mill was up and running,” Barrowman said. “There are too many unknowns at this point.”

Gov. Paul LePage decried energy costs as hastening the demise of the Lincoln mill. Barrowman said he thinks the mill’s connection to natural gas lines stands to entice potential new buyers.

Pipeline constraints at the regional level raise the price of natural gas in New England above prices in other parts of the country, but Barrowman said pipeline expansions set to come online in the next few years stand to chip away at that price difference.

“When those new pipelines come online, then the market will correct itself on volatility in the pricing for us in Maine,” Barrowman said.

Houston-based Spectra Energy has approved expansion projects of existing lines in southern New England and has plans to connect its Algonquin system to the Maritimes & Northeast Pipeline that connects New England and New Brunswick, traveling through Maine.

 


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