LINCOLN, Maine — Lower fuel costs and the loss of a major customer will delay until 2017 the expansion into downtown of Bangor Natural Gas’ $7.5 million Lincoln pipeline, officials said Tuesday.
The shutdown of the Lincoln Paper and Tissue LLC mill on West Broadway last month generated speculation that the expansion was threatened by the loss of such a large customer, the anchor to the West Broadway gas line installed in 2014.
Town and Lincoln Paper officials had said the pipeline system is the cornerstone to a plan that would keep the mill competitive and solidify Lincoln’s standing as a service hub and business magnet for northern Penobscot County.
But Andrew Barrowman, BNGs’ manager of sales and marketing, said that while the loss of the mill didn’t help, RSU 67 officials simply couldn’t justify at present the cost of converting to natural gas the oil-burning boilers at the three schools that would anchor the next phase of gas-line construction onto Main Street and beyond.
“We’re talking with each other every other month,” Barrowman said Tuesday of school officials. “It’s quite an investment for the schools to convert their boilers. Right now with what they are paying for oil, it’s almost an even split, so I agree with them that we should sit tight and look at the budget for 2017.”
Bangor Gas officials also told school leaders that the loss of LPT revenues has left them short of the cash needed to extend their gas lines from West Broadway to Main Street, said David Ham, RSU 67’s facilities director.
His cost estimates are incomplete, but Ham said that one comparable school system, Bucksport’s, paid about $100,000 each to convert three school boilers about three years ago. RSU 67 has three schools in Lincoln ― Ella P. Burr Elementary, Mattanawcook Junior High and Mattanawcook Academy ― serving the towns of Chester, Lincoln and Mattawamkeag.
Ham hopes to have cost estimate studies done by mid-January, he said Tuesday.
Natural gas prices right now equal about $1.79 per gallon of No. 2 heating oil, Barrowman said. According to maineoil.com, the average per-gallon cost in the mid-Maine Bangor area on Tuesday was $1.69. Cash prices in that region run from a low of $1.55 to $1.89 per gallon.
The Nasdaq listed the per-barrel cost for crude oil at $36.18 on Tuesday and gasoline cost $2.10 per gallon on average at the pumps in Maine, according to mainegasprices.com.
Ham said he wouldn’t be surprised if the conversion did occur in summer 2017.
“We haven’t said, ‘No, we aren’t going to do it.’ We are gathering information right now and eventually Bangor Gas will provide us with some kind of proposal for us to consider. We will either jump on board with it or say, ‘No, thanks,” Ham said.
School officials are working on a $700,000 upgrade of the academy roof to be done next summer, if all goes well.
Bangor Natural Gas finished Phase One of its expansion into Lincoln a year ago by installing two pipelines that run into Lincoln from a spur off a natural gas pipeline in nearby Mattamiscontis Township. That main pipeline once ran jet fuel from Searsport to the Loring Air Force Base in Limestone.
Of the two Lincoln pipelines, one is a steel, high-pressure line that delivers natural gas from the pipeline connection near Interstate 95 to Lincoln Paper and a natural gas substation near the tissue manufacturer. The other is a smaller plastic line that sends gas under lower pressure from the substation to the businesses and residences along West Broadway.
Fifteen businesses have signed up for natural gas along West Broadway, Ham said.
Bangor Gas officials figure that market conditions will correct themselves enough by the third quarter of 2017 so that pipeline expansion can resume. An expansion of a pipeline network in Boston should be finished by then to allow gas delivery prices to drop, Barrowman said.
He doesn’t foresee the loss of LPT as fatal to the gas line. The infrastructure is installed. The logical move for his company is to expand its customer base to offset the loss of the mill, he said.
Present heating oil and natural gas market conditions are “good for the public because the price stays consistently lower but it hurts the gas utility because we are not transmitting as much gas as we should,” Barrowman said. “Obviously, the mill was a big generator for us, but life goes on.”