Natural gas pipeline proposed

Posted: March 9, 2011

Natural gas pipeline proposed

BY LESLIE BRIDGERS Staff Writer

A Portland-based energy firm is proposing to construct a new 56-mile natural gas pipeline from Richmond to Madison, a $70 million project it says would benefit the environment and economic development around the region.

The outfit, Kennebec Valley Gas Company, is seeking tax breaks from 12 central Maine communities and is trying to secure anchor customers to move forward with the project, which it hopes to complete in 2013.

Kennebec Valley Gas Company is a new endeavor of Mark Isaacson and Richard Silkman -- the founders of Competitive Energy Services and Grid Solar, energy firms that are working with Central Maine Power Co. on projects in Portland and in the Midcoast region.

The company would be the fourth in the state to provide natural gas, which is available in greater Portland, Lewiston-Auburn, greater Bangor, the Brunswick area and Kittery, according to the Maine Public Utilities Commission.

Isaacson said he and Silkman formed Kennebec Valley Gas Company in 2010 because they saw a need for another energy option in the region.

"It's the largest population and industrial center in Maine that doesn't have natural gas," he said.

The project would provide a source of energy that's less expensive and less harmful to the environment than oil or propane, according to the company, while also retaining jobs by lowering energy costs for customers, which could include mills, shopping malls, hospitals and colleges.

The U.S. Energy Information Administration projects that this year's average heating fuel costs will be about $8 per million Btu for natural gas, $22 for oil and $29 for propane. In 15 years, the projections say, those prices will rise by $1 for natural gas and about $5 for oil and propane.

Waterville City Manager Mike Roy said he'd like to see natural gas available in the region, but would strongly discourage the City Council from approving a tax break to make it happen.

"Until we learn a lot more, it's hard to say how important this is from an economic development standpoint," he said. "We're excited that there's another energy alternative. How much of a difference it makes is still a question."

The gas company presented its proposal to local officials at a meeting Thursday hosted by the Kennebec Valley Council of Governments.

"There was a considerable amount of interest in the idea," said Ken Young, executive director of KVCOG.

Oakland Town Manager Peter Nielsen said he and two town councilors attended the presentation and called the project "an interesting concept."

"There's still a lot to be ironed out," Nielsen said, but added that "there's no obvious downside to pursuing this further."

Young said the project's developers have stated they would need tax increment financing arrangements in order to move forward, but didn't offer specifics about the kind of breaks they're looking for -- other than that they'd like the agreements to be similar in each affected municipality.

KVCOG has offered to facilitate negotiations regarding tax-increment financing between the gas company and the communities through which the new pipeline would run. Young said he's asked the 12 communities to advise him by next week whether they'd like to participate in negotiations.

Officials from Augusta will be at the table, said Assistant City Manager Ralph St. Pierre. "We think it's an interesting project and look forward to getting natural gas into Augusta," he said.

In addition to negotiating tax agreements with the towns and cities, Kennebec Valley Gas would need to secure enough large commercial or industrial users of natural gas to make the investment worthwhile.

Though Isaacson declined to name specific companies or organizations, he said, Kennebec Valley Gas was talking to "all of the major users" in the area.

Young suggested those customers could include the Sappi mill in Skowhegan, Thomas and Colby colleges in Waterville or the Maine State Capitol complex.

Though the state would be interested in switching from oil to natural gas, it couldn't sign onto the project up front, said Betty Lamoreau, acting director of the Bureau of General Services. By state law, she said, "we would need to competitively bid."

Waterville-based Huhtamaki, which manufactures disposable paper and plastic products, could become one of the first customers.

"We're definitely very interested in natural gas," said Ray McMullin, manager of the plant, which currently uses oil.

McMullin said the company has a factory in Indiana that uses natural gas and its energy costs are much lower.

"It's also much cleaner, so it would be advantageous from a maintenance perspective as well," he said.

It's not the first time McMullin said he's heard talk of a natural gas pipeline in the area.

"The problem has always been getting enough anchors," he said.

According to Young, when the Maine portion of the Maritimes and Northeast natural gas pipeline was built in the late 1990s, there was a plan to construct a spur that would run east of the Kennebec River, but that never happened.

The plan for the new pipeline is to connect to the Maritimes and Northeast pipeline at a compressor station in Richmond and run parallel to the river on the west side. It would be build in the road right of way in "comparatively rural areas," Young said, and smaller pipelines would distribute the gas to customers from as many as nine different points.

The Maritimes and Northeast pipeline runs from Nova Scotia to Massachusetts. It enters Maine in Baileyville and exits in Kittery.

Young said the new pipeline could eventually serve residential customers in more densely populated areas, such as Waterville, Augusta and possibly Skowhegan.

Aside from local and state approval of the tax increment financing districts, the project would require a certificate of public convenience and necessity from the Public Utilities Commission, according to Isaacson.

He said he hopes to get a conditional certificate from the PUC within a few months.

Leslie Bridgers -- 861-9252

lbridgers@centralmaine.com

http://www.onlinesentinel.com/news/natural-gas-pipeline-proposed_20...

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