February 8, 2013






Natural gas complex to cut heating costs
 by Edward French


     The former Louisiana‑Pacific OSB mill in Baileyville has been redeveloped into a high‑capacity natural gas fueling complex that will be serving Maine industries and businesses from paper mills to food processing plants and hospitals and helping them save significantly on fuel costs, following the significant drop in natural gas prices in the U.S. Last August, Xpress Natural Gas of Woburn, Mass., signed a long-term lease for the facility with Woodland Pulp LLC, which in 2011 acquired the OSB mill that had been idle since the end of 2004. The facility is now able to fill delivery trucks with more than 8 billion cubic feet of natural gas per year from the Maritimes & Northeast Pipeline and also will include truck fueling stations that offer a low‑cost transportation fuel alternative to gasoline and diesel.
     Matt Smith, executive vice president for sales and marketing for Xpress Natural Gas, says that the savings for customers that have been using No. 2 heating oil and who switch to compressed natural gas (CNG) can be 30% to 40% or more.
     Xpress, which serves customers from Massachusetts to the Maritimes, already has signed up several customers in Maine, including Great Northern Paper's mill in East Millinocket, the Aroostook Medical Center in Presque Isle, Naturally Potatoes in Mars Hill and Penobscot McCrum, a potato processor in Belfast. "We're in active negotiations with a dozen others," including Lincoln Paper and Tissue, says Smith. "They're excited to explore CNG with us." Currently, Xpress is trucking liquefied natural gas (LNG) from Massachusetts to the Lincoln mill and also the Madison paper mill. The Baileyville facility will provide Xpress an alternative to the 300‑mile trip from Massachusetts to supply natural gas to its customers. Smith expects his company will have 20 to 30 or more customers in Maine by the end of the year.
     Woodland Pulp recently installed its own natural gas line, which runs 4.5 miles to the Maritimes & Northeast Pipeline, and expected to recoup the $12 million cost for the line in a year, through avoided costs for oil payments. The mill had been burning over 10 million gallons of heavy #6 fuel oil, and the difference between oil and gas prices in 2011 was about four to one.
     Woodland Pulp spokesman Scott Beal comments, "This continues to be a good project for us. There was an uptick in the [natural gas] price recently, but we're very fortunate that the mill's owners saw fit to fund this project."
     Most potential customers, though, are not able to fund their own pipeline and are looking to Xpress to provide the cheaper fuel source. "We can bring gas to an area much faster than providers like a pipeline," Smith says. "We need to help our customers to convert their equipment to burn gas. But we need to work with them now so we can be supplying them by next winter."
     Xpress Natural Gas is partnering with H.O. Bouchard of Hampden and the Dead River Company of Bangor for delivery of the gas. H.R. Bouchard will truck the gas to the larger industrial customers, such as pulp and paper mills that have been oil dependent, and Dead River will be distributing to mid-size customers, such as commercial businesses, hospitals and colleges. Xpress will provide the gas and the equipment for converting to CNG usage.
     Bob Moore, president of Dead River, says, "The reality is most areas of the state of Maine will never see a natural gas pipeline. The cost is simply prohibitive. Our partnership with Xpress Natural Gas presents an immediate solution to Maine companies with high energy use who are looking for alternatives to lower their costs."
     "The combined resources of Dead River and XNG can more rapidly expand the benefits of natural gas to a range of commercial and institutional enterprises across the state," says John Nahill, president and CEO of Xpress Natural Gas. "Together, we will have a real impact on solving a problem that has made Maine a less competitive state to do business C the high cost of energy. XNG's current customers are already saving 25% or more on their fuel bills using our service. With the energy costs often times being the biggest number on Maine companies' balance sheets, we are providing significant relief. And we can offer guaranteed firm supply with fixed pricing to help protect our customers from spikes."
     Although there was a spike in the price of natural gas near the end of last year, customers of Xpress did not see any spike in their prices, Smith says.

Fuel for trucks and homes

     Smith points out that Xpress is looking for customers who are using at least 50,000 to 75,000 gallons or more of heating oil a year. "It's not a residential solution," he says. He adds, though, that Xpress could bring gas to a community if a municipality wanted to install its own gas line loop to houses. With more users, the costs would be lower. "With the right community support, we believe we could bring gas to smaller communities." Bucksport, for instance, is considering installing a natural gas loop for its downtown and residential areas, using a line from the Verso Paper mill.
     CNG also can be used as a transportation fuel and is presently used in the municipal buses in Portland. "Our focus of interest is long-haul trucking," Smith says. In diesel equivalent gallons, the cost for diesel is presently about $4, while for CNG the cost is under $2 and perhaps as low as $1.50. For either purchasing a new truck or converting a truck to use CNG, the cost is $30,000 to $40,000 for the fuel line and other adjustments. Xpress is in active discussions with companies in Maine that have truck fleets about converting to CNG, and larger mills also may want to convert trucks that haul wood to their mills. Smith notes that some of the larger mills handle 400 trucks a day.
     Compressed natural gas is gas that is reduced in volume to allow for storage and transport. It is maintained at ambient temperature but high pressure. On arrival, the gas is released at normal pressure to the customer. Liquified natural gas (LNG) is kept at low temperature but ambient pressure. While only about half as much CNG as LNG can be kept in the same size container, Smith notes that more customers can be serviced using CNG, since the cost is lower. CNG requires less equipment for the customer and costs less to produce.
     Smith says that using compressed natural gas as a fuel source is a proven technology around the world. However, in the U.S. the price of gas during the last couple of decades has been too expensive to encourage people to switch, until recently. The average price for a unit of natural gas has dropped in the U.S. from $8 in 2008 to about $2.50 in 2012. "It is used in municipal vehicle fleets" in the country, says Smith. "We're just bringing it to a new market."
     "We've had an incredible amount of support from not just the state of Maine but Washington County and the town of Baileyville," says Smith, adding that the company plans to be supplying natural gas in Maine for a long time.

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