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Bethel Wants to Tap into Natural Pipeline

August 22, 2011 - Bethel - Five miles from Bethel, a natural gas line that connects a Rumford power plant with the Portland Natural Gas Transmission System crosses under Route 26.

Some businesses in Bethel would like to tap into that line to burn natural gas, which is roughly one-third less expensive than heating oil these days.

It's part of a growing desire in Maine to diversify the state's energy supply with more natural gas. But as residents are learning, to bridge even a five-mile gap will take money and commitment.

For example: It costs a regulator station more than $1 million to drop pipeline pressure. Burying 8-inch diameter polyethylene pipe could exceed $150,000 a mile. And that doesn't include signing up big anchor customers needed to support the capital investment, and the potential of forming a utility and buying equipment.

That said, Bethel is in the midst of setting up a study committee to see if it's economically possible to build a new natural gas distribution network and perhaps the first municipal-owned gas utility in Maine.

"I'm a little skeptical, but it's worth pursuing," said Allen Connors, managing partner at the Bethel Inn, one of the town's largest employers. "If it would help bring a cheaper form of energy to town, we'd be happy to help."

In Maine, where seven in 10 homes are heated with oil, there is an unusual relationship with natural gas. Two interstate pipelines built in the 1990s provide the fuel to generate half the state's electricity -- perhaps too high a dependence, some experts say. But when it comes to space heating, only 5 percent of the state's homes and even fewer businesses burn natural gas.

Bethel, a small town tucked in the western mountains, is a prime example. In a state with scattered population centers, it's expensive to extend new lines to potential customers. The wide price spreads now between oil and gas, however, are providing new incentives.

In the Kennebec Valley, developers want to build a 56-mile line connecting the Maritimes & Northeast Pipeline in Richmond with communities including Gardiner, Augusta, Waterville and Skowhegan. But first they have to secure paper mills and other anchor customers for the $80 million project, and find the financial tools -- perhaps in the form of municipal tax breaks -- to make it viable.

The oil-gas price spread has finally made it profitable for Maine Natural Gas to extend its distribution system this summer from Brunswick to Bath Iron Works. That will set the stage for gas lines to reach downtown Bath in the years ahead.

In Washington County, the new owners of the pulp mill in Baileyville are spending $12 million this year to switch from oil and hook in to the Maritimes & Northeast Pipeline, four miles away. The Woodland Pulp LLC mill burned 10 million barrels of oil last year and expects a one-year payback. The deal has local bank financing, aided by loan insurance from the Finance Authority of Maine.

This loan assistance is one example of what government can do to help expand gas service, according to Ken Fletcher, who heads the state's energy office. Fletcher plans to form a task force next month that will make formal recommendations about gas expansion. One option could be state and municipal bonds, he said, which allow for longer financing periods.

It's too early to say what solutions might be considered in Bethel, where business and town leaders have yet to have their first meeting. But Chris Garner, a small business consultant who initiated the discussion, thinks gas has the potential to create jobs and boost the local economy.

Garner hopes the study group can determine the cost of bringing gas to the village, and whether big users along the route including the school district, the Bethel Inn, Gould Academy and a Hancock Lumber sawmill are interested.

The Bethel Inn, for instance, no longer heats with oil. The resort converted recently to propane, but consumes 70,000 gallons a year and would like to burn natural gas, which has more heat energy per gallon.

The inn also has considered wood pellets -- Bethel is home to Maine Energy Systems, which distributes pellets and central heating systems. But a gas conversion would make better financial sense for the inn, according to Connors.

The inn would be a critical anchor customer. Looking into the future, the study group may ponder whether gas could be extended to the Sunday River ski resort. Members may explore the idea of a cogeneration plant that would use waste heat to generate electricity for sale on the regional grid. That could provide a source of revenue for the town.

Garner is of the opinion that a gas distribution system in Bethel should be municipally owned. But public ownership is being panned by some business owners, he said, who would prefer a private investment.

Private gas utilities typically want a payback of less than 10 years, according to Darrel Quimby, vice president of Maine Natural Gas. A publicly owned gas company, similar to a water or sewer district, could finance investments with longer-term bonds, he said.

Quimby, who is familiar with the Bethel region, said bringing natural gas to the village seems doable. He has doubts, though, about the Sunday River ski area. It's farther away, spread out over rocky terrain and has a seasonal energy demand.

Quimby has agreed to meet informally with the pending study group. Maine Natural Gas isn't interested in serving Bethel, however. The payback period would be too long for his company, he said.

"We'd be treating it as an investment," he said. "Bethel might be treating it more as infrastructure."

Tux Turkel, Kennebec Journal, August 2011


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