Friday, March 7, 2014
With cheaper energy critical to its survival, the recently reopened Great Northern Paper mill in East Millinocket will begin burning natural gas in April – not from a hoped-for pipeline along the Penobscot River valley, but from a fleet of special tanker trucks.
File photo: The Katahdin Paper Mill in East Millinocket.
Tanker trailers filled with liquefied natural gas feed the Madison Paper Industries mill last fall. LNG is replacing 8 million gallons of oil a year at the mill, and saving the company millions of dollars.
Photo Courtesy of Xpress Natural Gas
CNG, LNG, propane: What's the difference?
Compressed natural gas, or CNG, is made by reducing the volume of natural gas to less than 1 percent of what it occupies at standard atmospheric pressure. CNG can be used as a substitute for gasoline to power vehicles; the city buses in Portland are an example.
Liquefied natural gas is a similar but different way to store natural gas. CNG is gas stored at air temperature, but at high pressure. LNG is gas stored at a very low temperature, which changes it into a liquid.
CNG tends to be less expensive to make and store than LNG, which needs expensive cooling equipment and cryogenic tanks. Both CNG and LNG can be used as heating fuels.
Propane is a byproduct of natural gas and petroleum refining. The fuel is more expensive than natural gas, but it can be stored in a liquid state under moderate pressure in low-cost steel tanks, making it useful for cooking and heating.
Propane has been delivered by truck for decades. Now that practice is growing for CNG and LNG.
In the Northeast, the abundance of natural gas found in shale deposits in New York and Pennsylvania has lowered wholesale prices. That has made it economical to truck both compressed natural gas and liquefied natural gas to rural areas not served by pipelines.
The construction of a CNG compressor station in the Washington County town of Baileyville, next to the Maritimes & Northeast Pipeline, is expected to make the fuel more available this year to businesses looking for alternatives to heating oil.
The trucks, operated by Boston-based Xpress Natural Gas, will fill up at a compressor station being built inside a former lumber mill in the Washington County town of Baileyville. The station is alongside the Maritimes & Northeast Pipeline, which moves natural gas between Nova Scotia and Massachusetts.
The $20 million investment by Xpress Natural Gas could represent a game-changing development for Maine’s large energy users, especially papermakers, which operate in a very competitive market and are desperate to cut costs.
New technologies and the discovery of vast gas fields in the Northeast have driven down natural gas prices, making gas at least 30 percent cheaper than heating oil. That savings translates into millions of dollars a year for big manufacturers, which is why companies such as Great Northern Paper are scrambling to convert to gas.
At Great Northern, the $1.5 million conversion will lower steam costs enough to run a second paper machine as much as needed to fill new orders for newsprint and book stock. The company continues to hope that a pipeline will be built to Millinocket, but it can’t wait for that to happen.
“It’s about costs, but it’s also about increasing capacity and being able to compete in the market by producing more paper,” said Scott Tranchemontagne, a spokesman for Cate Street Capital, which owns the mill. “That’s an important thing for us right now.”
The Great Northern mills in East Millinocket and Millinocket have been the economic anchors of northern Penobscot County. Both were sold in escrow in 2011. Today, the East Millinocket mill has 257 workers. Increasing production is crucial to stability and growth, but doing it with oil is “cost prohibitive,” Tranchemontagne said.
Four of Maine’s 11 paper mills are on gas pipelines. But new lines are very expensive to build, and it’s uncertain when they will reach far-flung rural areas.
The Legislature is expected this session to consider how Maine can participate in plans to boost the capacity of pipelines in southern New England, with a goal of lowering winter gas prices here. But that’s a longer-term ambition.
In the interim, some big energy users are signing up for a virtual pipeline of tanker trucks that promises reliable, round-the-clock service within months – not years.
Replacing oil with natural gas is a priority for all paper mills not on a gas pipeline, said John Williams, president of the Maine Pulp & Paper Association.
Buying wood fiber and paying workers, who earn an average of $61,000 a year, are the top two expenses in papermaking. Energy is third, and with slim profit margins, saving 30 percent on energy can make or break a mill, Williams said.
“Converting to gas is probably the biggest thing happening with the Maine paper industry right now,” he said. “It’s the biggest thing we can do something about.” For example:
n The Madison Paper Industries mill is receiving six tanker trucks a day of liquefied natural gas from the LNG terminal in Boston Harbor. LNG has displaced 8 million gallons of oil, and saved an estimated $5 million.
n Every 36 hours, Xpress Natural Gas trucks filled with LNG make a 300-mile trip from Boston Harbor to Lincoln Paper & Tissue. LNG is due to offset 2 million gallons of oil this year, and the $2 million investment to convert the mill will pay for itself in less than a year.
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