Pipeline Cancellation An Opportunity For Gas Trucking Company

Release Date:
April 23rd, 2015

Contact:
Taylor Dobbs
Staff Reporter Vermont Public Radio

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Vermont Gas Systems canceled plans in February to run a pipeline under Lake Champlain to an International Paper mill in Ticonderoga, N.Y., but the company’s product is still going to power the plant when it switches to natural gas next month.

Instead of a pipeline, the gas will be delivered by a middleman: NG Advantage. The Colchester company will serve International Paper with a “virtual pipeline.” That pipeline consists of 14 tractor-trailers per day driving from Milton Vermont to the Ticonderoga plant.

NG Advantage CEO Tom Evslin said that even with the emissions from the trucks, the arrangement will greatly reduce the plant’s emissions. It currently burns oil that Evslin says is also delivered by truck.

“The amount of fossil fuel burned by the trucks, and C02 emitted by the trucks, is de minimis compared to the enormous savings,” he said. “They’re converting from number six oil, which is a relatively dirty fuel, I mean physically dirty, it’s black when it burns.” Evslin also says the plant’s emissions of sulphur and nitrous oxide will fall with the switch to natural gas. “I think what some environmentalists are missing – whether the natural gas gets there by pipeline or gets there by truck – is the enormous environmental difference it makes to substitute natural gas for number six oil.”

The arrangement with International Paper was initially supposed to be temporary; NG Advantage signed on to deliver natural gas to the plant by truck only until Vermont Gas finished the pipeline that would feed the plant in the long term.

Now that the pipeline plans have fallen through, though, Evslin says NG Advantage hopes to be the long term vendor for the plant’s fuel. He says International Paper has put natural gas delivery out to bid, and NG Advantage will submit an offer.

If it gets the deal, NG Advantage – already Vermont Gas’ biggest customer – will represent an even larger share of the demand for Vermont Gas. The arrangement would also mean International Paper will run on Vermont Gas natural gas even without a pipeline under the lake. That pipeline had not yet been reviewed by state regulators who would ultimately have the option of rejecting the project. There is no such oversight on the truck delivery model.

Evslin said he isn’t concerned that the volume of trucks running the route from Milton to Ticonderoga will be disruptive, since the route – Interstate 89 to Route 7, then to the bridge in Addison – is already heavily used by commercial trucks. “I’m not worried about that, and I don’t think anybody should be,” he said. “It’s not as though we’re going down back roads.”

The long-term deal, if the company’s bid wins, would also be NG Advantage’s first major foray into permanent delivery. It currently delivers to southern Vermont as well, but the company’s “gas island” serving Middlebury has been presented as a solution for commercial customers there until the pipeline can take over. Evslin says that while a pipeline is the endgame for some customers, the market for truck delivery won’t go away.

“I think we’ll see some of both,” he said, noting customers in Brattleboro and St. Johnsbury where there are no plans in the foreseeable future for natural gas pipelines. “It’d be a long, long time, if ever, before there is ever a pipeline in Brattleboro and yet we’re able to keep those plants operating economically because we can serve them with our trucks.”

The company was bought up by Clean Energy Fuels, a California firm, last year. Evslin said there are plans for national expansion of NG Advantage.

“What we’re particularly doing is looking for these huge opportunities like International Paper that can be the anchor tenants for service in a new territory,” he said. “We’re finding, for example, in areas where there’s been a lot of coal, there are a lot of factories that run on coal that for environmental reasons aren’t going to be able to do that, so they’re looking to switch over to natural gas. But there are no pipelines there because it didn’t make economic sense to build a pipeline to where there was cheap coal.” Evslin said environmental gains in a switch from coal to natural gas are even bigger than a transition from oil because coal is even more polluting.

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