SKOWHEGAN — Summit Natural Gas of Maine announced Tuesday that it has signed up a second anchor customer in its northward push to provide service in Kennebec Valley.
Sappi Fine Paper’s Somerset mill in Skowhegan joined Huhtamaki Inc. in Fairfield and Waterville with agreements in principle in recent days with Summit, which is competing with Maine Natural Gas to be the dominant gas provider in the region.
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Summit is scheduled to begin construction of its natural gas transmission and distribution system early next month, according to a statement released Tuesday.
“The opportunity to utilize natural gas is essential to maintain the competitive cost position of our Somerset Mill and is another example of our investment in the state of Maine,” said Mark Gardner, Sappi president and chief executive officer. “We look forward to working with Summit to establish access to clean, economical natural gas, which we foresee will ultimately reduce fuel costs, be better for the environment, and ensure the long-term profitability of our operations.”
Huhtamaki plant manager Ray McMullin said the company has been “negotiating and discussing natural gas supply arrangements” with both companies over the past few months and was pleased to announce to municipal officers in Waterville and Fairfield that a decision had been reached.
“After many months discussing supply arrangements, which includes pricing as well as timing, and commitment to timing, we have decided to move forward with Summit Utilities Inc.,” McMullin wrote in an email Friday to town officials. “They are expecting to be able to supply to us by pipeline by the beginning of 2014.”
McMullin said the company has relied on liquefied natural gas in recent months as an alternative to oil, but it looks forward to the arrival of natural gas.
“We believe a pipeline will eliminate many of the disruptions we experienced with LNG,” he wrote. “It has been a long time coming, but appears to be in the fairly near future.”
Summit’s investment of $350 million in pipeline infrastructure will create an estimated 435 jobs, according to the release. Summit plans to serve about 15,000 residential, commercial and industrial customers by its third year of operation.
Skowhegan Town Manager John Doucette Jr. said by landing the two businesses — Sappi and Huhtamaki — Summit establishes itself as the primary player for natural gas distribution.
“For this area, this is really big,” Doucette said Tuesday. “Summit not only wants to handle the anchors, but they’re also looking for residential markets. They are the one natural gas company that has looked at that.”
Doucette said he expects natural gas to be available soon to what he calls the secondary anchor market — local manufacturing plants, the hospital and schools — now that the two major players are in place.
From there, he said, residential customers are next in line, perhaps four or five years down the line.
“It’s going to be a very positive thing for the whole area,” Doucette said. “It gives us another source of energy to use.”
Summit’s competitor, Maine Natural Gas, whose parent company, Iberdrola USA, owns Central Maine Power Co., has committed itself to offering gas to 70 percent of households and small businesses by 2015, but only in Augusta, according to published reports.
The company has proposed a $50 million project serving municipal, school, county and court facilities in Augusta, making gas available to more than 7,500 customers.
Steel pipe arrived in March for Maine Natural Gas to install on Route 17 in Windsor, and work continued on pipes off Civic Center Drive in Augusta to reach MaineGeneral Medical Center’s new regional hospital under construction.
The Summit project, which is subject to regulatory and other approvals, consists of 88 miles of steel pipeline originating in Richmond and traveling through the Kennebec Valley, ultimately to Skowhegan and Madison. In addition to the proposed project with Sappi and Huhtamaki, Summit plans to serve 17 communities in the region with the installation of about 1,600 miles of polyethylene distribution pipeline.
Sappi’s participation in the project is subject to certain corporate capital approvals, as well, according to the release.
“Sappi is one of the largest employers in Maine,” said Tim Johnston, Summit’s executive vice president and chief strategy officer. “This service agreement would provide us with an important commitment to advance our effort to deliver natural gas to central Maine, creating the opportunity for a significant reduction in energy costs to Sappi and the surrounding communities.”
The same applies for Huhtamaki, Summit President Mike Minkos said.
“We are pleased to be able to provide Huhtamaki with the ability to access a lower cost alternative energy resource,” Minkos said in the release. “Pipeline infrastructure required to provide Huhtamaki service is scheduled to be completed early fourth quarter 2013.”
Kenneth Young, executive director at Kennebec Valley Council of Governments, said the agreements with Sappi and Huhtamaki are good news to the entire Kennebec Valley region. He said the agreements, once completed, are critical to the pace of bringing natural gas all the way to the paper mill in Madison.
“This means that it’s much more likely to happen more quickly than it might have otherwise and will underwrite a more extensive distribution system than would have been possible without those anchor customers,” Young said Tuesday.
Young said both companies — Summit and Maine Natural Gas — have stated publicly that they needed those anchor customers in order to come north.
“With Summit now securing those customers, it would seem less likely that Maine Natural Gas would come up into Somerset,” he said.
Madison Town Manager Dana Berry on Tuesday said so far there has been no agreement for natural gas to come to Madison.
An email sent Tuesday to Daniel Hucko, spokesman for Maine Natural Gas parent company Iberdrola USA, was not returned by press time.
Doug Harlow — 612-2367
dharlow@centralmaine.com
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