Vermont Gas aims to lay gas line under Lake Champlain

Vermont Gas headquarters in South Burlington. VTD File Photo/Josh Larkin

The South Burlington-based utility Vermont Gas Systems is looking to lay a natural gas pipeline under the nation’s sixth largest body of fresh water: Lake Champlain.

Vermont Gas, which is owned by the Canadian energy giant Gaz Métro, has been planning a $57 million pipeline extension into Addison County for roughly two years. When managers of the International Paper mill in Ticonderoga got word of the project, they contacted Vermont Gas in late spring.

After the two parties contracted environmental and engineering studies, representatives from both companies say that it’s feasible to pipe natural gas under Lake Champlain to New York. Both companies are poised to make that happen.

Vermont Gas spokesman Stephen Wark said the Addison County expansion would change slightly. Rather than running a plastic distribution line from Monkton to southern Addison County, the International Paper line would fund an additional 10.5 miles of steel transmission line through Addison County. This stretch of line would end just south of Middlebury and branch off west to Ticonderoga.

The additional pipeline is important, said Wark, because the Addison County expansion, which will increase the company’s customer base by roughly 7 percent, is a short-term goal for the company. Vermont Gas’ longer-term objective, he said, is to pipe gas to Rutland and southern Vermont. The extra 10.5 miles of steel transmission line would lay the necessary infrastructure to expand into southern Vermont at a quicker pace than the company had previously imagined.

“International Paper’s (potential) contribution to the system not only allows us to serve them at no cost to our ratepayers,” said Wark, “but it also allows us to build up a robust system that will enable us to go further south with our transmission lines getting us to Rutland earlier than we otherwise would have been.”

The story and the timeline

As the cost of heating oil has risen steadily in recent years (more than doubling in Vermont since 2004), International Paper spokeswoman Donna Wadsworth said, her company began looking for new sources of fuel for the Ticonderoga mill.

With its low prices and smaller carbon footprint, Wadsworth said natural gas fit the company’s bill.

“Looking at the relative costs of oil and natural gas right now, there’s quite a discrepancy and the forecasts are that there will be a significant cost differential based on a one million BTU (British Thermal Unit) differential,” she said. “We’d like to take advantage of those cost savings by converting to natural gas.”

But as the paper company began to search for a gas provider, managers realized that the closest natural gas line with the volume to supply the Ticonderoga mill was in Saratoga, almost 65 miles away.

This spring, International Paper representatives attended a public meeting about the Addison County expansion project and they realized the proposed pipeline would run to within 20 miles of the mill. International Paper promptly contacted Vermont Gas, said Wadsworth.

Wark said Vermont Gas hadn’t initially considered piping gas to Ticonderoga. But when it ran an economic analysis for the potential customer, the utility was receptive to the idea. After feasibility studies indicated it was possible to run a pipeline under the lake, Wark and Wadsworth said, the two parties have begun serious negotiations and are eager to reach an understanding.

Wark declined to say how much the project would cost.

This development first came to light in a Vermont Public Radio story on Friday, and Wark expects the two parties to know whether they will have an agreement and general plan for developing the pipeline by the end of October. Shortly afterward, he hopes the companies can wrap up a service agreement.

Vermont Gas plans to file an application for the Addison County project with the Vermont Public Service Board by the end of the year. It will file a separate application for the Ticonderoga extension.

“If everything lines up, we’d like to serve the Ticonderoga paper mill by 2015,” said Wark.”That means by sometime in mid- to early-2013 we’d be filing our applications with the Public Service Board and our regulators here in Vermont.”

The line, the method and the regulators

Vermont Gas is considering six routes to run a gas line underneath Lake Champlain, said Wark. But he wouldn’t provide any details about how that line would be dug because the company hasn’t conducted any studies of the lake bottom’s geological makeup.

Louis Porter, lakekeeper at the Conservation Law Foundation, said he’s concerned about the potential phosphorus that the project might release from the lake bottom. Phosphorus is the primary food source for the potentially toxic cyanobacteria, or blue-green algae, which has plagued Lake Champlain for more than a decade.

“We’re still in the process of getting information on the environmental effects of the project and what effects might it both have on the lake and in terms of greenhouse gas emissions,” said Porter. “We won’t have a formal position on that until we evaluate such data.”

David Mears, commissioner of the Vermont Department of Environmental Conservation (DEC), said his team wouldn’t have a position on this pipeline until more details were provided. His department doesn’t have authority over pipeline safety, but he said that the DEC would keep a close eye on effects to Lake Champlain uplands and shoreline.

“We’ll make sure they’re sensitive to those resources in their entire proposal,” he said.

The New York Department of Environmental Conservation was contacted for this article, but did not get back to VTDigger by the time of publication.

Elizabeth Miller, commissioner of the Department of Public Service, also said it’s too early for her department to take a stance on this project, as Vermont Gas has yet to file an official application.

The Vermont Comprehensive Energy Plan, which Miller co-authored, calls for increased development of natural gas in Vermont, and she touted the potential economic and environmental benefits that the low-cost and low-carbon gas could have for southern Vermont.

Miller said she’d keep close tabs the project to ensure that the Ticonderoga paper mill pays for the pipeline extension, not Vermont ratepayers.

But Wark insisted that wouldn’t be an issue.

“Our ratepayers will not pay for this,” he said. “None of the Vermont customers will pay for any of the International Paper Ticonderoga upgrades.”

Clarification: VTGas spokesman Stephen Wark said his company expects to know whether it can reach a financial agreement with International Paper by the end of October. A formal agreement won’t be finalized at that time, he said, and if the two parties cannot find a way to reach such an agreement, the project won’t happen.