State regulators have postponed indefinitely a review of Vermont Gas Systems’ proposal to build a natural gas pipeline from Middlebury to Ticonderoga, New York, after the company requested a delay last month.
The lead bankroller of the project, International Paper, is now concerned about when the gas will arrive at its mill on the other side of Lake Champlain. The manufacturer has agreed to pay $70 million of the approximately 20-mile, $74 million pipeline.
Vermont Gas asked regulators to delay their review of the project in December following the second estimated cost increase to the first phase of the pipeline extension through Addison County.
The company is updating its cost estimate for the second phase using a new formula. Vermont Gas plans to update the cost of the project within a month, at which point it will ask regulators to continue their review.
Following possible changes to the cost and schedule of the project, International Paper and Vermont Gas are discussing the details of a financing deal they reached in 2012. The deal was amended last year on the condition that Vermont Gas receive a state permit by March 31, 2015.
“The timeline, of course, is a concern to us because the value of this project is based on certainly getting natural gas and getting it in a timely manner,” said Donna Wadsworth, communications manager for International Paper.
She said the company is assessing the schedule and cost of the project.
“We do have the option of reviewing those at this time and we are,” she said.
Wadsworth said the company has already contracted with NG Advantage, a Milton company that delivers compressed natural gas to commercial and industrial customers, to supply parts of the plant with natural gas after a scheduled shutdown in late April.
Nonetheless, she has said consuming gas by pipeline is preferable to gas delivered by truck.
“We firmly believe that a gas pipeline would be a great benefit to us,” she said.
Beth Parent, a spokeswoman for Vermont Gas Systems, said the delay would only be a matter of months. She expects the project might be completed by the end of 2015 or early 2016.
Meanwhile, the Vermont Public Interest Research Group, which opposes the project, is calling on regulators to dismiss the company’s application for a state permit altogether, arguing the material supporting the application is outdated. The documentation includes hundreds of pages on greenhouse gas emissions, costs and benefits of the project.
The environmental advocacy group says much has changed since the project was first announced.
Jim Dumont, a Bristol attorney representing VPIRG, said competition for pipeline construction will likely increase costs further, air source heat pumps are becoming a cost-competitive option to heat homes, and the company’s greenhouse gas emission data does not account for International Paper’s ability to increase production.
Vermont Gas intends to serve about 170 residents in Cornwall and Shoreham and provide the towns with a financial benefits package. International Paper plans to use the gas to replace oil for industrial heating purposes.
The Shumlin administration has yet to weigh in on the second phase of the company’s pipeline extension, but has supported phase one.
Chris Recchia, commissioner for the Department of Public Service, said he will urge regulators to review the first phase of the company’s pipeline extension following a cost increase to $154 million announced in December.
For the previous cost estimates, the company contracted Clough Harbor and Associates, an engineering consulting firm headquartered in Albany, New York. Vermont Gas has since reduced the firm’s role to engineering and surveying.
Now, Vermont Gas is assessing the cost of the project based on standards established by the Association for the Advancement of Cost Engineering International. The association’s standards were used to produce Vermont Gas’ latest cost estimate announced last month for the first phase of the pipeline.
VPIRG is asking regulators to fine the company for not filing quarterly cost updates on the second phase of the pipeline. The company agreed to file quarterly updates last summer at the state’s request.
Recchia said the company did meet its commitment to file a cost update in October. The department is waiting for a detailed cost estimate for both phases of the project this month.
