AUGUSTA — One of two companies engaged in central Maine’s furious natural gas ramp-up has signed a five-year deal to provide fuel to the University of Maine at Augusta, beating out its area competitor for the job.

Brunswick-based Maine Natural Gas, a subsidiary of Iberdrola USA, owner of Central Maine Power, said the university will begin receiving natural gas on Oct. 1.

UMA spokeswoman Rachel McFadden said the university is expecting to save between $700,000 and $1 million over the course of the five-year deal by converting to natural gas from No. 2 fuel oil. Under the contract’s terms, the university could re-up with the company for an additional five years.

Maine Natural Gas also said in a Tuesday press release that 70 percent of the Augusta distribution portion of its $54 million pipeline, coming into the city from Windsor, is complete. Crews were working on Capitol Street in Augusta on Tuesday.

The north Augusta campus is in a convenient location for the company, just more than a mile as the crow flies from the new MaineGeneral Medical Center on Old Belgrade Road, which signed a natural gas agreement with the company late last year. The hospital is slated to open in November.

Perhaps as important, Maine Natural Gas also scored a victory over its area rival: Peter St. Michel, UMA’s facilities director, said it beat out Augusta-based Summit Natural Gas of Maine for the right to serve the campus.

Those two companies have fought each other in the press and in dueling radio and newspaper advertisements since they both expressed interest in competing in the Augusta market.

“This commitment from UMA is another significant testimony for Maine Natural Gas and further proof of our commitment to provide affordable natural gas service to businesses and residences in Augusta and on through the Kennebec Valley,” said Darrel Quimby, vice president of Maine Natural Gas, in a Tuesday statement.

The University of Maine System solicited bids in December for cost-saving forms of fuel to campuses in Augusta, Farmington, Machias and Presque Isle.

In a February press release, Summit said it submitted proposals to serve the Augusta, Farmington and Presque Isle campuses. Maine Natural Gas spokesman Daniel Hucko said in a Tuesday email that his company only bid on the Augusta project.

University system spokeswoman Peggy Markson said Augusta is the only project to move forward; the other campuses are evaluating whether alternative forms of fuel are feasible.

In February, Summit said if it won the contracts in Farmington and Presque Isle, it would provide those universities with propane until it builds natural gas distribution lines to serve the campuses and communities, with the University of Maine at Farmington perhaps seeing natural gas service by the end of 2014.

In December, the company said it was considering an additional pipeline serving customers in Farmington, Jay and Wilton, along with Livermore Falls in Androscoggin County.

In the February release, Summit said plans to explore a distribution system to get gas to Presque Isle, more than 230 miles north of Augusta in eastern Aroostook County, were “in their early stages.”

Maine Natural Gas has said its immediate focus is on Augusta, where it hopes to serve 70 percent of businesses and residential customers by 2015. It has said it would expand to other parts of the Kennebec Valley region if that is economically feasible. They began building their capital-area pipeline last year.

Summit is building a bigger, competing pipeline that it says will reach from Richmond to Madison at a cost of $350 million with a larger focus on residential customers than Maine Natural Gas.

Michael Duguay, Summit’s director of business development, said since his company just started construction last month after gaining state approval as a utility and their project is much larger, it started with a disadvantage to Maine Natural Gas for the university job.

“We competed head to head and we thought we had a very good case to make,” Duguay said. “In situations when we compete head to head, we’re going to win some. We already have.”

Hucko said UMA will benefit from Maine Natural Gas’ lower rates and earlier start date, as Summit has no pipeline in the ground in Augusta yet.

Summit has already signed big-ticket clients in wide-ranging areas, including three paper mills: Huhtamaki Packaging in Waterville, UPM Madison and Sappi Fine Paper’s Somerset Mill in Skowhegan.

It began construction on the pipeline in June, starting in Madison, and the company has said it wants to serve 15,000 customers in the Kennebec Valley region within its first five years of operation.

Michael Shepherd — 621-5632
[email protected]