AUGUSTA — Savings in heating costs and new jobs that are expected to result from natural gas now flowing into Kennebec Valley homes and businesses should also get millions in disposable income moving in the region, a gas company official told a crowd of mostly businesspeople Wednesday.
Michael Duguay, business development director for Summit Natural Gas of Maine, told attendees of a Kennebec Valley Chamber of Commerce Business Insider Breakfast the company plans to bring gas to 15,000 homes in the coming years. Duguay said those homeowners could save up to $1,500 a year in their heating costs by switching from oil to natural gas, which is cheaper. If each of those homeowners saves that $1,500 figure, it’d save them a combined $22.5 million annually. And some of that money is bound to end up being spent elsewhere in the Kennebec Valley, Duguay told the gathering of local businesspeople.
“If every customer saves $1,500 a year, it will create an economic engine of $22.5 million in our community, to be spent elsewhere,” Duguay said noting, in his former job as the city of Augusta’s development director, $22.5 million being injected into the region without a major contribution from municipalities would be considered “a home run. It means people can spend money on what they want to, not just what they have to.”
Not figured in to those annual savings is the cost of converting to natural gas from oil or other fuels, which can cost from $3,000 to $12,000, depending on how much equipment needs to be replaced.
Duguay said Summit initially thought the project would create about 450 temporary construction jobs but over the summer the company and its contractors employed nearly 700 workers.
Part of that was likely because installing pipeline in the region has been more difficult and labor and time-intensive than the firm first thought.
Duguay, referencing the difficulty of installing natural gas pipe in the region, joked that Mike Minkos, president of Summit Natural Gas of Maine, likes to say “Maine is a beautiful place above ground. It’s somewhat tough from the ground down.”
Schmid Pipeline Construction Inc., a Wisconsin contractor hired by Summit to manage construction of the pipeline’s 68 mile steel backbone, said in a lawsuit filed against Summit in December of last year it had to increase the number of workers and their hours on the job. Schmid’s $72 million lawsuit, filed after it walked off the job in November, claims Summit breached its contract and underestimated the scope of work.
Summit officials said after the chamber presentation that the dispute with Schmid and the fact more workers were hired for the project than the 450 first estimated were not related.
The arrival of natural gas in the area, both from Summit and competitor Maine Natural Gas, is also expected to lead to a major increase in work for local heating, ventilation and air conditioning contractors who convert residential and commercial heating systems to gas from other fuel sources.
Duguay said Summit’s multi-year project installing gas lines throughout the Kennebec Valley between Pittston and Madison will total $350 million when it is complete, but that doesn’t include the money to be earned by contractors converting heating systems in homes and businesses to burn gas.
He said that could be another $75 million to $100 million.
“The opportunities for plumbing and heating contractors will probably be the equivalent to the switch, years ago, from coal to oil,” Duguay said. “We’re talking, essentially, about a heating revolution that is right here on our doorstep.”
Summit and Maine Natural Gas both currently draw the gas for their pipelines from a Martimes and Northeast pipeline which brings gas from the Sable Island gas fields off Nova Scotia.
However Duguay said eventually natural gas may come to Maine not from the north, but from the Marcellus Shale formation in Pennsylvania, Ohio, West Virginia and New York.
Duguay said the development of that abundant source has driven down natural gas prices in recent years, which previously more closely mirrored oil prices.
The Marcellus Shale gas is extracted through the process of fracking — hydraulic fracturing of rock to get to the gas — which is controversial because of environmental concerns.
Duguay said Summit’s business model has always been to bring gas service to more rural areas other gas firms have neglected as they focused on urban areas. That, he said, made Maine attractive to Colorado-based Summit Utilities. He said when the Maine system is fully built, it will be the biggest division of Summit Utilities.
Mark Johnston, president and chief executive officer of Kennebec Savings Bank, asked if Summit and Maine Natural Gas could share at least some of their distribution system, to avoid having pipelines from both companies running along some of the same streets.
“This summer we had Summit and Maine Natural Gas working on both sides of the street in some cases, and both making that investment in infrastructure,” Johnston said. “Which seemed crazy to me.”
Duguay said Maine’s natural gas rules allow two or more competing natural gas companies to serve the same area, and it can be difficult for companies to reach agreement on sharing costs or infrastructure.
The major sponsors of the chamber’s Business Insider Breakfast series are Kennebec Savings Bank and Central Maine Power.
CMP is owned by Iberdrola USA, which also owns Summit competitor Maine Natural Gas.
Peter Thompson, president and CEO of the chamber, said Peter Bottomley, sales and marketing manager for Brunswick-based Maine Natural Gas, will be the guest speaker for the February breakfast meeting.
Keith Edwards — 621-5647 [email protected]