Virtual Pipeline: Expanding the natural gas market
Companies both with and without access to natural gas pipelines are recognizing the powerful benefits of natural gas over other forms of energy.
Industrial prices of natural gas have run at least half the price of fuel oil in recent years, according to the U.S. Department of Energy, and the environmental benefits of natural gas are far superior over that of other conventional fuels.
But a lack of pipeline capacity in New England has prevented the region from tapping abundant supplies. Many rural areas are unlikely to ever get pipelines because the relatively few customers don鈥檛 justify the costs of extending them. That has put paper mills, hospitals, and universities, often major employers in rural New England, at competitive disadvantages.
The solution that has emerged in the last couple years is the creation of what is now called the 鈥淰irtual Pipeline,鈥� which is transporting natural gas via tube trailers.
Recent advances in tube trailer design have made it possible for companies to transport the gas to areas that don鈥檛 have access to the pipelines or gas utility services. Even though trucking the gas is more expensive than having the gas delivered by pipeline, the savings is still worth it.
For example, Oldcastle Inc., a manufacturer of building materials, has plants in nearly every state, including 130 across New England, many without access to natural gas pipelines.
Four of its New England plants have been using compressed natural gas delivered by truck. While the trucked-in version is more expensive than piped natural gas, the company蘑菇视频 switch from oil has cut the fuel costs at these plants by 20 to 40 percent.
These savings have allowed the company to set lower prices, which has led to more sales and a 2 to 5 percent increase in hiring.
Compressing natural gas is more cost efficient than liquefying natural gas, which has been the traditional process used for transporting gas over large distances. Gas in compressed form has been used for decades as fuel for vehicles, but until recently it was rarely used on an industrial scale.
But plunging natural gas prices and new tractor-trailer technology that allows for transportation of 40-foot carbon-fiber tubes that can hold larger volumes of compressed gas have helped make the mobile pipeline a lower-cost alternative to fuel oil and propane. Compressed gas also is a cleaner-burning fuel that is less flammable than liquid fuels, and it dissipates quickly if spilled.
Several companies are now compressing gas which is then loaded onto trucks and delivered to industrial and commercial customers without access to pipelines outside utility service areas.
Cheshire Medical Center, a community hospital in Keene, N.H., recently converted its heating system to compressed natural gas and expects to save a third off its $1.5 million fuel expense.
Some say that compressed natural gas could replace 75 percent of fuel oil burned by the industrial sector in New England. The pipeline has enough additional capacity to guarantee uninterrupted supply to several large facilities, even during winter peaks, according to a utility spokesman.
International Paper 鈥淚P鈥� in Ticonderoga, N.Y., is now receiving CNG via truck delivery, representing 60 percent of its energy needs. The cost of building a pipeline was just too expensive and the trailering of the CNG was a much more economical alternative. IP sees trucking in CNG as a long-term solution.
Opponents to the building of gas pipelines welcome the virtual pipeline. A pipeline generally costs $1 million per mile, and these costs are passed along to the utility蘑菇视频 customers. But by trucking the gas, the transportation cost is paid by the end user. Will trucking gas replace pipeline gas?
The advantages of trucking gas include a lower capital investment: There is no need to buy up land from unwilling homeowners or go through the lengthy and cumbersome Public Service Board process.
Over time, pipeline gas is cheaper than trucked-in gas and you don鈥檛 have to worry whether the truck will get stuck in traffic or delayed by weather.
However, the 鈥渧irtual pipeline鈥� is allowing companies that don鈥檛 have pipeline access to gain the benefits of CNG, thus making them competitive.
David Pearl is Vice President of Infinity Resource Group, Inc., a professional mineral rights consulting firm, specializing in the leasing and sale of mineral rights in PA, WV and OH. He is also managing director of a natural gas fuel dispensing patent holding company and director of a natural gas fuel island development company. Your questions are welcomed by calling 412-535-9200 or by emailing IRGOilGas@gmail.com.