Compressing Energy Costs

For big industrial users, the cost of heating their facility and running machinery is a huge chunk of their budget. These users used to have few affordable options as many are far from a pipeline carrying cheap natural gas. That lack of choice is being filled by compressed natural gas (CNG), a cheaper and less polluting alternative to oil and propane that does not require a pipeline. And CNG providers have been ramping up in NH.

Liberty Utilities is building a compressed natural gas filling and fueling station in Concord that is slated to open this spring, and Clean Energy Fuels opened a filling station in Pembroke last year for tractor-trailer trucks to deliver CNG to industrial customers. While compressed natural gas has long been used to fuel vehicles, the switch to heating is relatively new. Both of these stations are focused on shipping CNG to customers to heat buildings and run machinery.

Cheshire Medical Center Dartmouth-Hitchcock Keene is among those that made the switch. It used to spend $1.6 million annually to heat its 500,000-square-foot facility with oil. Last August it switched to CNG and anticipates its heating bill will drop to $1.2 million, a 25 percent savings.

In Claremont, APC Paper was the first NH company to switch to CNG with Vermont-based NG Advantage, says APC President Frank Tarantino. NG Advantage, along with its competitor XNG in Boston, launched in 2011 and has built a “virtual pipeline” via tractor trailers to deliver CNG to big energy users. APC, which made the switch last March from #6 fuel oil to run its paper machines, expects annual savings of about 20 percent. “With the cost of oil we wouldn’t have been able to survive,” Tarantino says. He says CNG is easier on the paper machines, cutting maintenance costs.

There are 24 companies in New England and New York that buy CNG from NG Advantage. Clean Energy Fuels, a publicly traded company, acquired controlling interest in NG Advantage in October. NG Advantage focuses on large industrial and institutional users. Many of its customers are in remote locations far from pipelines, says co-founder Mary Evslin. XNG added Plymouth State University in Plymouth to its customer roster.

Compressed natural gas costs about 20 to 30 percent more than natural gas for Liberty customers, but less than oil. Natural gas, a fossil fuel comprised mostly of methane, creates fewer emissions than oil, according to the U.S. Environmental Protection Agency. It can be used as CNG or liquefied natural gas (LNG).

CNG is not a magic bullet. It requires boilers to be converted and at Cheshire Medical Center that cost $250,000. But Dennis Secore, director of facilities maintenance, says the hospital has already made back its investment in savings and can switch back and forth between oil and CNG, providing critical backup.

Bethany Ricciardi is part of the Young Reporters Project, a partnership between Business NH Magazine and Keene State College. Associate Editor Erika Cohen contributed to this story.