County hears plan for natural gas line

Chesapeake Utilities seeks exclusive deal; ECI likely anchor user

By Richard Crumbacker

Crisfield-Somerset County Times

PRINCESS ANNE — Dover-based Chesapeake Utilities is again asking the County Commissioners to sign an exclusive franchise agreement that will support its efforts to bring natural gas into Somerset County.

It’s encouraged that ECI is serious about converting from wood chips to natural gas to power its steam and electricity generating plant, and in turn other large users like UMES, Mountaire and Perdue would tap into the line as well.

Chesapeake serves over 20,000 customers in five Maryland counties including Wicomico, Dorchester and Worcester. Its subsidiary Sandpiper Energy purchased Eastern Shore Gas which served Ocean City and West Ocean City with propane and that system is being converted to natural gas, with a line running under Assawoman Bay into the town itself.

“Currently we’re about 90 percent residential,” said Dean Holden, manager of business development. “ In dustrial, is a very small slice” with agri-business a key part.

But what prompts an expansion of service, are commitments by commercial and industrial customers. Chesapeake ran a line 13.5 miles to Lewes, Del., in 2012 when anchors including Beebe Healthcare, Allen Harim Foods and Perdue were ready to convert to natural gas.

Likewise in 2015 in Cecil County, a line 5.7 miles long was extended to serve a mushroom grower. Two years later a medical marijuana grower located its facility on the gas corridor, and next year another mushroom operation expects to open.

“We see that time and time again,” Mr. Holden said. “The availability of natural gas brings business in when you have economical energy.”

In Somerset County, the company sees ECI, UMES and agri-business as the reason to install a natural gas distribution hub in Eden. Last year the prison requested information about alternatives to its chip-burning power plant. Mr. Holden said Chesapeake received a letter of interest last month from the Department of Public Safety and Correctional Services stating that if gas was available it would make “every effort” to connect.

 “That has provided us an anchor load,” Mr. Holden said, “a customer large enough to bring natural gas into Somerset County.” And while “it’s not a contract” the prison uses “a lot of energy and they are important enough for us to substantiate the investment.”

And with Mountaire and Perdue nearby, “ we hope to serve them as well,” and they have provided Chesapeake their propane reports so a cost-benefit analysis can be prepared.

The franchise agreement is necessary to protect Chesapeake’s investment of $25 to $30 million, Mr. Holden said, and would be exclusive for at least two years. Once that is secured a similar arrangement would be sought from the Princess Anne Commissioners.

Public Service Commission approval would also be necessary to serve this area.

Currently a company is surveying and estimating the cost of installing a transmission line some 12 miles and it might take approximately two years from start to finish. High pressure gas ends at Commerce Street in Salisbury, and while Fruitland is served through a local distribution system, Mr. Holden said there is not enough pressure to build off of it.

“It’s very much needed,” said County Administrator Doug Taylor, and Commissioner Jerry Boston said “It sounds like a good project” but President Randy Laird said the board was not immediately prepared to sign the agreement.

Since at least 2007 county leaders have been trying to attract a natural gas provider to come here. In November 2011, Shane Breakie, director of energy services with Chesapeake who also attended last week’s meeting, met with the commissioners but a draft franchise agreement was never finalized.

Two years later in 2013 a non- exclusive franchise with Somerset Utilities was approved, but that company dissolved and following a federal district court order its assets were taken over by a company in Denver.

Mr. Holden said exclusivity for at least two years is necessary so a competitor does not come in with an alternative project, leaving Chesapeake out a substantial investment.