Lawmakers see LNG storage as way to boost winter gas supply

By Tom Bell, AP

Lawmakers looking to Maine's energy future often focus on natural gas and Canadian hydropower, but some say liquefied natural gas should be part of the fix.

AUGUSTA, Maine (AP) — Lawmakers looking to Maine's energy future often focus on natural gas and Canadian hydropower, but some say liquefied natural gas should be part of the fix.

They want to give regulators the ability to reserve storage space in yet-to-be-built tanks to smooth over supply problems in cold winter months. A legislative panel on Thursday expressed strong support for a bill to create the program.

The tanks would be located near existing gas pipelines. Gas would be removed from the line when prices are lower and stored in liquid form. The liquefied natural gas would then be converted back to gas in winter when prices spike. The gas could be used by manufacturers and power companies.

Ratepayers would have to back a contract for reserved space in the tanks.

The idea is similar to municipal water tanks that are filled up with water during a rainy season so water is available during a draught, said Rep. Martin Grohman (D-Biddeford), a member of the Legislature's Energy, Utilities and Technology Committee.

"It's like a self-storage unit for natural gas," he said. "I think the idea has some really good potential."

The committee is expected to endorse the bill next week after working on final language.

Northern LNG has been pushing the bill. The company is a joint venture between Boston-based Energy Management, Inc. and JGC, a Japanese energy construction firm.

The company wants to build a 1 billion cubic foot LNG storage facility in Rumford or Brewer.

The bill, however, does not specify where in Maine a facility would be built and it would require a competitive bid.

Companies that own existing fuel storage facilities say it's unfair to give one company an advantage.

If Northern LNG wants to build a facility, it should go ahead and build it without ratepayer support, said Daniel Riley, a lobbyist for Maine Energy Marketers Association, which represents oil dealers and other fuel suppliers.

"You are being asked by this company to put the ratepayers potentially at risk," he told the committee.

James Cote, a lobbyist for Northern LNG, said it will be difficult to finance the $200 million project without a commitment from the state.

The Legislature for years has being trying to find ways to get more natural gas into Maine. There's not enough gas line capacity in New England to meet demand during the coldest days of winter, causing electricity prices to spike. Manufacturers say high energy costs make it difficult to compete.

The Legislature in 2013 gave the Public Utilities Commission the authority to commit ratepayers to long-term gas contracts, for as much as $75 million annually, to expand natural gas pipeline capacity. The commission is now looking at three proposals and is expected to make a decision in June.

Lawmakers say pipeline expansion is a priority and don't want the LNG proposal to interfere. The committee amended the bill so state energy regulators could only use whatever money is left over after they complete the deal for the pipeline expansion.

"At the end of the day, pipelines and storage capacity should and will be complimentary to one another," Cote said.

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