Maine regulators on Tuesday conditionally approved plans to build an 80-mile pipeline that would bring natural gas service to a swath of the state for the first time. The eight-inch diameter transmission pipeline would run through more than dozen towns from Richmond to Madison in the Kennebec Valley region.

Project sponsor Kennebec Valley Gas Co. (KV Gas) will have to return to the Maine Public Utilities Commission (PUC) for a final approval of its financing and engineering plans for the $70 million transmission pipeline project. With the pipeline, KV Gas bids to become a fully operational natural gas local distribution company.

Most of the new transmission pipeline, which would run along the west side of the Kennebec River in the south-central part of the state, would be buried in public right-of-way with distribution pipelines interconnecting at nine points. Gas supplies would come from the existing 685-mile Maritimes and Northeast interstate pipeline tapping offshore Nova Scotia supplies on a transmission line in which Spectra Energy is the majority owner/operator (see Daily GPI, July 30, 2010). The pipeline runs near Richmond.

The PUC stressed that the conditional approval was a first step. KV Gas would need to line up anchor customers before getting final regulatory approvals. Tax agreements with local communities through which the proposed pipeline would pass are also needed before a final PUC decision.

Conditional PUC approval “keeps us on track to complete construction and deliver gas in 2013,” said Mark Isaacson, a managing member of KV Gas. Isaacson said the goal is to “bring this lower-cost heating fuel to the region.” Gas is considerably cheaper than oil and other fuels, but for now Maine is “highly oil dependent,” he said.

“Maine has the highest per-capita use of oil in the nation and twice that of other New England states,” said Isaacson, predicting that natural gas supplies would lower fuel costs for all customer segments: residential, commercial and industrial.

With industrial and city tax agreements in hand, KV Gas would be able to complete its financing for the project. As part of its filing it also seek PUC authority for it to become a regulated natural gas provider.

The transmission pipeline ultimately would traverse more than a dozen towns: Richmond, Gardiner, Farmingdale, Hallowell, Augusta, Sidney, Waterville, Oakland, Fairfield, Norridgewock, Madison and Skowhegan. “None of these municipalities currently receives natural gas from any local distribution company or a natural gas supplier,” Isaacson said.

©Copyright 2011Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.