Trucked natural gas gets green light in N.S.

Universities, hospitals and other big energy customers in Nova Scotia could have compressed natural gas delivered to their front door by trucks as early as next year, the provincial government announced Wednesday.

Energy Minister Charlie Parker said the move could mean savings between 35 and 50 per cent for some customers without harming the interests of Heritage Gas, the province's sole distributor of natural gas via pipeline.

"Anywhere where [Heritage Gas is] serving right now, where they've got the pipeline in the ground, companies that are on that pipeline will be required to hook in," Parker told a news conference in Halifax.

"Pipeline is cheaper than trucking natural gas so it's an advantage if you're on a pipeline."

Parker said the government accepted a recent consultant's report that recommends not regulating the distribution of compressed natural gas by truck.

The report, commissioned in April, says the market is not regulated in New Brunswick, Prince Edward Island or in the New England states, not unlike the delivery of oil and propane.

It goes on to say that doing so may "deny potential customers of [compressed natural gas] in Nova Scotia the benefits of synergies that could come from being part of a broader distribution networks of systems that cut across provincial and international boundaries."

Report author Bill Lahey said Wednesday that some, including Heritage Gas, argued for a fully regulated approach.

The Halifax-based company has connected some 3,600 customers across Nova Scotia to natural gas since 2004.

Companies have expressed interest

"What the recommendations try to do is balance the interests of large industrial and institutional customers who can benefit significantly right away from natural gas becoming available and the interests of … natural gas customers for whom [compressed natural gas] is never going to be an option — small business, homes," said Lahey.

Parker said a number of companies have already expressed an interest in delivering the gas, including Heritage Gas, Irving and the Floating Pipeline Company. Customers that could potentially benefit from the approval include Minas Basin Pulp and Power in Hantsport, he said.

"It's really creating a new industry in our province," he said.

"There's going to be more private opportunity for trucking and for servicing, and also it provides another clean source of energy to our industry around the province at a competitive rate."

Natural gas is considered one of the lowest-cost fuel options available, said the report.

Lahey said he didn't believe the distribution of compressed natural gas would have any effect on electricity rates from Nova Scotia Power, the province's private utility.

He said there was no indication during the consultation process that any of the customers interested in having compressed natural gas delivered is using electricity for the same purpose in their business.

Parker said while trucking natural gas makes sense for large customers, it won't likely be viable for residential customers given the hefty cost of delivery and necessary equipment. The installation of a so-called compression station costs about $150,000 alone.

The government said trucking compressed natural gas will be subject to the same regulations that apply to transporting dangerous materials. As recommended in the report, the distribution of the gas will undergo another government review in five years.

'It's huge'

The goal is to deliver the kinds of savings Dalhousie University realized when it spent nearly $2 million in 2010 converting from bunker oil to natural gas.

Darrell Boutilier, director of operations for Dalhousie University's facilities management, said it made the money back in savings in just one year.

"It's huge. Those are dollars that can go to education and other programs versus wasting on energy costs," he told CBC News.

Suppliers will not be allowed to truck compressed natural gas to customers able to connect to the pipeline.

Heritage Gas, the province's sole distributor of natural gas via pipeline, had urged Nova Scotia to treat compressed natural gas as "a pipeline on wheels," subjected to a franchise and regulation.

"What the government's report has done is come up with a bit of a hybrid model," said Jim Bracken, president of Heritage Gas Ltd.

"They are allowing the opportunity for some non-franchise parts of the business where there are single or small clusters of venues."

Bracken said the company will need to look at some of the details of the report to see if the company's plans will change.

The government decision was applauded by Len Thompson, CEO of the Floating Pipeline Company of Halifax. It is one of four companies — including Heritage Gas — that want to distribute compressed natural gas.

"We could be on the road by this fall," Thompson told CBC News.