Monday, October 04, 2010

NG pipeline for Norton School; Council sees the big picture

Last week the Council's Planning Committee discussed the possibility of extending natural gas pipelines to both Norton School* and Doolittle School.** When the issue of costs arose, it gave everyone pause. As the MRJs Jesse Buchanan reported:

Town Council planning committee chairman James Sima said Norton school could be hooked up to existing gas pipes... for $500,000, while Doolittle could be hooked up for $450,000.

Not chump change. But the Planning Committee recognized that initial costs are only part of the discussion.

Using the Town's Energy Benchmarking Tool, we immediately knew that Norton School had about $105,000 in energy bills last year, including both oil and electric. But costs are a function of the main concern: consumption.

DPW staff quickly determined that Norton's oil consumption was:

19,500 gallons (delivery dates from 11/16/09 to 3/31/10...)

and then had that converted to BTUs and to an equivalent of:

2,621 MCF of natural gas.

Then BOE staff immediately reviewed Norton's numbers with a back-of-the-napkin calculation and determined:

19,500 gallons of oil @ $2.362 = $46,059
26,210 CCF of natural gas @ $1.22 = $31,976

And noted that ancillary costs* may be $3,000 annually... for an annual savings of $17,000 based on current unit costs.

By itself, this would be a 30 year payback on the Norton pipeline.

$500,000 / $17,000 = 29.5 years

And while there are other tangible benefits,** 30 years is a long time. So by itself, this may not work. BUT...

Yankee Gas is interested in Town business beyond Norton and Doolittle.

For example, the Youth Center uses oil exclusively. Yankee would like to sell NG there. And while CHS runs largely on oil, it's also prepared to heat with NG... but until now, the pool consumed everything that made it that far south.

So the new NG capacity offers the possibility of material changes to the overall Yankee / Town relationship. As such it may be possible to work within the DPUC-regulated pipeline costs, while moving our schools to NG and providing an improved quality of life / lower cost of living to many town residents.

I thank Jimmy Sima and the Planning Committee for looking at not only the initial costs, but at the lifecycle costs, including the much larger relationship. It's also nice to see the Council and BOE doing this for many big, new projects, such as the pool, the turf and natural gas pipelines.

Where data can be quantified with some degree of certainty, we should look at the big picture and not be exclusively focused on initial costs.

Tim White

* Probably down Route 42
** Probably down Ives Row and across Oak Avenue
* NG is much cleaner than oil, thus it's less costly to maintain equipment, NG does not need anyone monitoring oil levels to ensure timely fuel drops, etc.
** NG is from North America, not the middle east; NG is cleaner than oil; North Brooksvale homeowners could hookup; feeder roads may be able to get pipeline in the future; etc.


Anonymous said...

In the years to come there may be an even greater divergence in price between oil and gas and that gas will reign supreme.

Any extensions make other extensions easier and build for the future.

I would hope that the gas company will either pay for the extension or be a major contributor. Also, others should be able to connect to it.

Skip the turf and put the money into something that won't end up being a millstone around our neck.

Tim White said...

I'm guessing that future oil prices increases outpace that of NG, though they tend to mirror each other.

I would hope that the gas company will either pay for the extension or be a major contributor.

The DPUC regulates their contribution so that current ratepayers are not significantly subsidizing new ratepayers.

others should be able to connect to it.

This could be a real win for anyone who has the opportunity to switch from either oil or electric to NG.

Anonymous said...

What is the source of the cost estimates for extending the lines and are they accurate?

Tim White said...

The source is Yankee. And since we have sewers on both North Brooksvale and Ives Row / Oak Ave... I'm guessing that somebody has a pretty good idea of what it entails to excavate in either place... though that may just be wishful thinking on my part... it's all very preliminary at this point.