Natural gas, oil companies compete for customers

BANGOR — With the winter freeze approaching, natural gas companies are scrambling to hook up their last new customers of 2013, while Maine oil and propane dealers are trying to give their users money-saving options in hopes they won’t convert.

“We’re on track to put in about 800 new services this year,” Andrew Barrowman, manager of sales and marketing for Bangor Natural Gas, said Wednesday.

The company is providing natural gas to 4,156 customers in Bangor, Brewer, Orono, Old Town Veazie and Bucksport, with about 275 more to be added before installations wind down by December.

Bangor Natural Gas has set a goal of bringing 5,000 customers online by 2014 and doubling that amount by 2017, Barrowman said. The company is working to extend a gas line to Lincoln and will continue to spread through Bangor’s surrounding communities, he said.

In 2012, the company added 1,200 customers in an “extraordinary year,” according to Barrowman. That was largely due to the number of densely populated streets the company connected to the pipeline.

In November 2011, Bangor Natural Gas struggled to meet a dramatic increase in demand, and more than 100 new customers had to wait until spring to have their homes hooked up.

That isn’t expected to happen again this year, according to Barrowman.

“We’ve stopped taking customer applications for installing gas this year,” he said, adding that they’re still accepting applications for spring hookups. A Bangor Gas expansion into Lincoln is expected to bring more customers after the company taps into the 190-mile Loring pipeline, which runs from the Mack Point port facility in Searsport to the former Loring Air Force Base in Limestone.

Farther south, Maine Natural Gas has 540 new customers hooked up so far this year and is pushing to add 250 more customer orders before winter cuts work short. Whether or not Maine Natural Gas will be able to complete all that work in time is “very weather dependent,” according to Peter Bottomley, director of sales and marketing for the company.

If it reaches that goal, Maine Natural Gas will be up to 3,500 customers. It hopes to build to 7,500 in the next five years, Bottomley said. The company has services in Gorham, Freeport, Pownal, Brunswick, Topsham, West Bath and Bath, and recently expanded to Augusta after finishing a 21.4-mile connection from the Maritimes and Northeast Pipeline, which stretches from Atlantic Canada to Massachusetts, to the state’s capital city. The new extension will provide natural gas to the new Maine General Hospital and allows for service to other Augusta customers. That Augusta pipeline project cost about $23 million, according to Bottomley.

The prices of natural gas and oil have separated significantly in recent years, prompting thousands of Maine homes and businesses to switch, dropping oil and propane boilers in order to hook into the growing network of natural gas lines spreading across the state. Depending on the natural gas burner installed, residential conversion prices can range from $6,000 to $9,000, according to Barrowman.

But natural gas prices have fluctuated in recent heating seasons. Last winter, customers of Bangor Gas saw a roughly 47 percent increase in the cost of natural gas — from $0.89 per therm charged in December 2011 to $1.30 per therm in December 2012. A “therm” is equivalent to 100,000 British thermal units and is a unit of measurement for natural gas consumption. This month, the price to customers is about $0.91 per therm, according to Barrowman.

Bangor Natural Gas proudly promotes on its website the fact that the current price of the natural gas equivalent to heating oil is $1.27 and that a home using 900 gallons of oil per year at $3.50 per gallon would have saved more than $2,000 in 2012 by switching to natural gas.

As of late October, the price per gallon for heating oil among Bangor-area companies ranged from $3.40 to $3.60, according to MaineOil.com.

The price difference and marketing material it provides has created a challenge for oil and propane providers in recent years, according to Maine Energy Marketers Association President and CEO Jamie Py.

“It’s been a challenging marketplace, obviously, because of the prices,” Py said Wednesday. “Price is king.”

MEMA is a trade association representing about 350 members, including 170 heating oil, propane, biofuels, pellet, electricity and motor fuels providers. Until about three years ago, MEMA was known as the Maine Oil Dealers Association, but the organization rebranded because it saw more members were selling a variety of products and services ranging from heating oil to pellets.

Oil providers should be bringing their customers options when they are considering a change to save themselves money on heating costs, Py said. For example, the cost of propane is closer to that of natural gas, coming in around $2.68 this month, according to the Governor’s Energy Office.

Heating oil companies also can stress the fact that weatherization projects, boiler upgrades and other improvements could dramatically reduce their heating bills without the expense of switching to a natural gas system, according to Py.

Py points out that oil has historically been a better buy than natural gas, at least for 19 of the past 25 years. It’s hard to predict how much longer natural gas will be a significantly cheaper option, as predictions of energy costs are often wrong, he said.

“If (oil and propane providers) want to keep their customers, they’re going to have to offer all these options and continue to be reliable service providers,” Py said.