All paper mills need access to natural gas. If your mill is located in a very rural part of the country or is located on geographically challenging terrane, you might still be burning heavy fuel oils, coal or even tires.
You are responsible for the mill and the surrounding community. Your facility must remain competitive, comply with ever stricter EPA air emissions regulations, and do its part to meet corporate’s “green goals.” We talked to one potential customer who said that she could fine tune her boiler to pass a CO2 test or fine tune it to pass a NOx or particulate test…..but not all at the same time. This situation causes a great deal of pressure on your staff. It is sort of like the Volkswagen dilemma. It will eventually need to be fixed.
If your mill is not yet on a gas pipeline, you may think that your only “fix” is paying millions of dollars per mile for a pipeline extension. The money is one thing but the environmental requirements, environmental activists, delays, and bad press caused by right-a-way purchases or eminent domain threats are just as bad.
How do you find the particular solution for your mill? There is a new option called the virtual pipeline. At least ten mills in the US are currently receiving trucked natural gas from a virtual pipeline.
A virtual pipeline is a fleet of tractor-trailers that delivers the same gas that traditionally comes from a pipeline. Virtual pipeline providers keep their trucks rolling so that the mill is provided with gas 24/7. The service does not require the mill to build storage as the gas is drawn out of the trailers directly into the power house at whatever temperature and pressure that is required. With between two and twenty 40 foot trailers unloading CNG all day long, the experience is like being on an old fashioned gas pipeline. Customers love it! Some find the added benefit of having the wood products that they also burn actually burn more efficiently with gas in the mix.
You do not need to convince corporate to fund a pipeline extension when no one knows how long your mill will be producing its current product lines or how long it will even stay operational. And your mill may do so well on natural gas that you will be a hero and get new equipment, put in a CHP system, or expand. A virtual pipeline can expand with you at no cost. The virtual pipeline service provider who had been delivering six loads a day for your process heat just brings ten loads a day after the expansion. No new capital requirement.
How exactly does this work? You work with your engineering team to convert the boilers, kilns, etc. to being dual-fuel. You can do it in stages if you like. The primary fuel source will be CNG and the backup may be fuel oil. The backup is needed when the virtual pipeline provider is curtailed at the transmission line, but the need for backup fuel would also exist if you were physically connected via a distribution line to the same transmission line that curtailed the virtual pipeline provider. Back up fuel is not bad, however, as it represents a good insurance policy in today’s erratic energy pricing world. Who knows when gas will be cheaper than fuel oil or vice versa? The service provider may occasionally have a problem with your delivery because of inclement weather or perhaps an automobile accident causing a delay. In this very infrequent scenario, the provider’s Operations Team will contact your operations people to discuss slowing down the mill, or switching briefly to your backup fuel. This does not happen often and in fact, it is usually the mill asking the virtual pipeline provider to slow down fuel deliveries due to equipment maintenance or malfunction.
While you are converting the equipment inside your mill, the virtual pipeline company is building a compressor station on the closest interstate transmission gas line, building decompression and heating equipment outside your power house, ordering new trailers, and hiring drivers. This all takes about twelve months. Most of the work outside your walls is paid for by the virtual pipeline company.
Besides the conversion, your expenses are opex expenses. You can purchase the commodity yourself or the virtual pipeline provider can purchase it for you. You pay them for transportation to your mill. The price is determined by many factors, but the most important factors are your distance from the proposed compression station, the length of contract with the virtual pipeline service provider, and the volume of gas purchased.
It is pretty simple. Connecting your facility to a natural gas virtual pipeline has many advantages. It is cheaper than paying for a pipeline extension, it requires much less maintenance than complex scrubbing equipment, and now that your facility is dual-fuel, it can act as a temporary solution while you wait for the pipeline, should it ever arrive. Additionally, natural gas is a much safer and environmentally friendly fossil fuel, and it can satisfy ever more stringent clean air regulations. Using a clean fuel produced in North America has the positive effect of reducing our dependence on foreign oil, and historically it has shown significant cost savings relative to other fossil fuels. Natural gas can now be the solution to a variety of problems facing mills that use dirty and expensive fuels.
NG Advantage LLC – a Clean Energy company (NASDAQ: CLNE) - announced that it has signed a contract to work with International Paper (NYSE: IP) to deliver compressed natural gas (CNG) to International Paper’s Ticonderoga, N.Y. mill.
NG Advantage will deliver CNG to the mill using its Virtual Pipeline which consists of compressor stations located on natural gas pipelines, a fleet of specially designed carbon fiber CNG trailers, and off-loading and monitoring equipment which NG Advantage is installing at the mill. Deliveries will begin in May of 2015.
International Paper initially awarded this contract to NG Advantage in order to begin using natural gas prior to the completion of a planned natural gas pipeline. However, as previously announced, International Paper decided to cancel the pipeline project for cost reasons.
Despite the cancellation of the project to deliver natural gas to the mill by constructing a pipeline under Lake Champlain, contributing to a cleaner environment and reducing fuel costs remain very important to International Paper. The company has issued a new RFP for a long term trucked-CNG contract, starting when the current contract with NG Advantage ends. NG Advantage is a bidder for the long term contract as well.
The mill is currently International Paper’s largest US plant without access to natural gas. In order to meet this huge demand safely and reliably, NG Advantage has invented the “Private Virtual Pipeline”, a high volume variant of the Virtual Pipeline service, which the company introduced to the US market in March of 2013. Tractors and drivers will be based in Ticonderoga, NY – where the mill is - and gas can be provided from any of several compressor stations used by NG Advantage.
Clean-burning North American natural gas is expected to displace at least 32,000 gallons of fuel oil a day during this contract. The gas will be used to run the mill’s kiln and power boiler.
NG Advantage’s CEO Tom Evslin said “Because International Paper is staunchly committed to their environmental goals, they have done years of design work to extend a pipeline under Lake Champlain to replace fuel oil with natural gas. They will now be able to convert to burning natural gas even though the pipeline extension proved uneconomical. We are proud to use our equipment, technology, and experience to deliver the economic and environmental benefits of natural gas using our “Private Virtual Pipeline” to the Ticonderoga mill and to contribute to the economy of that region.”
NG Advantage was the first company to deliver compressed natural gas to industrial customers in the United States and is the US industry leader in volumes delivered. It is a US based mid/downstream company which currently trucks CNG to 22 large industrial and institutional customer sites in New England and New York State. With its majority investor, Clean Energy Fuels, NG Advantage is expanding its coverage area nationwide in 2015.
About NG Advantage LLC: NG Advantage is a US based mid/downstream provider and the leader in the new “Virtual Pipeline” industry of trucking compressed natural gas (CNG) in the U.S. – bringing the economic and environmental benefits of North American natural gas to large institutions and industrial customers without access to a pipeline or on a pipeline without sufficient capacity. The Company’s current customers include large regional hospitals, paper mills, asphalt facilities, food processors, industrial dry cleaners, LDCs, and manufacturing facilities. As a result of the purchase of a controlling interest in the company by Clean Energy Fuels (NASDAQ: CLNE), NG Advantage is expanding its service area nationwide beginning in 2015.
About International Paper: International Paper (NYSE: IP) is a global leader in packaging and paper with manufacturing operations in North America, Europe, Latin America, Russia, Asia and North Africa. Its businesses include industrial and consumer packaging along with uncoated papers and pulp. Headquartered in Memphis, Tenn., the company employs approximately 58,000 people and is strategically located in more than 24 countries serving customers worldwide. International Paper net sales for 2014 were $24 billion. For more information about International Paper, its products and stewardship efforts, visit www.internationalpaper.com