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Panel studying extension of natural gas service to ND communities

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Despite being awash in the natural resource, North Dakota has nearly 370 communities without natural gas service, and an economic development official told state lawmakers Thursday that extending service is crucial to attracting businesses and growing communities.

However, the state’s propane industry, which successfully fought off a bill last year that would have provided tax incentives for extending natural gas infrastructure and converting homes to natural gas, argues that market demand – not state subsidies – should drive the issue.

“We want an even playing field, and we don’t think the government should be involved in this process whatsoever,” North Dakota Petroleum Marketers Association President Mike Rud testified Thursday to the Legislature’s Economic Impact Committee, which is studying the issue.

Public Service Commission chairwoman Julie Fedorchak said North Dakota currently has 89 communities with natural gas service and 368 without it, including 11 with a population of more than 1,500 people: Belcourt, Beulah, Bottineau, Harvey, Hazen, Hillsboro, Lisbon, Mayville, New Town, Oakes and Rugby.

Challenges for extending natural gas service include the distance, cost and the limited number of customers across which to spread the cost, Fedorchak said.

“It’s clearly an important issue for our small towns,” she said. “There’s no simple solution or silver bullet.”

Communities with access to natural gas have an economic development advantage over those that don’t, said Connie Ova, CEO of the Jamestown/Stutsman Development Corporation and president of the Economic Development Association of North Dakota, which represents more than 80 organizations across the state.

The association has formed a Natural Gas Committee to promote expanding natural gas service and is collecting information about other states’ efforts to do the same.

“National site selectors have reported they will not consider a community for a manufacturing project if it doesn’t have natural gas service,” she said.

Jamestown is among the cities underserved by natural gas, Ova said, noting companies there use it but must have an alternate energy source like propane or steam.

“We have definitely had issues because we don’t have adequate natural gas,” she said.

A $3.3 billion plant at Spiritwood east of Jamestown that would have converted natural gas from the Bakken oilfields into nitrogen fertilizer was canceled by CHS last August, partly because of rising costs and water needs. A proposed natural gas pipeline from Wishek to Spiritwood to supply the plant is now on hold until a substantial end user can be found, Ova said.

The Bobcat plant in Gwinner is fueled by propane and the company is satisfied with the service and rate, but the cost is three times that of the pure fuel rate of natural gas, Fedorchak said after speaking with the company’s controller for North America on Wednesday. She said they’ve looked at options with utilities for natural gas extension but haven’t been able to come up with a plan.

“The reality is … that the opportunities to grow in Gwinner are hampered because of the fuel cost inputs there,” she said.

At least 33 other states are looking at various types of natural gas extension plans and policies, she said. Last year, Minnesota passed a law that allows public utilities to petition state regulators for a rider that spreads the revenue deficiency from a natural gas extension project across all of the utility’s customers.

Reach Mike Nowatzki at (701) 255-5607 or by email at mnowatzki@forumcomm.com.

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