Chesapeake Utilities aims to bring gas service to Millville

The Millville Town Council at its workshop meeting on Tuesday, June 26, heard a proposal for a natural gas pipeline to connect to the planned Beebe Medical Center campus in the town.

The presentation by Dean Holden, manager of business development for Chesapeake Utilities, outlined the company’s proposal for a 9-mile pipeline connecting to existing natural gas pipes in the Dagsboro area.

Holden told the council and those in attendance on Tuesday that Chesapeake Utilities is hoping to receive a grant from Delaware’s Department of State for part of the cost of the proposed gas line, which is estimated to cost between $2 million and $5 million, depending on the size of pipe they use.

“We have service in Millsboro, we have service in Frankford, we have service in Dagsboro, but as you know, we don’t currently have service east of that,” Holden said. The company currently has about 80,000 customers in the region, most of which are residential, he said.

Holder said the company has been growing its customer base by about 3 percent each year, and that “with the economy picking back up,” hopes are that the growth will only get better. However, he said, the company has to have customers lined up before it starts a new pipeline project.

“The Public Service Commission holds us to ensure that any new gas main has customers committed to pay for it, or alternative revenue sources to pay for it. We can’t build gas mains and have our existing customers pay for that infrastructure,” Holden said.

He said customers in the new service area may pay a higher meter charge per month “if the economics don’t prove to support the installation or the cost of natural gas to get to you. For larger customers, Holden said, “We can do negotiated rates,” which are higher than normal rates. “That’s what we did with Beebe when we got to Beebe in Lewes, to help pay for the infrastructure,” he said.

Customers in the potential service area may be able to hook up to propane services prior to completion of the gas line, as a preliminary step toward natural gas service, according to Holden.

Chesapeake is applying for a $6 million grant from the Delaware Department of State that became available in May for natural gas infrastructure expansion, Holden said. The company’s proposal includes a smaller project in Milford and the Dagsboro-to-Millville extension.

Holden said the line that runs to Lewes was made possible by the presence of three large corporate customers, including Beebe, Allen Harim and SBI Pharma. Since that gas main was run, Chesapeake has added about 1,700 residential customers along the path of that gas main.

The lack of large customers east of Route 113 from Dagsboro has been an obstacle to running a main in that direction, Holden said. Now that Beebe is due to start construction on Route 17 in the coming months, a gas main is closer to becoming a reality in Millville, he said.

A decision on the state grant is expected at the end of July, Holden said.

“The grant could provide enough money to put that gas main in,” he said, adding that the company may foot part of the cost based on customers signing up in the first year of construction. “A few thousand” homes could be served by the proposed 6- or 8-inch main, he said.

The permit process would take about 12 to 18 months, with completion of the project within two to two and a half years, Holden said.

In order for them to serve customers in Millville, the Town would have to grant Chesapeake a franchise, so those discussions would follow in the coming months, if the project is to move forward, he said.

If the grant application is not successful but the Town does approve a franchise for Chesapeake, an alternative to the gas main project could be something called a “tube trailer” system — a small distribution system wherein natural gas is put in pressurized tubes and brought to an area on a tractor trailer, then released into a pipe system that serves a specific area.

“That’s a tool that we use to get a distribution system started to generate enough use that then it supports the economics of bringing a natural gas main in,” Holden said.

In the long term, Chesapeake hopes to bring natural gas from Dagsboro to Millville and then south to the Maryland state line, he said.

Chesapeake, which supplies natural gas to the Ocean Pines community west of Ocean City, Md., hopes to eventually come up to the Maryland-Delaware border from Ocean City, Holden said. All of those pieces, are included in a plan “that’s probably a 10-year expansion plan,” he said.

By Kerin Magill
Staff Reporter