Nearly 2.5 million miles of gas pipelines sprawl across the United States, delivering safe, affordable and reliable energy to many areas. But wide pockets exist where gas pipelines don’t—and where communities, including large agricultural and manufacturing customers, rely on more expensive and less climate-friendly fuels, such as bottled propane, heating oil or wood chips.
Lack of access to gas due to infrastructure issues is a topic that the National Association of Regulatory Utility Commissioners tackled back in 2017, convening a Presidential Natural Gas Access and Expansion Task Force to identify and suggest methods and recommendations for expanding natural gas into underserved and unserved areas, including rural communities.
Mississippi Commissioner Brandon Presley was co-chair of that task force along with Pennsylvania Commissioner John Coleman. “Too many Americans live in communities that lack the basic access to natural gas service, a situation that we hope to remedy,” Presley told Natural Gas Intelligence at the time the task force was announced.
There’s another vital reason for expansion. As gas utilities set net-zero goals and formulate aggressive policies to meet them, relationships with the agricultural community—often based within rural, underserved areas—can be described as a win-win-win. They are a win for gas utilities, which are seeking renewable energy partnerships with farms to help win the decarbonization war. They are a win for the farms, which need new revenue streams and lowercost energy for daily operations—and which benefit even further from byproducts of renewable energy partnerships, such as bedding or fertilizer.
Rural infrastructure expansion is also a win in the bigger picture, enabling natural gas to tell its story of how it serves customers with reliable, low-cost, innovative—and, yes, sustainable—energy.
Under a blazing-hot blue sky in Mississippi this past July, Presley, along with Atmos Energy representatives, county officials and legislators, cut the ribbon for a roughly 20,000-foot rural expansion project that will connect natural gas to 57 residents and companies—including a large grain-drying business—in Tunica County.
It’s the latest in a series of projects under Atmos Energy’s rural expansion program, which has completed 120 extensions in 43 communities to date. And there’s still more to be done.
Mississippi is the fourth most rural state in the nation, with a topography that makes it difficult for a utility to serve those customers, said Wendy Collins, vice president of rates and regulatory affairs at Atmos Energy. Plus, the state has an extension policy, designed many years ago, that limits ratemaking to approximately 75 feet of main for new customers. That doesn’t work for rural areas where homes are much farther apart. So, in 2017, the Mississippi Public Service Commission gave the greenlight to an Atmos Energy expansion initiative, providing $5 million a year during an initial five-year period to enable Atmos to expand gas lines into rural areas; that funding has been renewed for another five years.
The program also allows for public/private partnerships in cases where projects are not economically feasible but where counties agree to pay a share of the costs. That was the case in Tunica County, where Atmos invested nearly $700,000 and the county invested more than $125,000.
Demand for projects is far outpacing the budgeted dollars, said Matt Davidson, president–Mississippi division for Atmos Energy. Rural demand for reliable, affordable energy is high in the state, he added. Having backup reliability during winter storms and other weather events is top of mind, but “at the end of the day, people want choices,” he said. “They clearly see that all energy costs have increased, including natural gas, but they still have those savings compared to propane or electricity. … People in these areas are just pragmatic. They’re viewing the potential for cost savings. They like not having to fill up a propane tank every winter or not having to buy an entire winter’s worth of propane in October or November.” However, the Tunica project would not have been possible without a large agricultural customer—a grain-drying operation that wanted to convert from propane to natural gas. When it did, it saw its fuel costs drop by 60%. “Having that agricultural, large end-user and having the county put funds up really enabled us to be able to extend all the way out to this community,” said Davidson.
The economic impact of pipeline expansion goes even further. Davidson has seen it in other counties, where new housing subdivisions have sprung up and more businesses have moved in. He echoed what he has often heard Presley say: “You don’t need to evaluate the success of these projects on a five-year basis. You need to be looking out even further than that. What impact will this have to those areas, to these economies 10 to 20 years into the future? Those gas pipelines are going to be there, and they’re going to have access to them. I think you can argue it increases the property value. It makes it a more desirable area to build a home, a business. You have to have a long-term view.”
Along the Delmarva Peninsula, poultry farms raising chickens for Perdue, Tyson, Mountaire and other poultry companies dominate the region. Some residents say that chickens outnumber people, and that was even more true 20 years ago in these very rural areas.
Poultry farming is a complicated and energy-intensive business, where chicken houses must be heated, grain must be dried, mills must process that grain into feed, and processing plants must prepare the chickens to be sold. Two decades ago, Delmarva farms relied on fuel oil to run these giant machines. Today, they depend on natural gas, thanks to a concerted effort by Chesapeake Utilities Corporation to extend pipe into rural areas and meet the needs of the poultry industry, local farms and surrounding communities.
“Fifteen years ago, a lot of people didn’t realize the depth of our natural gas system,” said Shane Breakie, vice president of sustainability and organic growth at Chesapeake Utilities. “There was not the public recognition that this natural gas infrastructure was in place and ran all the way through the state, up into Pennsylvania and tying into Transco, Columbia and TETCO, transporting gas southward throughout the Delmarva Peninsula.”
That natural gas infrastructure, however, is a lifeline in more ways than one. It took some education on Chesapeake Utilities’ part, but once the first poultry producer signed on—cutting its energy costs by millions of dollars, noted Breakie—neighboring farms began to demand natural gas. The utility forecasted that residential and multifamily demand would follow, and it has, with housing developments popping up all along the coast and moving inland; these subdivisions now are independently marketing their homesites by touting the availability of natural gas appliances. The peninsula has surpassed 100,000 customers to date, said Breakie, and with today’s post-pandemic housing market, the pace is not expected to slow.
But Breakie is perhaps most proud of this: “When you look at the EIA carbon dioxide emissions by state, Delaware’s emissions have gone down over the last 15 years. We have been a significant contributor to that reduction because we were able to reach a lot of these facilities and switch them out from oil to natural gas.”
While those reduced emissions are not solely due to that switch—coal power plants also moved to natural gas during that time—overall CO2 emissions have gone down 20% from 2005 to today, he said.
Meeting these goals required partnerships—with the agricultural community, towns and the states, all of which had to realize that the infrastructure was critical. To that end, Delaware and Maryland developed programs that helped support natural gas infrastructure growth. Also, unlike in other parts of the country, natural gas expansion projects received minimal resistance, said Breakie. He credits that to being an engaged, active partner with local communities, and to educating customers about their energy choices early and working closely with them to meet their energy needs.
According to the utility, it collaborates with communities to continue to forge the path to significant carbon emissions while protecting jobs, supporting economic development and providing energy reliability. In doing so, it involves builders and developers, local home builders associations, restaurant associations and business groups in conversations about consumer energy choice.
Breakie also noted that it’s important to be actively involved in and aligned with the communities where the company operates. Building these relationships has helped the company know and understand what the communities’ needs are while also creating a more sustainable energy future, he said.
As the company planned to meet forecasted demand, Breakie added that a new geographic information system 10 years ago helped the utility identify large industrial or agricultural customers that could benefit from switching to natural gas. Chesapeake Utilities representatives could then meet with those customers to discuss the economic benefits, but equally so, the environmental benefits.
Then there’s the overall economic boom that Breakie has seen happen, with thousands of jobs added to a community once new businesses begin to relocate thanks to natural gas. “We’re meeting our customers’ needs,” he said, “and there’s plenty of opportunity out there.”
The opportunities also include those in Pennsylvania, where UGI’s GET Gas program has installed gas main in 205 projects since the program’s inception in 2014, connecting 476 new customers as of the end of fiscal year 2021. In all, GET Gas has made the fuel available to 25 unserved communities that previously did not have access, said Joseph J. Swope, manager of media relations and special projects.
While many of GET Gas’ projects would not be described as rural, said Swope, the Growth Extension Tariff, or GET, program was the first of its kind when it was launched, enabling customers who want natural gas to pay back the costs of extending a main via a monthly surcharge over a 10-year period. At the time, Public Utilities Commissioner Pam Witmer challenged other gas utilities to be “as creative and innovative as UGI” in devising ways to bring service to new areas.
Several years ago, UGI also modified its general extension policy by moving the threshold to extend mains at no cost to up to 150 feet.
GET Gas works in conjunction with Pennsylvania’s Pipeline Investment Program, or PIPE, which provides grants to construct the last few miles of natural gas distribution mains to business parks and existing manufacturing and industrial enterprises; grants cannot exceed $1.5 million or 50% of the total project costs, whichever is less. “[This] has been an important and invaluable initiative to extend natural gas service across Pennsylvania,” said Swope. “A significant number of PIPE grants have been driven by local or regional economic development organizations and have been used to make natural gas conversions viable to larger commercial and industrial companies. PIPE grants have served as a great complement to initiatives such as GET Gas.”
Over in Nevada, the state passed Senate Bill 151 in 2015, granting authority to Southwest Gas to expand its natural gas service to unserved or underserved areas. To date, the utility has completed nearly $100 million in expansion projects under SB 151, including expanding gas service to two river valley cities, Spring Creek and Mesquite.
Spring Creek is in northeastern Nevada, where harsh winters can deliver temperatures as low as minus 20 degrees Fahrenheit. The energy reliability of gas was a huge selling point, as were the economic development opportunities and access to cleaner-burning fuels, said Julie Williams, senior vice president and chief operations officer at Southwest Gas. In fact, during the first year of the Spring Creek expansion, 100% of residents who were identified as eligible for gas service signed on.
“An average residential customer in Spring Creek uses about 1,000 gallons of propane a year,” said Williams. “By switching to natural gas, these customers could potentially save up to $1,500 a year. Customers no longer need to cut firewood or transport wood pellets back and forth from stores to their homes and from the garage to their heating source. More importantly, it is helping cities maintain healthy air quality.”
Southwest Gas said that with the expanded gas infrastructure in Mesquite and Spring Creek, it is now poised to deliver renewable natural gas and future energy solutions like hydrogen to customers in those areas. “This is why continued investment in natural gas infrastructure is important,” said Miller.
UGI inked an agreement with Archaea Energy in 2021, and in January this year, RNG from the Keystone Landfill in Dunmore, Pennsylvania, began flowing into its pipelines. Once it is fully operational, the interconnect can accommodate up to 5.3 billion cubic feet of RNG supply each year, making it the largest current RNG supply point in the United States to date, according to a UGI news release.
In Delaware, said Breakie, emissions from vehicle fuel—specifically Class 7 and 8 vehicles, trains and boats for shipping—are identified as an opportunity. With natural gas infrastructure now in place thanks to Chesapeake Utilities’ expansion efforts, he foresees being able to meet the needs of new, additional customers right where they are by partnering with poultry farms to develop RNG and provide a local, sustainable vehicle fuel, which would further drive down the state’s emission levels.
For Atmos Energy, its rural expansion program is also about helping customers reduce their carbon footprint. The switch to gas from propane helps reduce emissions, especially when combined with the utility’s existing and future energy efficiency programs. Atmos is also in the process of filing for a voluntary carbon offset tariff across its eight-state footprint.
How pipeline infrastructure is providing the foundation for natural gas innovation can be further illustrated in a scenario that’s playing out in Vermont, thanks to a partnership between Vermont Gas, Vanguard Renewables, Goodrich Family Farm and Middlebury College.
The farm began operations in 1956 with just 10 cows, but with a 900-head herd today, that’s a lot of food scraps and manure. In 2021, after more than a decade of working on the project, the Northeast’s largest farm-powered anaerobic digester, built by Vanguard, officially launched at Goodrich Family Farm to convert waste into RNG, which will be used by Middlebury College and Vermont Gas customers.
During that decade, Vermont Gas also put a new pipeline into service, and “we wouldn’t have been able to help the Goodrich Family Farm without this project,” said Neale Lunderville, president and CEO of Vermont Gas.
The utility had long been working on other rural expansion projects, with dairy and cheese producers such as Cabot as anchor customers, switching these farms and surrounding communities from propane or fuel oil to natural gas and helping to reduce the costs of production.
While Vermont Gas recognizes the economic benefits of natural gas, “We [also] need to make it a more sustainable energy source,” said Lunderville. “Part of our vision and mission is to help fight climate change by decarbonizing our energy supply, and that leads into RNG. But it has a lot of other elements to it—energy efficiency, in-home innovation and other nonfossil products. So, we have to find a way to balance the economic benefit of an affordable fuel source with more renewable, environmentally friendly ways of providing warmth to customers.”
Pipelines, he said, are “the integrator of this value.” In the case of the Goodrich project, “Without the pipeline, the gas would be stuck on the farm, and it wouldn’t be able to produce value for the farm,” he said. “It’s that pipe that really allows that value to flow, if you will.”
That value also includes providing farms with a new revenue stream and byproducts such as fresh bedding; preventing phosphorus from leaching out of waste streams and into waterways, and instead extracting that element so it can be placed on fields as fertilizer; and capturing methane that would otherwise be released in the atmosphere and making it useful.
Lunderville said that there are at least 10 large farms in the vicinity of Vermont Gas’ three-county pipeline with the potential for similar RNG projects. For other large farms outside the pipeline’s scope, there’s also the possibility of being able to truck in the RNG.
“The thing about RNG is that it ticks so many boxes,” he said. “The benefit to the farm, the benefit to the rural community, the environmental benefit and then, on top of that, the climate benefit. You stack all those together and there are few other projects that we’re looking at that have so many benefits all in one project.”
Like many utilities, Vermont Gas has an aggressive goal to reduce its greenhouse gas emissions by 2030 (in its case, 40% below 1990 levels) through a combination of RNG, energy efficiency and working with like-minded energy leaders on innovative solutions. “There are still folks who don’t think we’re moving fast enough,” Lunderville said. “But we are moving at the speed of the technology and also at the pace that our customer can afford. … We’re always going to do it safely and reliably. But we also need to be able to do it affordably and sustainably. Those have to be in balance.”
He has this to say about the fears of the naysayers: “Even after we do energy efficiency, even after we electrify a lot of in-home appliances and systems, there is still going to be a need for delivered energy via a pipe. We choose what goes into that pipe. We have so far largely chosen fossil gas. But in the future, we will choose RNG. We will choose hydrogen. We will choose synthesis gas. We will make different choices in order to decarbonize that load. And I think it’s inside of our field of view to be able to do that over the next 20 to 25 years.”
Added Breakie: “What I remind people of is that our company has been around for 160 years, but we’ve only been a natural gas company for 70 years. We used to utilize manufactured gas, or we utilized a propane air mixture. So, our history as a company has always been looking for solutions to find products that are better for the environment and to lower costs. We’re an energy delivery company with a commitment to be a leader in the transition to a lower-carbon future. We’ve shown it over the last 160 years, and our plan is to keep showing it for the next 160 years.”
Other Selected U.S. Expansion Projects
Virginia
In 2022, the General Assembly approved House Bill 558, which in part updates the existing Steps to Advance Virginia’s Energy, or SAVE, plan. Under the bill, enhanced leak detection and repair programs are included as eligible infrastructure replacement projects under SAVE. The SAVE Plan is a Virginia State Corporation Commissionapproved plan through 2024 to enhance the reliability of the natural gas delivery system by accelerating the replacement of pipeline infrastructure.
Michigan
In July 2022, Consumers Energy received approval from the Michigan Public Service Commission for a $170 million investment to modernize the natural gas distribution system, making it even more safe, clean, reliable and affordable for customers. The investments are part of the company’s Natural Gas Delivery Plan, a 10-year, $11 billion blueprint that includes upgrading transmission infrastructure, transforming compression and storage operations, and replacing aging distribution pipes. Consumers is also adding 146 miles of new gas distribution main in areas currently without natural gas, supporting more than 2,000 customers.
Missouri
Since 2004, Spire Missouri has operated using an infrastructure system replacement surcharge, or ISRS, to improve safety by replacing older pipelines with more reliable plastic pipe. The program is a crucial part of Spire’s strategy to reduce gas utility methane emissions by 59% by 2025 and 73% by 2035 across all its service territories. In 2021, Spire replaced an additional 285.8 miles of aging infrastructure, which resulted in a 35% emissions reduction per 1,000 system miles of distribution pipeline compared to fiscal year 2020. This marks a 68% reduction in emissions over the last five years.
Maryland
In late 2021, natural gas began flowing in Somerset County for the first time after years of planning resulted in construction finally getting off the ground in early 2020. Previously, Somerset County had been one of only three counties in Maryland without access to natural gas; it is also one of the poorest counties in the state. The Somerset County Expansion Project extends natural gas service to the Eastern Correctional Institution and the University of Maryland Eastern Shore. ECI will reduce its on-site carbon dioxide emissions by 65% annually and will reduce the amount of particulate matter that it emits by 99.5%. UMES will reduce its on-site CO2 emissions by 38%. The project will provide more than 1,300 construction jobs over the next decade and more than $7 million in new wages because of lower energy costs.