Dover-based Chesapeake Utilities Corporation plans to expand its natural gas system in Maryland, despite a competing pipeline proposal.
The Dover company has not commented on a competing proposal from Baltimore-based start-up, Demarva Pipeline Co.
Delmarva is no relation to the utility that serves the Delmarva Peninsula. Delmarva has proposed a pipeline that would run from Rising Sun, MD along Delaware State line.
The goal of Delmarva Pipelne would be to serve properties along the pipeline. The pipeline comes with an estimated price tag of $1.3 billion – equal to the total stock market value of publicly traded Chesapeake.
Shares in Chesapeake are trading around $69 a share, off from December’s all-time high of $85.
Delmarva Pipeline faces many hurdles
American Agriculturalist reported the pipeline would supply a proposed gas-fired power plant on the Eastern Shore, but would face a host of regulatory hurdles on a route that would pass under a substantial amount of farmland, wetland and waterway areas.
The proposal comes as natural gas supplies remain abundant and affordable, due to new wells from the Marcellus formations, primarily in western Pennsylvania.
Chesapeake, which got its start after the Civil War as a gas lighting company in Dover, grew slowly over the years, due to the costs of natural gas and volatile pricing. In recent years, it has stepped up expansion as demand for the fuel increased and prices remained low.
Delmarva Power, which offers natural gas service in northern Delaware, has expanded its natural gas system to more subdivisions and industrial customers.
Expansion cited by Chesapeake
“Chesapeake is committed to bringing more natural gas to the Delmarva Peninsula including areas in Maryland and Virginia’s Eastern Shore. Through the company’s interstate natural gas transmission pipeline, Eastern Shore Natural Gas Company (ESNG), and its natural gas distribution division, Chesapeake Utilities, the company aims to expand its service offerings to new areas, a release stated.
ESNG, like the competing pipeline, has initiated a nonbinding open season for its Market Hub Services and Pipeline Expansion Project. The project would expand the availability of natural gas on the Delmarva Peninsula, the company stated.
“Our company has a long history of safely meeting the growing demand for energy while tailoring our services to fit the unique needs of an area. We’re committed to preserving the Eastern Shore’s environment and bringing natural gas to the region in a manner that best suits the energy needs of our communities,” said Michael P. McMasters, CEO of Chesapeake Utilities Corporation. “We look forward to building on recent service area expansions including those in Worcester and Cecil counties, Maryland and eastern Sussex County, Delaware.”
Jeffrey Tietbohl, Vice President, Eastern Shore Natural Gas Company, says the Chesapeake subsidiary is “committed to serving our customers and communities on the Delmarva Peninsula. We’ve done so for the past 60 years, as evidenced by our recent investment of more than $100 million to add significant firm transportation pipeline capacity and enhanced reliability in the region through our 2017 System Expansion Project.”
Natural gas for Ocean City
Tietbohl added, “We believe the project will generate jobs and lower energy costs in the area. In addition, increasing the availability of natural gas serves as an attraction for businesses looking to relocate to buildings or industrial parks that use natural gas. Natural gas service provides long-term benefits for residents, businesses and the community at large.”
Expansion efforts have been underway at Chesapeake’s natural gas distribution division and Sandpiper Energy. Sandpiper has been converting a propane pipeline system to natural gas in the Ocean City, MD area.
“We are committed to providing natural gas to communities throughout Maryland and Virginia’s Eastern Shore and Delaware that will result in long-term savings for consumers, reduced emissions, and job creation in communities,” said Aleida Socarras, vice president, Chesapeake Utilities. “With an abundant supply of natural gas providing cost savings and environmental benefits across the nation, many states, like Maryland, Virginia, and Delaware, are looking for ways to expand natural gas infrastructure so more citizens and businesses can access this clean, domestic fuel.”
In 2016, Chesapeake Utilities partnered with Cecil County, Maryland business, Warwick Mushroom Farms, to replace the mushroom grower’s supply of fuel oil with natural gas, marking the first time the more economical option has been made available in the southern portion of the county.
Chesapeake Utilities plans further expansion in Cecil, a county that had long been hampered by a lack of natural gas service for businesses and homes outside of Elkton. Elkton has long been served by a natural gas utility.
