Soaring natural gas prices cause three day shutdown at GPT

GORHAM – Gorham Paper and Tissue shut down production for three days over the weekend as the extreme cold temperatures spiked natural gas prices. GPT CEO Mike Cummings said about 100 employees were temporarily laid off Saturday, Sunday, and Monday as both production and shipping operations were shut down. He said some maintenance workers remained on duty.
The subzero temperatures caused the price of natural gas supplied by the Portland Natural Gas Transmission System to skyrocket. Cummings said the price of natural gas reached the point were it was "uneconomical to operate the mill".
Last Friday, Cummings said the price per dekatherm was $33 compared to $6.50 per dekatherm last December. The price of natural gas dropped Tuesday and again yesterday. Operations resumed Tuesday.
"We're running two machines and trying to start a third," said Cummings.
North County State Senator Jeff Woodburn said he notified Gov. Maggie Hassan and key state officials of the situation.
"I've reached out to key local officials and am ready to do whatever I can to help GPT and the workers impacted by this shut down. This is a reminder that our daily focus must be about stabilizing our fragile economy and strengthening our local communities," Woodburn said.
Mark Belanger, manager of the N.H. Employment Security Office in Berlin, said the laid off workers may be eligible for partial unemployment benefits depending on their past earnings. He said a handful had come into the office to file.
The Gorham mill was not the only paper mill effected by the increasingly competitive market for natural gas in New England. The Portland Press Herald reported several mills in Maine limited production or shut down parts of their operation. The price surge in New England is blamed on a lack of pipeline capacity in the region compared to other parts of the country where natural gas is cheap and plentiful.
New England's electric grid has increasingly turned to natural gas, which now provides over half of the region's energy production. But there has been no corresponding increase in pipeline capacity.
When temperatures drop to subzero, demand for natural gas increases dramatically and so does the price, which Cummings said is based on the Boston and Massachusetts market.
Cummings said natural gas prices have never been this high and winter is just underway.
"So we're in uncharted territory," he said.
The problem is not likely to go away any time soon. Several articles on the topic note that pipeline projects can take years to bring to fruition and nothing is planned for New England until at least 2016.
Compounding the problem for the Gorham mill is problems with the Androscoggin Valley Regional Refuse Disposal District's landfill gas project. That had been supplying almost 20 percent of the mill's needs but has been shut down for some time.
The mill retained its fuel oil boiler and Cummings said it is assessing when it might be more economical to switch to fuel oil. The mill is also looking at ways to reduce its natural gas consumption.
Cummings said he also spoke last month with Burgess BioPower officials about an earlier proposal to have the biomass plant supply hot water to the mill. When Laidlaw Energy Group was initially proposing the biomass project, it signed a memorandum of understanding with then mill owner, Fraser Papers to use heat produced as a byproduct of the biomass plant to heat water for the mill. The heat and recovery system was to be jointly engineered by the two parties using available piping and an existing 2.5-mile pipeline between the sites. Laidlaw estimated it could heat the water to at least 80 degrees. The mill uses about 8 million gallons of water daily that it pulls from the Androscoggin River and much of that water is converted to steam for papermaking operations.
Cate Street Capital took over the biomass project and the mill was sold to Lynn Tilton and the memorandum was never implemented. Cummings said the engineering was not done as part of the biomass construction and it is not a project that can be implemented immediately. But he said he thinks it can help the mill long-term.
"The potential is still there," he said.