Tar Heel Tattler - December 2005

Natural gas hasn't boomed in the East
By Edward Martin

Maybe it’s heresy, but the gospel of natural gas as an economic-development catalyst might have to be rewritten. A $188 million pipeline in Eastern North Carolina has failed to start a predicted stampede of industrial development.

The pipeline, completed in 2004, has attracted about 1,000 customers, mostly residential. Recruiters say steadily rising prices are to blame. Now, with Hurricane Katrina-linked disruptions and shortages, some economists predict prices will be 50% higher this winter than a year ago. Electricity rates will rise 5% to 10%.

The lure of natural gas was strong for the 14 Eastern counties served by the pipeline. They are among the state’s poorest. “Companies go on a Web site for anywhere in rural America, and if you don’t have gas, they just blip off and go somewhere else,” says James Ward, executive director of the Martin County Economic Development Corp.

In a statewide referendum in 1998, voters approved bonds to create a nonprofit natural-gas system in counties too sparsely populated for commercial lines to be feasible. In April 2000, Raleigh-based Progress Energy Corp., then Carolina Power & Light Co., joined Albemarle Pamlico Economic Development Corp. to create Eastern North Carolina Natural Gas. In 2002, Charlotte-based Piedmont Natural Gas Co. bought Progress’ natural-gas distribution subsidiary, North Carolina Natural Gas, as well as its half of the nonprofit. By this summer, the nonprofit had signed up only about 230 commercial customers. Still, Piedmont bought the rest of it in November.

Some say all the system needs is time. “In the short term, pricing is hurting us, but in the long term, we don’t know what it’ll be,” says Rick Watson, president and CEO of North Carolina’s Northeast Partnership, an industry-hunting group. Piedmont spokesman David Trusty says slow growth is not unusual. “When we run natural-gas lines to serve new customers, we don’t expect to cover the cost in the first year. Yet some people seem to expect if you put $1,000 in the ground, you should recover $1,000 the first year.”

The upshot? “Gas will help us grow,” Ward says. He cites an ethanol plant under construction near Robersonville in Martin County. It could employ 400. “The gas line is right at its front door.” As for the high prices and slow signups? He and other industry hunters are sanguine: This too, they say, shall pass.