MALONE — St. Lawrence Gas has suspended work on its natural-gas pipeline through Franklin County because construction costs have doubled from earlier estimates.
Officials say they need a little time to close the estimated $9 million shortfall they require to finish the project.
Technical experts and the specialized labor force, along with sophisticated equipment needed to build the pipeline safely, are flocking to a natural-gas boom in Pennsylvania, where the Marcellus shale formations are being worked to free newly discovered pockets of natural gas.
That and higher steel prices are some of the issues pushing back the aggressive timeline St. Lawrence Gas set to get its first high-volume customers online by the end of 2012.
LONGER TIMELINE
The original overall project cost $20 million, but the construction increases bumped it to $30 million, said Jim Ward, the company's assistant general manager.
He said he hoped to have word by March on what additional funding sources can be tapped.
Company officials told the County Legislature on Thursday that they remain committed to finishing the 48-mile project to its agreed-upon end and feel this is a small hurdle to overcome.
But with the time delay, St. Lawrence Gas may have to spread construction out across two years, bringing the western portion at Moira online one year, then taking the line to Chateaugay in the second year, Ward said.
Contractors qualified to do this kind of specialized pipeline-construction work, such as welders and drillers, are in immediate demand in Pennsylvania and can command higher wages than they could on the Franklin County project.
The company estimated its costs specifically for construction at $9.2 million, but realized those numbers were off after its first round of bids came back in July, he said.
A second bid round in September confirmed that, leaving a nearly $9 million gap in funding.
SEEKS MORE FUNDS
Ward says he has approached or is about to speak with the largest benefactors of the pipeline project to see if they can kick in to close the funding gap, including Agri-Mark/McCadam Cheese in Chateaugay, school districts, the New York State Department of Corrections and Community Supervision and Alice Hyde Medical Center.
St. Lawrence County will also be asked for support, as will state representatives and state agencies that have helped with the project in the past.
Ward has also spoken with North Country Chamber of Commerce Executive Director Garry Douglas, co-chair of the North Country Regional Economic Development Council, to see if any of the millions the region has been promised for projects can be earmarked for the natural-gas pipeline.
Ward said that whatever the company cannot raise from outside sources, it will kick in itself.
Ward didn't ask Franklin County for any more money Thursday, "and I won't," he said.
The county committed $1.425 million to the project, along with $2 million through Sen. Betty Little, $2.5 million through former Gov. David Paterson and $14 million from St. Lawrence Gas.
SPECIALIZED WORK
St. Lawrence County was asked for $600,000 but has so far not promised anything to the project, even though a portion of it would benefit North Country Dairy, the former Breyer's Yogurt plant in North Lawrence.
Legislators there will again be asked to contribute toward the pipeline, which would be appreciated by Franklin County even if its support is given through in-kind services instead of cash, said Legislator Timothy Burpoe (D-Saranac Lake).
Legislator Billy Jones (D-Chateaugay) wanted two points clarified: The pipeline will go all the way to Chateaugay before it's finished, and workers building the pipeline must have special skills.
The work is not routine and must be done by natural-gas contractors, even though there may be plenty of local contractors out of work at this time of year, he said.
Email Denise A. Raymo at: draymo@pressrepublican.com
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