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Glatfelter Completing $63 Million Natural Gas Conversion

York, Pennsylvania, USA 10 June 2016 -- (From The York Dispatch) -- Glatfelter is working to complete its $63 million renovations to convert from coal to natural gas boilers at its Spring Grove facility by the end of the year.

The company began the process approximately three years ago to meet environmental compliance regulations, which will be implemented Jan. 1, 2017, according to James Loder, director of energy management.

The two natural gas boilers replace three long-used coal-fired boilers, which will be retired once construction is complete, Loder said.

Loder spoke about the decision to switch to natural gas boilers as a panelist at The Keystone Energy Forum Thursday morning at the Homewood Suites.

The panel, which also included KCF Technologies' Ben Lawrence and UGI Energy's Max Rishel, discussed the benefits of natural gas for local manufacturers.

Loder said Glatfelter officials explored numerous options when deciding how to bring the Spring Grove facility within environmental compliance. Other options included installing scrubbers on the current coal-fired boilers or converting to biomass boilers, he said.

Natural gas was ultimately the choice for reasons including lower emissions, increased efficiency, lower variable costs and supporting a resource critical to the state's economic health, according to Loder.

Rishel said the Marcellus Shale has been a boon for the local natural gas market, with prices dropping rapidly and the volatility that was previously associated with the energy source dissipating.

Loder mentioned price volatility as a risk in the conversion, but he added that advancements in fracking technology have helped reduce major ups and downs. Other risks included pipeline capacity constraints and pipeline interruptions.

Glatfelter's pipeline will be owned and operated by Columbia Gas of Pennsylvania, he added.

Less than 20 percent of the total cost of the project will actually be spent on the natural gas boilers, Loder said. Other major costs include a new water system, a new building to house the water system and boilers, the pipeline and permitting.

The company is receiving $8 million in state grants to help fund the project, according to previous reports, including $5 million from the Redevelopment Assistance Capital Program (RACP) and $3 million in Alternative and Clean Energy grants.

Tom Palisin, executive director of the Manufacturing Association of Southcentral Pennsylvania, which cosponsored the forum, said he's heard from several members that the increased use of natural gas in energy production has lowered costs and increased sales margins.

Seb Henbest, the author of a Bloomberg study which looks at the future of the world's power market previously said that, while natural gas is moving strongly right now, it's not going to be cheap forever.

Henbest's report suggests that few countries outside the U.S. will replace coal plants with natural gas, and utility-scale solar will be cheaper than natural gas production in the U.S. by 2036.

"Prices tend to rise in extracting industries," he said. "(As coal production drops off), you're going to get to the point where gas is just competing with renewables, and that's when things get less rosy for gas."

Loder said Glatfelter has explored the use of solar technology and will continue to look at it, but the company's energy capital is currently tied up in projects such as the one occurring in Spring Grove.

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