AUDIE CORNISH, HOST:
We've reported on how cheap natural gas is revolutionizing the energy industry. It's plentiful, thanks to the drilling technique known as fracking. Well, that's also changing American manufacturing. Factories are turning to natural gas to replace oil and even biomass sources like woodchips. And here's an example, a paper mill in East Millinocket, Maine.
Jay field of Maine Public Radio has the story.
JAY FIELD, BYLINE: When the elevator doors open on the fourth floor of the Great Northern Paper Company, you get hit with a blast of hot air and a non-stop drone. The sprawling plant makes paper for catalogues, newspapers and flyers.
(SOUNDBITE OF MACHINERY)
NED DWYER: We dry a lot of paper, hundreds of tons of paper everyday.
FIELD: Ned Dwyer, Great Northern's president, leads me across a walkway of steel grates for a close look at the mill's three boilers. One burns biomass, two run on oil. The machines that dry all the paper run on steam, millions of pounds of it a year cranked out by those boilers.
DWYER: This is a pretty energy intensive industry. What you want to be able to do is operate consistently, where you can consistently provide the products that customers want.
FIELD: And for decades, the mill in the northern Maine town of East Millinocket ran round the clock, thanks to all the cheap power it drew from the Penobscot River. In 1964, the original Great Northern Paper Company generated two-thirds of its energy from the six hydropower dams it owned on the river. The mill eventually lost control of its dams in the years of mergers, ownership changes and financial instability that followed.
And now, an ongoing problem with the mill's current mix of energy sources has come to a head as the company, located in an area known for its long, cold winters, looks to cut costs.
DWYER: This is a fairly severe winter in this part of the country and the heat load in the facility increases substantially in the winter.
FIELD: Ned Dwyer says the biomass boiler doesn't generate enough steam to run the paper machines and heat the mill. For years, the solution was easy. Just fire up one of the backup oil boilers every year during the winter months.
DWYER: All the Great Northern facilities burn oil, but historically oil was cheap and it's not any longer.
FIELD: The kind of oil used at the plant costs about $100 a barrel nowadays, many times the price that prevailed when those boilers were installed decades ago. With oil prices so high this past winter, the company had to make a tough decision to save money. It chose to keep the workers warm rather than continue paper production at high levels.
But next year, if all goes as planned, Great Northern Paper likely won't have to make such a penny-pinching choice. That's because the mill has started converting one of its boilers to run on much cheaper natural gas.
TOM RUNIEWICZ: Anybody that is a high consumer of energy will be looking at significant cost savings if they convert to natural gas.
FIELD: Tom Runiewicz, an economist with the firm IHS Global Insight, says that's why many companies that use big industrial boilers and furnaces are also making the switch. But Runiewicz says it may not be easy for some companies that want to convert to natural gas to get a regular supply of it.
RUNIEWICZ: The most efficient way to do that is to pipeline. That infrastructure will have to be developed and further enhanced to get the full advantage of, you know, the natural gas energy source.
FIELD: Northern New England has a very limited pipeline system. State lawmakers in Maine are trying to pass bills to pave the way for an expansion. In the meantime, Great Northern Paper has found its own short-term solution.
CLYDE COLEMAN: These are the trailers that actually transport the gas. We are a pipeline on wheels, if you will.
FIELD: Clyde Coleman heads up engineering for Express Natural Gas, or XNG. The young company has just started trucking natural gas to customers in Maine from its compression station near the Canadian border. Ned Dwyer says the boiler conversion is scheduled to be completed in June.
DWYER: It allows us to run a second vapor machine in the wintertime. It produces about another 40 jobs.
FIELD: And it gives Great Northern Paper the best chance of holding on to its more than 200 workers. Just two years ago, those people were laid off for four months during tough times. Now, they're hoping the energy cost reductions will help their plant continue operating even when the weather or the economy turn cold. For NPR News, I'm Jay Field.
ROBERT SIEGEL, HOST:
It's ALL THINGS CONSIDERED from NPR New.