Corn growers frustrated by variability in natural gas hook-up prices

Farmers in Manitoba are voicing frustration with the price and process of having natural gas brought to their farms, as the cost of drying last year’s crop has reignited efforts to access natural gas across the Prairies.

Nearly every bushel of corn, as well as many other crops, in the province needed drying before going into the bin this past fall and winter, as poor harvest weather prevented the crop from drying down naturally.

Farmers without access to natural gas had little choice but to run up their propane bills, which costs four or even five times as much as drying with natural gas. There were fuel shortages on top of that, as propane delivery trucks couldn’t keep up with demand in some areas.

So it was no surprise when the issue of natural gas access was discussed (again) at the Manitoba Corn Growers Association’s annual general meeting in Winnipeg last month.

“You look at what it takes to truck propane around the countryside. There’s a lot of activity that needs to happen when you could have a simple pipe in the ground. Natural gas is the ideal alternative to propane,” says Dean Toews, MacGregor, Man.-area farmer and MCGA director, in the video below, filmed after the group’s AGM during the CropConnect conference.

Natural gas distribution in the province is the responsibility of Manitoba Hydro — a Crown corporation. Hydro has franchise agreements with municipal governments, which allows Hydro to install gas lines and obligates the utility to evaluate and consider applications for natural gas service, explains Hydro spokesperson Bruce Owen.

“There is no mandate from the Province of Manitoba specific to expanding natural gas in Manitoba. However, Manitoba Hydro entertains all requests for natural gas service and will provide a cost estimate and approximate timeline for installation in areas that have access to natural gas,” says Owen.

Many producers who have inquired about having natural gas brought to their grain dryers say the prices they’ve been quoted make it very difficult — if not impossible — to justify. There’s also a wide range in the price estimates farmers say they have received from Hydro. For example, Toews says he was told it would cost him $200,000 to hook up to a natural gas line just 300 feet away, across the road from his dryer. Other farmers report receiving initial estimates of around $50,000 per mile.

Owen says for each application, Hydro begins with determining the customer’s natural gas load, and then calculates the cost of the infrastructure — length, size of pipe, meter type — and labour required to supply the required amount of natural gas. Rather than tendering the work on each individual project, Hydro tenders multi-year contracts for gas installation in regions across the province.

Hydro also estimates future revenue, and uses this number to offset the price given to a potential customer. The Public Utilities Board requires each project does not have a negative impact on existing customers, and that each project can economically “stand alone,” either through future revenues for Hydro or through a customer contribution, explains Owen.

Since on-farm grain dryers generally require a large amount of fuel over a short season in fall and early winter, the price of connecting to the natural gas system may include upstream upgrades to ensure adequate surge capacity during drying season.

“Manitoba Hydro designs the natural gas extensions based on the size of the load. The design considers how the additional load from the grain dryer affects the existing system. Modifications to the existing system may be identified as required to reliably meet the requirements of the existing gas customers and the new load from the grain dryer,” says Owen. “Manitoba Hydro sees the value that natural gas can provide to customers and there is no reluctance to connect grain dryers to Manitoba Hydro’s system.”

Toews, meanwhile, says the Corn Growers will continue to raise the issue of natural gas access wherever its relevant, including with the provincial agriculture minister, highlighting the economic benefit to rural areas.

“Farmers are willing to pay for the product, but these hook-up fees are exorbitant, just beyond what’s economical, and it’s not consistent. It seems they don’t have a system,” he says. “It just seems that with a Crown corporation, there’s a lack of initiative there, and it’s frustrating.”

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Disclosure: I have some personal interest in this issue, as we are currently working on having Manitoba Hydro bring natural gas to our farm. — KH

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