Woods Construction workers fuse pipeline together near the intersection of Shepherd of the Hills Expressway and Highway 248 for Southern Missouri Natural Gas' Branson project.
SMNG lays pipeline to Branson, Hollister
A Mountain Grove natural gas company is spending $50 million to lay pipeline from Aurora to Branson and provide natural gas service in Branson by December, with plans to add service to Hollister in 2011.
Southern Missouri Natural Gas is building a 48-mile steel distribution line from Aurora to Branson supplied by Owensboro, Ky.-based Southern Star Central Gas Pipeline. SMNG has laid more than 11 miles of pipeline in Branson in Phase I of the project, which comprises a total of 50 miles of pipe within Branson, said Carol Harris, the company’s spokeswoman.
Phase II, to be completed in mid- to late-2011, includes expanding Branson service and extending service to Hollister.
A 2008 feasibility study by SMNG determined that commercial and residential growth make the Branson-Hollister area a strong candidate for natural gas service, Harris said.
College of the Ozarks, Chateau on the Lake, Branson Landing, Skaggs Regional Medical Center and Table Rock Asphalt Construction Co. have signed on as SMNG’s largest commercial customers, according to Larry Lacy, SMNG’s Branson district manager.
Most homes and businesses in the area are served by at least six propane service companies; electricity also is used.
“Among the Phase I distribution area, we’re shooting for 85 percent of propane customers,” Lacy said.
Mountain Country Propane Co. LLC serves roughly 800 Branson area customers. Owner Paul Lindsay is naturally protective of his propane users, citing competitive price points.
“We have competition that keeps a lid on our price,” Lindsay said. “Natural gas, they tout that they have the Public Service Commission that monitors their pricing, but it’s fairly easy for them to get price increases passed along.”
Lindsay said his company currently charges $1.39 to $1.79 a gallon for propane. Lacy said SMNG expects to charge $1.25 a gallon when natural gas service begins.
SMNG is not the first natural gas company to eye the Branson market, Lacy said.
He said several natural gas companies have considered Branson the last 20 years but have passed because of a lengthy payback period. Ozark Natural Gas Co. signed the first franchise agreement in 1995, and two other providers have signed since but not made the service investments, said Jerry Adams, Branson city spokesman.
SMNG’s parent company, New York-based J.P. Morgan Infrastructure Investments Group, is willing to accept a longer road to profitability, Lacy said.
“On a gas line project like this, you look for a payback period where all of your upfront costs are paid back through use fees in five to seven years,” Lacy said.
This project has a duration of 30 to 40 years, Lacy said.
Both Branson and Hollister stand to gain revenue from the addition of natural gas.
The city of Branson will receive a franchise fee of 2 percent of SMNG’s sales during the company’s second year and 5 percent starting in the third year. The city is not budgeting revenue from the franchise agreement in 2011 and won’t receive franchise fees in SMNG’s first year of operation, Adams said. Hollister will collect 5 percent of sales starting in SMNG’s first year, said Rick Ziegenfuss, city administrator.
SMNG and the city of Branson declined to disclose projected annual revenues, citing pricing variables and uncertainty in customer conversions. Lacy said SMNG anticipates 800 customers using 540,000 dekatherms of natural gas by the end of 2011.
Natural gas service could help attract new businesses to the city, Adams said that the city has lost out on some businesses because it couldn’t offer natural gas.
Mike Rankin, Branson’s economic development director or a consultant to the city 1998–2007, said the city missed opportunities to attract boat manufacturers and recreational watercraft makers.[[In-content Ad]]