Thursday, February 12, 2015 1:15 pm

TICONDEROGA, New York (From the Bennington Banner) -- Vermont Gas Systems has reportedly abandoned its plan to bring natural gas under Lake Champlain to an International Paper mill in New York after IP withdrew its financial support.

Vermont Gas had proposed building a pipeline from Middlebury, Vermont to the International Paper facility in Ticonderoga, New York. The mill was to pay a significant portion of the pipeline cost, but recent construction estimates proved unacceptable to International Paper.

The utility's latest cost estimate pegs the project at $105 million -- up from the original $64 million estimate. This week, International Paper told Vermont Gas it was terminating its financial agreement to pay for nearly the entire project.

"This project was designed primarily to serve International Paper. Without their continued participation, the project doesn't make sense anymore," Vermont Gas CEO Don Rendall said.

Donna Wadsworth, communications manager for International Paper, said the company was notified of the cost increase about 10 days ago. On Monday, it decided it would terminate its contract with Vermont Gas, known as the Facilities Development Agreement, or FDA.

Under the contract, the company was allowed to pull out if costs exceeded $104 million, Wadsworth said. The company would have had to pay $135 million under the recent cost estimates.

"We made that decision based on a significant increase in cost and the uncertainty of the timeline," said Wadsworth.