Nova Scotia's natural gas franchise holder, Heritage Gas, has postponed its planned $8.5-million expansion into Antigonish, citing poor economics.

The expansion was approved in 2014, but earlier this month, Heritage Gas notified the Nova Scotia Utility and Review Board that it needs to postpone the expansion because of lower "projected customer conversions to natural gas and current market conditions in Antigonish County."

"As a result of that, we are delaying our plans to go to Antigonish," Heritage Gas CEO John Hawkins told CBC News.

Regulators approved the delay Monday.

Plans for in-ground pipeline

The AltaGas subsidiary intended to truck compressed natural gas to a conversion station outside the Town of Antigonish. The station would supply 7.5 kilometres of in-ground pipeline in the town, serving 350 residential and business customers.

The expansion was supposed to be in service by the fall of 2015, anchored by two large customers, which the company will not identify.

St. Martha's Regional Hospital

St. Martha's Regional Hospital in Antigonish, N.S., is supportive of the project. (CBC)

St. Martha's Regional Hospital in Antigonish has confirmed it is one. St. Francis Xavier University, while supportive, won't say whether it signed a commitment.

"None of our anchor customers have indicated they are not prepared to proceed. It's really just a matter of changes to the forecast," Hawkins said.

Antigonish needs 'sustainable supply'

Antigonish Mayor Laurie Boucher is concerned about the uncertainty over the future supply of natural gas in Nova Scotia. 

Laurie Boucher

Antigonish Mayor Laurie Boucher says she doesn't think Heritage Gas intends to abandon its expansion. (Emma Davie/CBC)

The province's two offshore natural gas projects — the ExxonMobil-led Sable and Encana's Deep Panuke — are winding down.

"I think that's probably one of the reasons they aren't coming," Boucher told CBC News.

The mayor does not think Heritage Gas intends to abandon its expansion. 

"I think they would still like to get in here but it does have to be sustainable and we have to have confidence that it is going to be here for the long haul," Boucher said.

Heritage Gas rejects supply concerns

But Hawkins says the delay has nothing to do with long-term supply, saying the company anticipated the decline in offshore supply by contracting gas from other sources.

"We filed the original application because we want to expand our business. We still want to expand to Antigonish and other places. This is a reflection in change of forecast demand," he says.

St. F.X. not worried

St. Francis Xavier University signed an memorandum of understanding with Heritage Gas to participate in a feasibility study. 

On Monday, the university said it was unaffected by the delay.

"It isn't an issue. We continue to upgrade our facility with more energy efficient programs," Cindy MacKenzie, manager of St. F.X. media relations, said in an email response to CBC News.