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Philadelphia Consortium Lobbies for NatGas Energy Hub

A consortium of energy industry, business, labor and academic interests behind Philadelphia's push to transform the city and surrounding areas into a modern energy hub wants to double the 3 Bcf/d of natural gas that is consumed in the region.

But first, it would need more pipelines carrying Appalachian gas and natural gas liquids (NGL) east, according to a 64-page report released this week by the Philadelphia Energy Action Team. Among the consortium members and the report’s contributors are representatives from the Dow Chemical Co., Sunoco Logistics Partners LP, Drexel University and Braskem SA.

Once a prominent industrial center that was home to U.S. oil refineries, textile, chemical, pulp and paper companies, Philadelphia and the surrounding regions of Southern New Jersey, Southeast Pennsylvania and Northern Delaware have become different kinds of economies. However, with the rise of the Utica and Marcellus shales in the city's backyard, support has increased to revive the industrial complex and brownfield sites to capitalize on growing natural gas supplies (see Shale DailyOct. 28, 2015).

The Greater Philadelphia Chamber of Commerce and its affiliates assembled the action team to conduct public outreach efforts about the benefits of natural gas and pitch the city's industrial complex, major ports, rail infrastructure, its large buying market and a skilled union labor force to the energy industry.

In creating the hub, "first and foremost," is expanding the market for natural gas, according to the report. That's preceded in importance by the infrastructure needed to get it there. While pipelines have historically been built with long-term contractual commitments, the report acknowledges, Greater Philadelphia might have to set a new precedent for pipelines without such commitments.

The authors suggest building support for pipeline projects to allow for the kind of excess capacity that would attract more manufacturers so investors "don't have to be concerned with whether natural gas or NGLs will be available" before they consider the region.

Gas pipeline infrastructure, according to an economic benefit analysis included in the report, would help attract more business activity to the region. That could result in $10 billion of new investment in new and retooled manufacturing in addition to billions of extra dollars in direct and indirect regional production.

While the Philadelphia region is home to a stronghold of oil and gas opposition, with Appalachian production occurring to the north and west of the city, it has a leg-up in early development. Three formerly shuttered oil refineries have been revitalized, and Sunoco is spending $3 billion on its Mariner East project for pipelines that would carry NGLs to an industrial complex near the city for domestic and international distribution (see Shale DailySept. 14, 2015). UGI Energy Services PennEast pipeline would also deliver 1 Bcf/d of natural gas to central and southern New Jersey by the end of 2017 (see Shale DailySept. 5, 2014)

The report recommended that state and local governments consider more incentives to improve as infrastructure and create more capacity. Much like distribution system improvement charges for gas distribution companies, the report said governments could offer system improvement charges to stoke more supply for the region.

Expanding funds for the U.S. Dept. of Energy's Clean Cities Program and the area states' natural gas vehicle grant programs would accelerate the conversion of fleets and personal vehicles to run on natural gas, according to the report.

The report also suggested creating a "single point of contact" for permitting and approving gas pipelines within each state to remove multiple agencies from the current process to help reduce the costs of getting projects off the ground and expedite them, as well.

The consortium consists of more than 80 energy industry, business, labor and academic interests that worked together over the past year to develop the report and the energy hub strategy it lays out.

"A stable demand, the potential for load growth and multiple users of significant quantities of gas, all act as beacons for pipelines aiming to connect producers to markets," the report said. "There needs to be a focus on attracting energy-intensive manufacturing industries like chemical, petrochemical and energy-intensive manufacturing to develop the downstream demand." 

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