Private discussions are said to be ongoing among several companies interested in expanding Philadelphia's liquefied natural gas (LNG) capacity, as it tries to capitalize on Appalachia's growth by working to create an energy hub, according to a consultant who works in the city's burgeoning energy space.
TRC Companies Inc. Vice President Mitchell Bormack told a crowd Wednesday at Pennsylvania State University's Natural Gas Utilization Conference that those discussions remain confidential, but they run the gamut. Talks continue about expanding the city's existing liquefaction capabilities to boost the virtual pipeline and better serve the region's drilling industry and consumers in New England. He said other negotiations are underway about the possibility of building a large-scale LNG export facility to utilize the city's infrastructure and proximity to waterways.
A little more than 10 Bcf/d of LNG exports have been approved nationwide, primarily along the Gulf Coast. But in recent years, as the behemoth Utica and Marcellus shales have continued to grow in Philadelphia's backyard, support has increased to revive the depressed industrial complex and brownfield sites. Bormack said Philadelphia still remains second to the Gulf Coast when it comes to refining and petrochemical manufacturing, but said the city's industry could be much stronger given the oil and gas production occurring to the west and north of it.
"At the end of the day, it's about the markets. There are deals going on behind the scenes, but there really has to be a front page aspect," he said of raising awareness for the hub concept. "Success begets success; Houston didn't grow to be Houston in two years."
LNG expansion is just one possibility currently being explored by business leaders, local elected officials and state government. While the notion of Philadelphia as an energy hub remains a distant reality, the city continues to make quiet progress, Bormack said. The city’s leaders believe they can turn the industrial complex, three major ports, rail infrastructure, a large buying market and a strong union labor sector into something more for the energy industry.
Three formerly shuttered oil refineries in the region have been revitalized. Sunoco Logistics Partners LP is spending $3 billion on its Mariner East project, which calls for constructing up to three natural gas liquids (NGL) pipelines that would carry volumes from Ohio, West Virginia and Western Pennsylvania to its Marcus Hook Industrial Complex south of Philadelphia. That facility is being repurposed for NGL storage, processing and distribution to domestic and international markets (see Shale Daily, Sept. 14).
Sunoco community relations representative Chris Koop said the company is also actively exploring other manufacturing opportunities at Marcus Hook, such as a propane cracker that would convert propane into propylene. "We believe the largest shale basin in the U.S. is in Pennsylvania," Koop said Wednesday.
Another former Sunoco refinery in the city has been revitalized by Philadelphia Energy Solutions, which now refines more than 330,000 b/d of crude oil -- mostly from the Bakken Shale. The former ConocoPhillips Trainer Refinery has also been expanded by a subsidiary of Delta Air Lines to produce jet fuel. Other shuttered refineries in Southern New Jersey and Delaware could also be converted to serve shale gas production, Bormack added.
But he acknowledged that Philadelphia remains home to a pocket of strong energy industry resistance. No drilling occurs in Southeast Pennsylvania, and the city hosts a strong environmental sector that has opposed projects farther west. Citizens there have also voiced opposition to additional infrastructure such as Mariner East (see Shale Daily, April 28, 2014).
But he said efforts are underway among the city's business leaders and elected officials to reach more middle ground with the opposition. The Greater Philadelphia Chamber of Commerce has formed an energy action team to conduct public outreach and pitch the region's assets to the industry. The Philadelphia City Council also conducts informational workshops to advance ideas on how to grow the city's energy space.
The energy hub concept was discussed as part of the university’s fifth utilization conference, bringing together public utilities, producers, power generators, midstream companies and others to talk about end-use markets and creating new ones. Organizers said more than 225 people were expected to attend the conference, up slightly from last year’s event.