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Philadelphia Bans Marcellus Gas Supplies Pending EPA Study

Philadelphia officials on Tuesday directed the city-owned natural gas utility not to buy Marcellus Shale gas until more is known about the safety of hydraulic fracturing (hydrofracking).

Considered a symbolic gesture, Philadelphia is the first major U.S. city to ban gas sales obtained through hydrofracking production, said Councilman Curtis Jones, who proposed the resolution in December (No. 100864).

The Pittsburgh City Council in November unanimously approved an ordinance that prohibits gas wells to be hydrofracked in the city (see Shale Daily, Nov. 17, 2010).

Under the Philadelphia council's final resolution, gas purchases from the Marcellus Shale are to be avoided until the U.S. Environmental Protection Agency (EPA) completes a study into hydrofracking safety, which is not expected before 2012. The study was launched last March (see Daily GPI, March 19, 2010).

The city's Philadelphia Gas Commission (PGC), which oversees the Philadelphia Gas Works (PGW), in December unanimously approved a report by the city council's Joint Committees on Transportation and Public Utilities and the Environment, which concerned the economic and environmental impacts that hydrofracking would have on the city and surrounding region.

The vote Tuesday by the council adopted the report issued by the Joint Committees.

According to a PGW spokesman, the utility currently buys around $350 million of gas a year for the city. None of the gas supplies now being purchased, to his knowledge, are produced in the Marcellus Shale and there are no plans to purchase any in the future.

Marcellus Shale Coalition President Kathryn Klaber said the decision by the gas commission "is not based in fact or reality and clearly demonstrates a lack of understanding of how natural gas is transmitted and delivered to consumers...If what was passed [Tuesday] is put into effect, PGC would essentially deny the residents and businesses in the city of Philadelphia access to the very energy source used to heat homes and offices, cook meals and deployed for other daily uses.

"Gas and oil harvested from hydraulically fractured wells is proven, safe and has been deployed for decades on more than 1.1 million occasions without harm to drinking water supplies. PGC's position that it will prohibit the procurement of gas from hydraulically fractured wells disqualifies the vast majority of natural gas produced onshore in the United States. This is more than unfortunate for the residents of the city."

Klaber noted that Pennsylvania law requires PGW to purchase natural gas based on price.

"Craig White, the city-owned utility's executive vice president, said state and local regulations oblige PGW to buy the lowest-cost fuel on behalf of its customers, regardless of its origins," she said, noting that in an article in the Philadelphia Inquirer last September quoted him as saying in a written statement that the utility "is required by both state law and city ordinance to pursue a least-cost procurement policy in order to benefit our ratepayers with a stable supply of natural gas at the lowest possible cost."

Klaber pointed out that PGW is under a long-term contract to purchase gas from the Gulf Coast.

A "significant portion of PGW's Gulf Coast natural gas comes from other U.S. shale formations, and thus is obtained through common hydraulic fracturing technologies," she noted. "PGW procures a large quantity of its gas from the Transcontinental [Gas] Pipe Line [Transco], which connects up with many other pipelines as it makes its way from the Gulf Coast to the Northeast." According to a transmission map posted on Transco's site, she said, "the pipeline gathers natural gas from a variety of sources -- including the Haynesville, Eagle Ford and even the Marcellus Shale, all of which require fracture stimulation to remain viable."

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