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Philadelphia Gas Works Again Proposing LNG Expansion Project

Philadelphia Gas Works (PGW), the nation’s largest municipally-owned gas utility, has reached an agreement with a Pennsylvania-based energy infrastructure investment firm to build a liquified natural gas (LNG) plant to increase supplies for private buyers in the region.

PGW has for years now been trying to expand its LNG assets. The new plant and truck loading facility would be built at the site of its Passyunk Plant in South Philadelphia. PGW has operated liquefaction and storage facilities at its Passyunk and Richmond facilities for decades to better ensure natural gas supplies during peak winter demand and for sale to the private sector.

Under the terms of the deal, which have been filed for approval at the Philadelphia Gas Commission, Passyunk Energy Center LLC (PEC) would cover all the costs of building the facility. PEC was established by the investment firm Liberty Energy Trust GP LLC. PGW would then lease and operate the plant, selling the LNG production services to PEC for a fee. PEC would market and sell the volumes to regional customers.

The project, PGW said, would come at no cost for its ratepayers and could generate more than $4 million of annual revenue, or the equivalent of adding 6,000 residential customers.

PGW, which currently serves nearly 500,000 customers, has dealt with underfunding over the years. Efforts by the private sector, including Liberty Energy, to purchase the utility have failed.

Other efforts to expand PGW’s LNG assets have also fallen flat. The latest deal comes after a 2016 request for proposals seeking, among other things, a public-private partnership to enhance the utility’s liquefaction capabilities.

According to PGW’s filing with the gas commission, the new plant would be capable of producing 120,000 gallons/day of LNG. Construction could begin in November 2019 and last up to two years at an estimated cost of $60 million.

The deal would also need to be approved by the city council, which struck down other efforts in the past, such as private industry’s bids to buy the utility.

“This project takes PGW’s decades of LNG experience and expertise and puts it to new use on behalf of our customers, and the city,” said PGW CEO Craig White. “While working with LNG isn’t new, we are looking forward to opening up an important additional revenue stream, which we can reinvest right back into the business, on behalf of our ratepayers.”

The project’s backers also see an opportunity for more LNG to replace the fuel oil, coal and energy imports that are relied upon by some larger customers in the region.

“Improved utilization of PGW’s LNG infrastructure unlocks a cleaner fuel source for utilities, transportation sector and power generators that are eager to switch from oil and oil-based products,” said Liberty Energy founder Charlie Ryan.

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