A group of companies, including at least two electric utilities, has begun a discussion to possibly build a large natural gas pipeline that would connect Marcellus Shale supplies with Philadelphia customers.
Philadelphia Energy Solutions LLC (PES) CEO Philip Rinaldi is serving as chairman for an unnamed group working under the auspices of the Greater Philadelphia Chamber of Commerce to drum up interest in a pipeline.
“We haven’t quite named ourselves yet,” Rinaldi told NGI’s Shale Daily on Tuesday. “It’s a relatively new group, but one that is definitely interested in trying to develop the greater Philadelphia region into an energy and petrochemicals hub.
“We think we can make that possible, but it will take some effort to make that happen. Right at the core, Marcellus gas needs to get into Philadelphia in substantial quantities before anybody can work on adding value to that gas. Our first mission is to try to help promote and develop and explore various ideas that would facilitate the movement of that gas into Philadelphia.”
Although he said it was “way in the early stages” to discuss the size and capacity of a proposed pipeline, Rinaldi said it could be 30-42 inches in diameter. He also said ideas were premature over possibly running the pipeline under existing highways, rivers or other rights-of-way.
“None of this is at a stage that you would even call a preliminary piece of engineering; it’s just ideas at the moment,” Rinaldi said. “But we’re talking about a pipeline that would have sufficient capacity. It would be large and have to bring in a lot of gas. It wouldn’t be a 12-inch [diameter] pipeline.
“It would great to have an anchor tenant. Somebody will need to underwrite the construction of a pipeline before it’s worthwhile. There’s no one identified user that could consume all of the gas, so our group is going to try to coalesce users together and create that attractive mass. Hopefully we will get the attention of the Marcellus producers and the politicians along the way to help bring all of the pieces together.”
Rinaldi said it was unlikely that one single anchor tenant would be sufficient to create the necessary baseload for a new pipeline, but liquefied natural gas (LNG) exports would help.
“If there were an LNG export business, that would probably have enough mass to do it,” Rinaldi said. “But those are extremely difficult projects to pursue, particularly in a metropolitan area. There are so many others that have been in the permitting queue for a very long time that no one here is holding their breath waiting for a viable LNG export project to come to fruition.
“We think it has to be a collective group of users that make the first bid. We’ve got energy companies like mine, pure chemical companies, and companies that are looking to be in that business. Once we get that baseload flowing, there will be other entrepreneurial development that can take the next increment of gas.”
According to Rinaldi, PES would likely use about 100 MMcf/d of incremental gas for “a couple of quick projects. It’s a reasonable amount of gas, but certainly not enough to fill a big pipeline. And the existing infrastructure just doesn’t have much more dry gas movement.”
Rinaldi declined to identify all of the individuals and companies involved with the group but confirmed that Sunoco Logistics LP, Braskem America and utilities UGI Corp. and Exelon Corp.’s PECO Energy Co. were members. “We are in the throes of formation,” he said, adding that more information about the group soon may be released.
Last year Monroe Energy LLC, a subsidiary of Delta Air Lines Inc., purchased a refinery in Trainer, PA, from ConocoPhillips for $180 million. Rinaldi said the refinery is currently refining 180,000-190,000 b/d. At around the same time, PES, a joint venture (JV) between the Carlyle Group LP and Sunoco Inc., took over the former Sunoco Philadelphia refinery (see Shale Daily, July 3, 2012). The JV refines about 350,000 b/d and claims to be the largest refinery on the East Coast.
Also last year, Braskem America, whose parent is based in Brazil, took over some of the petrochemical operations at the former Sunoco Marcus Hook Industrial Complex south of Philadelphia (see Shale Daily, July 16, 2012).
“There are a fair number of very active and vibrant businesses [in the Philadelphia region]. We’re all trying to figure how to help stimulate the kind of next-step development as we see it in the Marcellus gas.
“Pennsylvania has a terrific resource in the Marcellus gas, but if you just ship it away and let some other entity do all of the value added based off of that, you’re missing the boat. It’s better to keep it here and do value added things in Pennsylvania. We’re anxious to have others step up and begin to speak for volumes so that together we help justify a pipeline.”
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