"There's going to be new investment," insists
Michael Krancer, Blank Rome partner and former Pennsylvania Department of
Environmental Protection secretary. "Will those new dollars be spent here
or down in Houston?"
Krancer's talking about investment in a new network that
can transport natural gas from the Marcellus and Utica shales of Pennsylvania
down to Philadelphia, so it can feel the effects of a booming economy
entrenched in new business.
But it's not as positive as the business and political
leaders with dollar signs in their eyes think, say the plan's opponents,
concerned with environmental impacts of using fossil fuels instead of
renewables, as well as Philadelphia's competitiveness in the future.
Then there's those who see it both ways.
"We should use the wealth, the prosperity, and this
great resource that we have under our ground in Pennsylvania, to create the
resources we need to fully transition to a de-carbonized environment,"
said Mark Alan Hughes, professor at the University of Pennsylvania and faculty
director of Penn's Kleinman Center for Energy Policy.
Eyes on the prize
As word spread four years ago that Sunoco was planning to
bulldoze its visionless South Philadelphia oil refineries into memory, Phil
Rinaldi, a Somerset County, N.J., local backed by private equity firm Carlyle
Group, stepped up to the plate.
After a year sifting through a complex transaction,
Philadelphia Energy Solutions, Rinaldi's now 29-month-old baby, was formed.
Rinaldi, an engineer by training, doesn't hesitate when
explaining why he has eyes for the Point Breeze and Girard Point refineries.
Their location — smack dab between Center City and the airport along both banks
of the Schuylkill — is ideal, especially with their 1,500 acres.
"This is a fabulous piece of property," he
said. "The actual operational footprint only takes up less than half of
the acreage. … To a guy like me, it's a beautiful blank canvas in which to
exploit energy, chemicals and natural resources."
Sure, to the citizen's eye, it's an ugly-looking thing,
with old foundations and pieces of pipe, and kind of a "historical
refuse," Rinaldi said, while chatting in a PES conference room at its
office on Market Street. "But it really is different."
"Where do you find that kind of property with all of
this industrial infrastructure, so close to rail, so close to the river, so
close to deep water access to the ocean, so close to population centers?"
Rinaldi said. "I said, 'Holy cow, this is really — what a very special
place.' You'd never be allowed to build anything like that in a location like
this today."
And, "by the way," Rinaldi continued, it's just
a little more than 100 miles from what is believed to be the largest natural
gas reserve in the country.
"That's really why we kind of bought this
thing," he said. "Because there was a second act."
Rinaldi has made it clear: His version of Philadelphia
becoming an energy hub means his company continuing to bring crude oil here, by
rail, from North Dakota. (He said PES buys about 25 percent of all the
production in North Dakota.) It also means running a massive billion-dollar
pipeline that carries natural gas, or methane, from the shale-rich eastern part
of northern Pennsylvania down to Philadelphia.
The use of the shale gas is about attracting businesses
that suck up large amounts of natural gas for fuel value, such as oil
refineries, chemical plants, steel making and steel rolling operations.
It's also about drawing industries that use natural gas as
a chemistry feedstock.
For example, Rinaldi said, "You can convert methane
into methanol and then you can turn methanol into synthetic gasoline, synthetic
diesel fuel. … It's really kind of countless derivatives that you could make
out of methane."
Rinaldi also mentioned the opportunity to convert natural
gas into liquefied natural gas, or LNG, which can be used as fuel.
There will be a business in Philadelphia, Rinaldi
insisted, in fueling ships with LNG. He also addressed possible changes in
fueling methods of the fleet that serves the area, such as SEPTA's buses and
trains.
He predicts more conversations about compressed natural
gas are also bound to happen.
Natural gas
liquids
While Rinaldi looks to bring traditional natural gas to
Philadelphia, Sunoco Logistics' prize is located beneath the northwestern part
of the state, which maintains an abundance of natural gas liquids, such as
propane, ethane and butane.
As part of Sunoco Logistics' $3 billion Mariner East 1
and 2 projects, exposed over the past few years, the natural gas liquids, or
NGLs, would be transported by means of underground pipes to the company's
Marcus Hook Industrial Complex on the Delaware River to be exported. The
company said propane would be sold to local markets, too.
"Locally, last winter already showed us that there
is a need for propane here as heating fuel," Sunoco Logistics spokesman
Jeff Shields said.
A major moneymaker would be if the NGLs are used in the
petrochemicals industry.
Propane, for instance, can be processed into propylene,
which is a raw material used in shampoos, paints and antifreeze. Ethane, turned
into ethylene, can ultimately make textiles, inks and solvents. Processed
butane is in plastics and tires.
The Mariner East 2 project, specifically, will include
development of a propane cracker located in Marcus Hook, Shields said.
"What we'd like to see is a new market for
manufacturing using these resources at Marcus Hook," Shields said.
Job-creation
engine
No matter how the natural gas is used, it's sure to bring
more business to the area, thought leaders say. More businesses mean more jobs.
Though no clear studies have been conducted as of yet,
it's predicted that thousands of jobs, spanning from construction to truck
drivers, will be created.
And there's no better place for it, said Pat Eiding,
council president for the AFL-CIO.
"We have some of the best workers in the country
that are so well-trained for anything that has to be developed on the business
front or in the petrochemical field," he said.
Pat Gillespie, head of the Philadelphia Building and
Construction Trades Council, furthered Eiding's thought by saying, "One of
the problems they have in the southern states … they don't have programs like
we have," referring to the unions' apprenticeship programs.
The "boosterism" for jobs is great, said Penn's
Hughes. But, he said, if something is really going to get done, Philadelphia
needs to "treat it like a contract."
"How many jobs, what are the requirements for the
jobs, who's going to get them, who's going to pay for the training that they're
going to need … just explain to us how it is that this prosperity is going to
be shared by people who are already here?"
Needed: A
discussion
In general, Hughes said, Philadelphia's problem is that
it doesn't have a table for people to sit around and talk through issues.
"Right now it's too one-sided," he said.
On Dec. 5, the Greater Philadelphia Energy Action Team,
which operates under the Greater Philadelphia Chamber of Commerce, and is led
by Rinaldi, held a full-day "energy summit" with a single purpose: To
anchor the commercial arrangements (businesses and big investors) Philadelphia
needs to underwrite a natural gas pipe.
Hughes, although active in the energy world, said he
didn't even have to go to know what was discussed.
"The Chamber of Commerce has fantastic talking
points around the natural gas strategy," Hughes said. "I'm an admirer
of good, clear talking points and they're all on message and they all say the
same thing every time."
But, he said, there needs to be "at least two or
three other sides … that are just as sharp, and just as clear, and just as
thoughtful, so we can make some decisions and move forward."
Bridge to
somewhere
Hughes agrees with the idea of Philadelphia taking
advantage of the economic benefits of what that abundant natural gas could
produce.
It has to be a "bridge" to renewables, though,
he animatedly insisted, while chatting over coffee in a Center City food court.
And it needs to be strictly engineered.
"We should take the metaphor super seriously,"
he said. "We should say, 'OK, that's great, let's draw the plans for that
bridge, how long is that bridge? Where does it go? How are we going to get
there? What's the toll on that bridge going to be?'"
Environmental group Delaware Riverkeeper Network heads
Maya K. van Rossum and Tracy Carluccio oppose the energy hub vision that's been
presented. They want Philadelphia to grow and thrive "in a way that has
long-term stability," Carluccio said. "That can't happen if we're
using shale gas and oil and the old-fashioned fossil fuel development
route."
Philadelphia is positioned, gaining a great boost from
its universities, to be a leader in energy efficiency technology and the
development of renewable energy solutions like solar and wind, Carluccio said.
"Those are the things we need to invest in,"
she continued, saying it's a "win-win" for the environment, job
creation and for the area's future competitiveness.
That's why she so adamantly opposes Hughes' idea to use
the natural gas as a bridge, too.
"When you're sucking all the air out of the room by
supporting fossil fuel development, then you leave renewable energy sources,
energy efficiency and other job sectors that are long term and environmentally
beneficial without the support they need," she said. "It's a lost
opportunity."
Carluccio and Rossum aren't convinced gas and oil will
materialize like the pro-energy hub companies expect.
"But sun and wind, it does not stop," Carluccio
said.
John Scorsone, president of Malvern-based SolareAmerica,
a 5-year-old energy company that develops solar products, said if job creation
is the goal, then investing in renewable energy is the answer.
"According to government statistics," Scorsone
explained, "for every $1 million dollars of investment, the following
amount of jobs are created: 0.8 jobs in natural gas and oil, 1.9 jobs in coal,
4.3 jobs in wind and 5.4 jobs in solar."
That means solar produces more than five times the job
creation per $1 million in investment than natural gas, Scorsone, who has a
background in the oil industry, said.
Drexel University College of Engineering Dean Joseph
Hughes said, ideologically, he "completely buys into" what the
Delaware Riverkeeper Network is proposing. "I am all in," Hughes
said.
But, he added, siding more with Mark Alan Hughes of Penn,
that renewables "will not meet the needs of this country and this world
today."
"We need to use fossil fuel to meet the energy needs
of the world today," he said. "It's just true."
Source: Philadelphia
Business Journal
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