“Through some confidential discussions that we’ve had we know there’s a keen interest in Philadelphia as a location to export LNG,” said Mitchell Bormack, the vice president of TRC Engineering Services.
Bormack testified at a hearing convened by Councilman David Oh, and Republican State Senator Michael Brubaker. The discussion focused on how Philadelphia could take advantage of the Marcellus Shale drilling boom.
“We’ve got an oversupply of gas here, and tremendous demand in Japan and India,” said Bormack.
He told Council that building an LNG export terminal would be a capital intensive and time consuming project creating 3000 jobs, and 120 longterm positions. But if Philadelphia wanted to be a contender, it had to get a proposal on the table soon, and prepare to wait in line.
With low domestic natural gas prices, and a glut of gas supplies due in large part to Marcellus Shale production, the industry has been pushing the Department of Energy to approve new export terminals to sell their product at higher prices overseas. Push-back has come from manufacturers, who are enjoying a resurgence due to both the cheap energy natural gas provides, as well as the less expensive raw materials for plastics, which come from natural gas liquids like propane and butane.
Natural gas liquids or NGL’s are different from liquefied natural gas (LNG). Natural gas gets converted from its gaseous state to a liquid state in order to ship it overseas. The DOE is debating whether to allow new export terminals in the U.S., and has 16 pending applications.
Kyle Isakower, from the American Petroleum Institute, warned of stiff competition for these terminals, which would require extensive state and federal environmental reviews, as well as potential oversight from the Delaware River Basin Commission.
“If there’s opposition to a proposed LNG export facility, D.O.E must consider whether the export is consistent with the public interest,” said Isakower. “I would urge Philadelphia to move quickly if they wish to site an LNG export terminal here.”
But the chances any terminal would be approved for Philadelphia seems slim. With 16 applications already pending, it’s unlikely the DOE would approve all of them. Mitchell Barmack, from the engineering firm TRC, later testified to how the math wouldn’t sustain so many terminals. Bormack suggested the City could partner with Philadelphia Gas Works to build an export terminal. But of the current pending applications, one is for Cove Point, Maryland, a facility that was originally proposed as an import terminal before the shale gas rush. It’s unlikely the DOE would site two terminals so close to one another.
What’s far more likely, however, are facilities utilizing natural gas liquids.
“It’s probably the most interesting because you can generate an entire petrochemical industry around the feedstock of natural gas liquids if we can just get them here,” said Barmack.
Barmack, along with other industry representatives on the panel, urged Philadelphia City Council to do whatever they could to speed up permitting processes for all natural gas related facilities.
“Can we help truncate the permitting process as a region,” said Barmack. “Can we help truncate some of the nitty gritty permitting issues going on with regard to air and wetlands and water on pipeline projects so it won’t take until 2016 to get a pipeline here, but maybe you get it here in 2014, for example.”
Philadelphia Energy Solutions CEO Phil Rinaldi floated a proposal for Philadelphia Gas Works at the end of the hearing. PES recently took over the Sunoco refinery in Southwest Philadelphia, where it’s refining shale oil from North Dakota.
“Maybe with the right change in regulation, and the right change in other things,” said Rinaldi, “there could be profit made by an appropriate joint venture and development of a gas-based project between my company and PGW.”