Energy. Environment. Economy.

Idea for Philadelphia LNG Export Terminal Floated at Council Hearing

Tom MacDonald / WHYY/Newsworks

Philadelphia City Councilman David Oh holds hearing on how the city could benefit from Marcellus Shale gas drilling.

Philadelphia’s deep water port and access to rail lines would make the city an ideal location for a liquefied natural gas export terminal, industry representatives told City Council members on Wednesday. But they need to move fast.

“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.”


  • Ron Wagner

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, trucks, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It is used to make many products. It will bring jobs and boost our economy. It lowers CO2 emissions, and pollution. Over 5,100 select natural gas story links on my free blog. An annotated and illustrated bibliography of live links, updated daily. The worldwide picture of natural gas. Read in 75 nations. ronwagnersrants . blogspot . com

    • John Trallo

      This is not about energy independence, never was, never will be. It’s about multinational corporations reaping huge profits by selling this gas on the global market to the highest bidder. China, Norway, and India are the major investors in US shale gas and oil. As for it lowering pollution, not when you consider the CO2 emission during the extraction phase, and the tons of VOC’s emitted from compressors stations. I would also like to point out that methane is 20 time more potant a greenhouse gas than CO2, and a greater threat to global warming. It is necessary to constantly vent or burn off methane to control the pressure during the life of a gas well. In a USDOE study comparing the Marcellus and the Barnett shale plays, the Barnett has an approximate 50% drop-off rate in production every 12 to 14 months. The Marcellus has an approximate drop-off rate of 67% every 105 days. That means the Marcellus shale is much more dense and has less ‘gas in place’ (GIP) than the Barnett. So, in order to maximize Marcellus production, there will have to be more wells drilled in a closer proximaty, and they will have to be re-stimulated (re-fracked) at twice the rate of those on the Barnett, making Marcellus gas more labor intensive, less cost efficient, and ultimately less profitable for landowners expecting to collect royalty payments, since the ‘pre/post production costs are deducted from the landowners royalty share. With the ‘gas glut’ in the US, it’s not profitable for these companies to sell their product here, until the price goes up domesticly to compete with the overseas markets. It’s not an energy policy we’re following, it’s the standard corporate business model whose only goal to to increase shareholder profits and increase their bottom line. It should also be pointed out that oil and gas jobs are temporary, transient, high risk, and not what most people would consider ‘family friendly’ local jobs. It follows the classic ‘boom/bust’ economic cycle. Also, the jobs that are lost in tourism, agriculture, small businsses, real estate and new home construction will be gone forever. No one wants to live, farm, hunt, fish, camp, or vacation in an industrial zone. The ‘boom’ is always short-lived, and the ‘bust’ is always long-term, if not permanent.

      • Ron Wagner

        Sounds like a lot more jobs drilling. That is a good thing for our economy. Our problem is not supply, it is not using enough of this cleaner, cheaper fuel in all of our engines, including transportation.

  • Liz Rosenbaum

    I’m all for progress but exporting shale gas is a very dangerous enterprise. So much so, in 2004 Peter Levene, CEO of Loyd’s, a British insurer of natural gas port facilities, stated that “Specialists reckon that a terrorist attack on an LNG tanker would have the force of a small nuclear explosion,” according to Mark Reynolds in Loyd’s Executive Likens LNG Attack to Nuclear Explosion on EnergyBulletindotnet. In case the header doesn’t grab you, maybe the subhead will: U.S. regulators don’t share the concerns of the top official at the world’s second-largest commercial insurer. It’s a BAD IDEA.

  • suegarelik

    No,the future does NOT lie in fossil fuels!

  • RobertGodfrey

    Contrary to the news article author’s statement that it is unlikely the federal government would permit two terminals sited close together, take a look at Louisiana and Texas. There are numerous LNG import terminals in close proximity that the government previously permitted — even though it has turned out they aren’t needed.

  • Ron Wagner

    That is the beauty of an offshore or isolated terminal. Natual gas is lighter than air and burns upwards. LNG cannot burn until it becomes gaseous. There will be many safeguards. There has never been an LNG tanker disaster.

    • RobertGodfrey

      …Except that “isolated,” according to the Department of Energy, does not mean “away from the public;” it means endangering “a lower concentration of inhabitants than metropolitan areas.” Regulations do not even require isolated terminal siting. Where siting is near populations, greater safety, security, and emergency response measures supposedly “mitigate” the hazards. Offshore (over 3 miles from shore) LNG terminals certainly do offer considerably more public safety.

      The moment LNG leaves containment it begins to regasify, creating a gaseous methane cloud. The edge of the gas cloud immediately and always contans the 5–15% methane-to-air mixture required to burn until the gas cloud dissipates sufficiently. That can take considerable time if the release is large.

      LNG vapor is heavier than air until it warms by 100°F. In the meantime, flammable (and potentially explosive, if it migrates to confinement) vapor can drift along the earth’s or water’s surface for miles in the wind. That is why Sandia National Laboratories defined Hazard Zones (up to a 2.2-mile radius) accompanying LNG ships. That is also why the US DOT requires vapor LNG terminal dispersion and thermal radiation modeling to demonstrate vapor and thermal hazards from a terminal release or fire would not go outside the terminal fence line.

      While LNG shipping has a commendable safety history, history protects no one. Circumstances, not history, determine consequences. LNG carrier safety and security near ports is an arduous and expensive task. Those measures can cost communities and states small fortunes. Unfortunately, FERC does not require thorough safety and security plans be developed prior to authorizing terminal construction — the cart comes before the horse. That means communities can be blind-sided by large, unexpected, and ongoing costs.

      US Government authorities (Congress, FERC, USCG, DOT) disregard Society of International Gas Tanker and Terminal Operator (SIGTTO) terminal siting best safe practices related to LNG terminal permitting decisions. One would think that the industry’s own decades worth of research-based safety advice should be the first thing that government looks at when vetting such projects. Not so. For a brief list of SIGTTO terminal siting best practices, see LNG Terminal Siting Standards Organization’s website:

      • Ron Wagner

        Sounds like you know more about it than I do, and should be on the board figuring out how to site the terminals we need. It is important that they be sited soon though, and get the permits they need. Eminent domain should be used, but with minimum infringement on private property. We need to use best and safest practices without wasting time.

        • RobertGodfrey

          Federal law prohibits eminent domain for LNG terminals.

          • Ron Wagner

            Federal law needs to be changed then, IMHO.

  • Ron Wagner

    Federal law needs to be changed then IMHO.

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