Marcellus Shale Remaking Greater Philadelphia's Energy Economy

Massive natural gas reserves embedded in western Pennsylvania’s shale formations are reshaping the mid-Atlantic’s energy economy and attracting new investment and job creation to Greater Philadelphia.

By on
Massive natural gas reserves embedded in Pennsylvania’s shale formations are reshaping the mid-Atlantic’s energy economy and attracting new investment and job creation to Greater Philadelphia. The Marcellus Shale Reserve holds enough natural gas to lead the United States in fuel supply, providing a low-cost energy source and boosting the country’s energy independence. The resource is, quite simply, “a game changer,” says Andrew Levine, co-chair of the renewable energy and clean technology law practice at Stradley Ronon. Major energy-sector players are creating shale-related partnerships and collaborations throughout the Greater Philadelphia region. New infrastructure transporting the natural gas and its liquid byproducts to the region will not only drop energy generation costs but also establish the area as a shipping hub and destination for manufacturers that need either reliable low-cost power or that use natural gas as a feedstock. These new natural gas supplies cost about one-sixth the equivalent amount of petroleum. “This is a very exciting time,” Levine says. New Life for Old Refineries In Delaware County, Pa., Sunoco is remaking the idled Marcus Hook refinery into a new facility to process liquid products from the Marcellus reserves; its subsidiary, Sunoco Logistics Partners LP, is spending $600 million on pipeline projects to move the material to big markets that include southeast Pennsylvania. Mariner East, a new pipeline, will transport propane and ethane from western Pennsylvania to Marcus Hook for processing and shipping to domestic and international markets. “Right now there is a bottleneck, a lack of infrastructure to move these materials to market,” says Thomas Golembeski, chief spokesman for Sunoco, which completed a merger with Dallas-based Energy Transfer Partners in October 2012. In September 2012 Sunoco Logistics announced it had a successful open season and binding commitments for the capacity of Mariner East, green-lighting construction to start. “It marks the first step in revitalizing the use of the site,” Golembeski says. “It is an 800-acre site, right on the Delaware River. We view it as a regional asset.” Mariner East’s initial capacity will be about 70,000 barrels per day of natural gas liquids with support for higher volumes; Mariner East is expected to start moving propane by the second half of 2014 and be fully operational, delivering both propane and ethane, in the first half of 2015. Cracking Carbon, Adding Value Philadelphia Energy Solutions, in a partnership with The Carlyle Group and Sunoco, will renovate the longest continuously operating refinery in the United States, updating and expanding the facility to process shale gas, convert components to other products and create electrical power. “We will have a lot of natural gas brought into the refining complex and not just as fuel but as value-added businesses that take the gas and add molecules and convert them to other products, from chemicals for agribusiness to synthetic diesel oil,” says Phil Rinaldi, CEO Philadelphia Energy Solutions. “It is meant to be a facility working across the spectrum of energy.” First up among big capital projects for PES is modifying existing equipment to process the shale products into higher-grade, cleaner-burning commodities. “The hydrocracker will be in two phases,” Rinaldi says. “Because this is a continuum, treating with hydrogen, you get to a technical point at which operation becomes so intense you have to build additional facilities. That creates a lot of construction work.” The first phase is expected to start in early 2013, and the second phase within a year of that, he says. Future plans include a shale gas-to-liquids processor and using shale gas to power a 600- to 700-megawatt co-generation plant. PES will create thousands of construction jobs and 100 to 200 permanent jobs in addition to securing the jobs of 850 workers already on site. Marcellus Shale: Only the Beginning Regional consumers already are benefiting from the shale reserves. “Our average customer is paying 40 percent less than they did four years ago on their natural gas bill,” says Joseph Swope, spokesman for UGI Corp., the largest distributor in Pennsylvania. Prices and market stability will improve even further with planned pipeline projects, he says. “Up until four to five years ago, the talk was about the tight balance between supply and demand,” Swope says. “You don’t have that anymore. It is local. There aren’t transportation costs like gas associated with the Gulf of Mexico." The impact of Marcellus Shale is immediate but only beginning, Levine says. “For Greater Philadelphia it creates a brand-new plan for our regional economy,” he says.

ABOUT THE AUTHOR

more

More Articles About Philadelphia, PA

Fri, 10/27/2017 - 19:55