What would becoming an energy hub mean for Philadelphia?
Posted Wednesday January 28, 2015
CEO Council for Growth Chairman Rob Wonderling and CEO Council member Phil Rinaldi talk about what it would mean for Philadelphia to become an energy hub in a recent Region’s Business article.
The article’s text is below:
By Lindsey Getz
On December 5, a summit entitled Greater Philadelphia: The Next Energy Hub was held at Drexel University and furthered the already intense dialogue going on about the City’s energy future. Of course, talk about Philadelphia’s future as an energy hub is nothing new. The discussion of the City adopting a natural-gas powered economy and potentially burgeoning an industrial revival has been going on for a year — maybe longer. But, with corporate interests announcing support and events such as this recent summit pushing things forward, it’s creating the possibility that this is no longer just talk.
According to reports from invited attendees, many at the Drexel Energy Hub summit believe that creating an energy hub for Greater Philadelphia is a great opportunity — one that should be acted on immediately. Those in favor cite not only lower energy costs but a boost to the economy, the creation of new jobs and simply increasing the overall desirability of the region. Rob Wonderling, President and CEO of the Greater Philadelphia Chamber of Commerce says that the concept of an energy hub certainly means more than access to an abundant supply of low-cost energy.
“It is beneficial to manufacturing growth, which in turn grows engineering jobs, technical jobs, and professional and financial jobs… good, family-sustaining jobs,” he says. “In turn, we’ll see a migration of activity from New York and the Gulf region all coming to this growing ecosystem centered around Greater Philadelphia as the strategic location in the Northeast United States.”
Philip Rinaldi, Chief Executive of Philadelphia Energy Solutions, the South Philadelphia refinery formerly operated by Sunoco, compares these events in motion to the confluence of the Allegany and Monogahela Rivers as they nurtured the steel industry over a century ago. “Today in Philadelphia, it is the confluence of popular demand for creating a jobs-based economy and the abundant supply of cost-advantaged energy that can and will nurture the coming manufacturing renaissance,” Rinaldi says.
Rinaldi says that the quality of the produced gas in northeastern Pennsylvania is key. It is very dry and requires little processing before becoming pipeline-quality “dry” natural gas — essentially methane. The gas produced from the more western reaches, on the other hand, is rich in NGLs (natural gas liquids) such as ethane, propane, and butane, explains Rinaldi,
“Industrial enterprise will grow and flourish in Philadelphia once these resources are made abundantly available,” Rinaldi continues. “Ethane and propane will serve both as exportable energy products as well as petrochemical plant feedstocks here and abroad. The dry gas will be consumed for its clean energy content efficiently generating electriCity via industrial cogeneration. Energy intensive manufacturing will be able to develop and grow, secure in the knowledge that this clean fuel will be available under good economic conditions.”
But Rinaldi says that the use of dry gas, methane, as “basic chemical feedstock that can be readily converted to hydrogen, ammonia, urea, methanol and synthetic liquid transportation fuels” stands to be even more impactful.
“Although the Delaware River channel depth and bridge clearances do not easily support international expert of LNG, a vigorous, smaller scale regional business is likely to grow,” Rinaldi says. “LNG will give rise to fueling fleet vehicles, ships, and trains. The possibilities are amazing.”
George Stark, director of external affairs at Cabot Oil & Gas, says that Philadelphia as an energy hub certainly has the power to attract new companies, given the large savings associated with natural gas.
“When you look at what drives a company to make a decision to relocate, it often comes down to two main pieces—cost of energy and availability of skilled workforce,” Stark says. “With Philadelphia being a large metropolitan area with so many educational institutions, we already have the skilled workforce. But we’re missing that piece of low-cost, clean-burning energy. By being able to tie into the Marcellus Shale, that would change. And I honestly can’t emphasize enough how much of a game changer it would be for the region to have access to this natural gas.”
But the possibility that Philadelphia will not become part of the Marcellus Shale energy revolution remains a concern for supporters like Rinaldi and Stark, who both say that a pipeline with ample expansion capability is a necessity in order to cement Philadelphia’s future as an energy hub. Consequently, the very construction of more natural gas pipelines in Philadelphia is among some of the concerns of those opposing the plans.
Among those who disagree with this form of energy being the City’s future is Max Zahniser, founder and CEO of Praxis Building Solutions, LLC, a company providing green building project delivery, as well as cofounder and chair of The Sustainability Nexus, an organization that brings together social and environmental efforts.
Zahniser says that recent gas leaks and even explosions are among his concerns. “Natural gas infrastructure is already old and with the huge new supplies, the economics don’t cover infrastructure replacement within the timeline of its useful life,” he says. “Plans like these prioritize short-term gains as worth the risk to vulnerable populations while either ignoring long-term costs or assuming they’ll be absorbed by taxpayers.”
An uncertain future
Instead of the proposed energy plans and the construction of new pipelines, Zahniser says he’d like to see a push for local, green-blue collar jobs focused on weatherization of existing building stocks and installation of renewables. “Unlike fossil fuels, renewables’ energy sources — the sun and wind—are intermittent at times but reliable in the long term and the technologies can be deployed much more granularly—building by building if need be,” he says. “I’m more comfortable focusing on real innovation in the energy space, in terms of the economic and workforce driven models, which I believe will create more jobs that are more stable and much safer to the workers and the public—all the while setting us up for long-term societal stability.”
Still, supporters go back to citing a serious boost to the local economy with a plan that connects Philadelphia to the Marcellus Shale energy revolution. “The kinds of facilities that could be built to take advantage of the abundant availability of reasonable and stably priced natural gas are exceptionally stimulating to the economy,” Rinaldi says. “The applications could have construction investment in the $500 million to $1.5 billion range, creating thousands of construction and permanent jobs.”
Though there is no exact figure as to how many jobs could be created, Stark says that it likely petrochemical companies, fertilizer companies and chemical companies would be among the types of industries that could benefit from locally sourced, clean-burning natural gas.
“In addition to meeting our residential, commercial, industrial, and manufacturing needs, there is also the opportunity to export energy,” Stark adds. “If we export, we strengthen our standing as a world power—plus help clean the air we breathe. I do believe that Philadelphia has a bright future but there is a window of opportunity on this and it needs to be approached with a sense of urgency. I think it’s important for Philadelphia, with its strong leadership, to treat this more as an urgent matter.”
It’s a complicated issue that will continue to generate new debate. There’s no doubt that Philadelphia’s proximity to fertile natural gas reserves as well as its strategic location between some of the nation’s major cities makes it highly desirable as an energy hub. But the concerns of environmentalists and others opposed to the plan remain. The solution stands to be one that only time will tell.