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Philly energy hub concept struggles in face of environmental opposition


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Philly energy hub concept struggles in face of environmental opposition

As their upstream brethren learned when they came to theKeystone State, natural gas infrastructure developers are finding thatPhiladelphia is not Houston, where the public accepts oil and gas, and projectpermitting seems more certain.

While a dozen or so protestors shouted from a downtownsidewalk outside, the Greater Philadelphia Chamber of Commerce's Energy ActionTeam introduced "A Pipeline for Growth," making the case for apartnership between industry, state and local governments to build at least 3Bcf/d of new pipeline capacity into the region to take advantage of the cheapMarcellus Shale gas coming out of the ground 150-miles to the north.

The average day-ahead price for gas at Leidy Hub, the largegas trading hub in northern Pennsylvania, over the last 12 months has been$1.219/MMBtu, a discount of more than $1 to the $2.413/MMBtu average day-aheadcash price at Louisiana's Henry Hub, the national benchmark, according to SNLEnergy data.

With refinery operator Philadelphia Energy Solutions CEO Phil Rinaldi doing theheavy lifting, industry executives and advisors outlined a plan to combine thatcheap gas with the acres of vacant industrial land along the Delaware River.The goal: rejuvenate industry in the Delaware Valley and create the samehigh-paying jobs that were salvaged when Rinaldi engineered the purchase of thePES refinery complex before owner Sunoco LP could close it.

"This is about reviving our economy," LisaCrutchfield, Chamber of Commerce senior vice president, said March 31. "Wehave the second-highest [urban] poverty rate, 26%, behind Detroit. Ourresidents need to go to work."

"The build-out can be environmentally compliant,"Crutchfield said but her concrete and immediate concern: "We need largeemployers to return to the region."

Matt Walker, the community outreach director ofPhiladelphia's Clean Air Council, dismissed the Chamber's plan as the same pigin new lipstick. "The goal is to make companies lots of money usingMarcellus Shale gas to manufacture things," Walker said. "There'snothing new here. These ideas are based on the premise of encouraging [businesses]to invest in new pipelines. If you build it they will come."

Walker said more fossil fuel use will reverse Philadelphia'sprogress at reducing air pollution, much of which comes from Rinaldi'srefineries in South Philadelphia, while, at the same time violating the climatechange math that requires fossil fuels to stay in the ground to keep the planetfrom overheating.

Stradley Ronon environmental attorney Andrew Levine, whoworked at gaining government and community approval for s' MarinerEast I NGL pipeline project from western Pennsylvania to the port andpetrochemical complex at Marcus Hook just outside Philadelphia, thinks Walker'sconcerns are exaggerated.

"This isn't the Wild West," he said of theregulatory environment. "This is one of the most regulated industriesanywhere."

Pennsylvania has pioneered shale oil and gas regulations,Levine said, while Delaware and New Jersey have even stricter rules in placefor new industries.

Levine, who wrote the environmental impact portion of theenergy hub plan, notes that in addition to federal, state, and localregulations, new development in the region is also monitored by the federalDelaware River Basin Commission, itself no long-time friend of natural gas.

The DRBC has been sitting on new regulations for shale gasdevelopment since November2011 when revised rules permitting drilling and fracking were metwith a huge public outcry. The commission tabled the rules to gather more data,effectively banning unconventional drilling in Pennsylvania counties borderingthe river.

University of Pennsylvania professor Mark Hughes, facultydirector at the Philadelphia school's Kleinman Center for Energy Policy, thinksboth sides are talking right past each other, with neither side having muchreason to seek common ground.

"They're not talking about the same things in the sameterms," Hughes said. "They're case-making to very differentaudiences. They have no place, no reason to talk to each other."

While the Chamber and the business community arebore-sighted on local economic growth and jobs, the issue of climate change hasgained a broader audience, Hughes said. "The talking points of small,global activists have become much broader now that accounting and insurancefirms are researching investor risks from climate change and oil majors areusing internal carbon pricing to guide investment decisions."

The Chamber of Commerce's plan runs the risk of"underestimating the risks other people care about," Hughes said.