At Shale Insight conference, Phila. energy-hub idea takes hold

Except for a cluster of protesters outside, everybody at the Shale Insight 2015 conference at the Convention Center on Wednesday seemed to be on board with the concept of a Philadelphia energy hub.

Representatives of industry, labor, and government said Pennsylvania's Marcellus Shale natural gas production could represent a tremendous economic opportunity for Philadelphia at the end of the pipeline - if only there were enough pipelines.

"Despite the fact that this area of greater Philadelphia is relatively close to where that gas is being produced, there is grossly insufficient infrastructure to move that gas from the point of production to the point of consumption," said John Walsh, chief executive of UGI Corp., the Valley Forge energy company that has proposed a $1.1 billion pipeline from Pennsylvania to New Jersey.

Gov. Wolf's commerce secretary, Dennis Davin, who spoke at a separate conference session, endorsed the pipeline build-out even though Wolf's Democratic administration is under pressure from activists, including the dozen or so who marched briefly outside the Convention Center, to halt fossil-fuel development.

"Philadelphia has great energy assets, and we are committed to helping to develop those energy assets through funding and other means of support," Davin said. "We know we need to get the gas to market, and Philadelphia is one of the ways to get the gas to market."

The two-day conference, sponsored by the Marcellus Shale Coalition, featured a keynote address by former New York City Mayor Rudolph W. Giuliani, whose law firm represents a number of large energy companies. But much of the confab remained fixed on local topics, in line with the sponsor's aim to build support in Southeastern Pennsylvania.

The state has become the nation's second-largest gas producer in the decade since improved horizontal-drilling techniques and hydraulic fracturing have been deployed to tap into the Marcellus Shale formation and the adjoining Utica Shale. Pennsylvania, once an oil and coal giant, has restored itself as a fossil-fuel goliath.

But producers have drilled so many wells that they have outpaced demand, as well as the ability of pipelines to move the gas to market. Prices have plummeted.

Todd Normane, general counsel of Talisman Energy USA Inc., said his company currently was selling 450 million to 500 million cubic feet of Marcellus gas a day, but could easily produce twice that quantity by turning up the spigot if the price were better.

Energy-hub advocates say Philadelphia's proximity to northeastern U.S. and European markets, and an abundance of vacant industrial land tied into rail and port facilities, make it an ideal location as an energy terminal, and also for energy-intensive manufacturing.

"You need new consumption, and the place to do that is in Philadelphia," said Philip L. Rinaldi, chief executive of Philadelphia Energy Solutions' refinery complex. "You have a long history of manufacturing, and an inventory of brownfield sites that are just dying to convert themselves into value-added businesses."

Rinaldi, whose refinery has been restored to economic health because of new supplies of shale oil delivered by rail, has been spearheading efforts to build a high-capacity pipeline to deliver industrial-scale volumes of natural gas to Philadelphia.

As the leader of the energy-hub movement, he has become the target of protesters, such as the small group that picketed Wednesday, organized by a group called Encouraging the Development of a Green Economy.

"These protesters we had to walk through to get in here occasionally follow me around, and occasionally you're going to see a photograph of my head, branding me as 'Fossil Phil with a Heart of Shale,' " Rinaldi said, to a scattering of applause. "Well, I like that, because it really is all about the shale revolution here."