Energy-hub supporters intensifying the push for a natural-gas pipeline

A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota November 14, 2014.
A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota November 14, 2014. (REUTERS/Andrew Cullen)
Posted: March 31, 2016

The campaign to build a massive natural-gas pipeline to Philadelphia to fuel development of an energy hub is about to kick into a higher gear.

The Greater Philadelphia Chamber of Commerce will release a report Wednesday outlining a strategy for building a network of energy-intensive industries along the Delaware River linked to production in Pennsylvania's Marcellus Shale region.

The 60-page report, "A Pipeline for Growth," expands on a vision sketched out over the last two years by the chamber's Greater Philadelphia Energy Action Team, led by Philip Rinaldi, chief executive of Philadelphia Energy Solutions.

Rinaldi, in an interview Tuesday, called the report a "quasi-political primer" for building support in communities along a still-undetermined pipeline route. It touts the economic benefits of putting the region's gas to work in Pennsylvania, rather than allowing it to fuel industrial growth elsewhere.

It is also a call to state political leaders to provide economic incentives to develop a pipeline.

Unstated in the report is that moves are underway to encourage even greater state involvement in the project, including government financing of the pipeline.

"If the three states in the greater Philadelphia region work together to create an energy hub, thousands of new jobs and billions of dollars in economic activity will be created," the report states.

The campaign to build an energy hub, which Rinaldi first disclosed at a shale industry conference in 2013, has lined up support among industrial and political leaders in Pennsylvania, New Jersey, and Delaware.

"We believe this is just the beginning of the dialogue," said Lisa Crutchfield, chief executive of the chamber's Council for Growth.

But the campaign also has aroused opposition among climate-change activists, who envision a fossil-free future for the region. Some have dubbed Rinaldi "Fossil Phil."

Rinaldi acknowledged that the campaign was slowed by last year's plunge in energy prices, which has reduced the appetite for investors in new energy projects. But he said a compelling case can still be made for pushing forward.

The report only hints at some of the critical challenges facing the organizing and financing of a huge pipeline that would deliver up to 3 billion cubic feet of gas a day to the region, about double what is now consumed.

Energy-hub organizers, who say current pipeline infrastructure is sufficient to supply only marginal industrial and consumer growth, add that some existing industries would commit to billion-dollar projects on the condition that a new pipeline would deliver gas. Such consumers would include local utilities, power generators, and petrochemical manufacturers. Rinaldi has stated that his South Philadelphia refinery is eager to build new gas-intensive businesses, if only it could get the fuel.

The organizers also want to build a pipeline with excess capacity to attract large transformative industries to the region.

But interstate pipeline operators typically need to line up firm buyers of capacity to get the support of lenders and also to win approval from the Federal Energy Regulatory Commission, which regulates pipelines.

The report suggests that "other parties" would be recruited to support the pipeline "to allow for excess capacity to be built and assigned in the future as new manufacturers and gas users move into the region."

In the interview, Rinaldi suggested the "other parties" might be natural-gas producers, who would finance some pipeline capacity to deliver their future output to market.

Rinaldi said another critical party would be the state of Pennsylvania, which has a stake in encouraging shale development.

Early talks are underway with the Wolf administration about enlisting "some kind of authority" to underwrite part of the pipeline, which would shift some risk to the public, he said. The authority then could remarket the capacity as demand develops.

Rinaldi suggested that such a public authority might take on a development role, too, which would give the pipeline a "kind of an imprimatur of the state" that would help win support from local government agencies.

The potential state involvement is likely to trigger opposition.

Joseph Otis Minott, executive director of the Clean Air Council, said that he has not seen the chamber's report, but that his organization is opposed to continued development of fossil-fuel industries.

"Pennsylvania has historically welcomed extractive industries," Minott acknowledged. "It's going to be hard to get them to see things differently."

Yet the state House Democratic Policy Committee on March 21 also conducted a public hearing featuring mostly anti-drilling advocates who questioned whether Pennsylvania should continue to incentivize natural gas. State Rep. Greg Vitali (D., Delaware) organized the hearing.

Rinaldi said any pipeline project would be a long-term venture. He anticipates that a "commercial entity" would be formed by year's end to organize the pipeline, which would require three to four years to get regulatory approval and to complete construction.

"It's definitely something you have to have a longer view about," he said.

amaykuth@phillynews.com

215-854-2947@maykuth

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