Philly’s Having An LNG Party (And We’re Not Invited)

There are two kinds of people in Philadelphia, those who oppose a Liquified Natural Gas (LNG) export facility, and those who don’t know about it yet. Oh, right, and then there’s a few who’ve been quietly getting LNG done for years.

Think About It – LNG Is A Bad Idea

Sierra Club Wants to Stop LNG Exports and they’re not mincing words. The new “Beyond Natural Gas” campaign website states: “EXPORTING LIQUEFIED NATURAL GAS (LNG) TO OVERSEAS MARKETS IS A DIRTY, DANGEROUS PRACTICE THAT LETS THE INDUSTRY MAKE A KILLING AT THE EXPENSE OF HUMAN HEALTH

Exporting natural gas would increase fracking and carbon emissions, put sensitive ecological areas at risk, and do nothing to address our country’s energy challenges. Natural gas companies envision a network of winding pipelines and noisy, polluting compressors that connect the drills to the docks, slicing through wild lands, rivers, and backyards. Pipelines and gas wells will inevitably leak or rupture, risking lives and fouling the environment where people live and further polluting the air we breathe and the water we drink.

Included in the post is the link to a recently published Sierra Club report entitled, LOOK BEFORE THE LNG LEAP: Why Policymakers and the Public Need Fair Disclosure Before Exports of Fracked Gas Start by Craig Segall, Staff Attorney, Sierra Club Environmental Law Program, with research assistance by legal fellow, Philip Goo.

Basically, Sierra researchers conclude that “The United States is sleepwalking through one of the biggest energy policy decisions of our time.”  

Processing LNG emits many times more methane into the atmosphere than producing compressed gas (CG) for domestic use. Most Philadelphians would oppose dangerous LNG exports if they knew this. If nothing else, common sense would prevail. One LNG tanker mishap would be akin to a “small nuclear explosion.” An entire processing facility would be uninsurable.

The Energy To Sell To The Highest Bidder 

When Fukushima Daiichi melted down after the tragic March 2011 tsunami, Japan was forced to decommission all but one of its nuclear reactors. Natural gas became the ichiban fuel of choice. Japan has the third largest economy in the world, and LNG imports soon spiked. Japanese LNG wholesalers, such as Sumitomo Corp., are now eager to buy gas from their friends in the city of brotherly love, kudesai.

Osaka Gas Company, in another example, is presently building not one but two new LNG carriers. The new tankers are slated for use in the Pacific, but they will liberate other ships in their fleet for duty elsewhere.

You Know They Want It

The LNG party was well into the planning stages back in January, 2011 when Sunoco saw a business opportunity, and with the able representation of their prestigious Philadelphia law firm, Blank Rome LLP, successfully completed the acquisition of 25 convenience stores in New York state.

Of course, as any teenager knows, it’s difficult to contain news of a party once word gets out. By June 14, 2012, the buzz was spreading, and Kate Kelly covered it for CNBC in Sunoco, Carlyle Group Discuss Philadelphia Refinery

By July 2, 2012, Sunoco and Carlyle had inked the Philly deal, and it was reported by the Associated Press in The New York Times: Partnership Formed to Keep Philadelphia Refinery Open. By September 8, 2012, the ink was dry, and Sunoco and The Carlyle Group posted this joint press release: Sunoco and The Carlyle Group Complete Formation of Philadelphia Refinery Joint Venture.

In February, 2013, Susan Phillips reported in StateImpactPA, Idea for Philadelphia LNG Export Terminal Floated at Council Hearing:  

“‘Through some confidential discussions that we’ve had we know there’s a keen interest in Philadelphia as a location to export LNG,’ said Mitchell Bormack, the vice president of TRC Engineering Services.‘We’ve got an oversupply of gas here, and tremendous demand in Japan and India,’ said Bormack.”

In March 2013, Secretary of DEP Michael Krancer announced that he would step down to go back to work for his old law firm, which happens to be Bank Rome LLP, as Marie Cusick reported in StateImpactPA in Controversial Head of DEP Leaving Agency to Work on Behalf of Energy Industry.

Since stepping down on April 15, 2013, Krancer has unabashedly gone on to leverage his expertise and “access” – presumably garnered while heading up DEP – to further his ambitions for LNG. In Revolving Door Keeps Spinning for Former DEP Chief Michael Krancer in StateImpactPA on May 2, 2013, Susan Phillips reports on a very telling email from Krancer’s newly minted public relations team about their client’s sudden availability to the media:

“Michael offers access to regional policy makers that other firms do not have, as well as NERC, FERC, EPA and other policy making entities. He is sought-after for his proven understanding of environmental regulation, governance and all other issues relative to optimizing regional energy supplies, and can speak to a track record of private and public success for creating new opportunities for business expansion and investment.

“Michael would be willing to speak on one of the following topics: PA’s natural gas renaissance and what it means geo-politically; Fracking: Why regulation should be left to the states; How LNG exports should evolve.

Shale Gas A Go-Go

Phila. Could Be Marketed As A Natural Gas Hub was the effusive Philadelphia Inquirer headline on July 10, 2013, from decidedly pro-gas reporter and Krancer fave, Andrew Maykuth. Maykuth seemed decidedly upbeat by Philadelphia Gas Work’s newfound viability on the open market: 

As a stand-alone utility, PGW is not necessarily an exciting investment. Constrained by the city’s borders, PGW’s customer base of 500,000 is static and becoming more energy efficient each year – not a recipe for selling more gas. But the utility’s position along the Delaware River puts it in a strong position to take advantage of opportunities related to the Marcellus Shale natural gas boom that are now beyond its reach as a municipal utility with legal and capital constraints.

“‘There are things like interconnections from some of the larger pipelines, built in the city area to move a lot of the Marcellus Shale gas. . . or obviously the prospect of the waterfront for LNG or some other kind of wholesale opportunities, separate from the retail residential base, said Dabbar, managing director in JPMorgan’s Global Mergers & Acquisitions Group.

“There is also considerable political opposition to exports from consumers and environmentalists who fear it will increase drilling and drive up the price of natural gas. PGW got a taste of the emotions that LNG can trigger when it explored the prospect of building an import terminal less than 10 years ago on the Delaware, setting off howls of protest.”

“Taking Advantage Of All The Advantages”

Last week, Sunoco began invoking “Eminent Domain” to seize private property from West Newton, Pennsylvania residents, as reported in Sunoco Set To Take Land For Pipeline by Timothy Puko in TribLiveNews and The Republic on July 26, 2013:

Sunoco Logistics Partners LP has notified landowners in several communities that it will try to take land for a pipeline running from Washington County to an export terminal near Philadelphia.

“’That is very convenient’” said Amanda M. Olejarski, a Shippensburg University professor who released a book about eminent domain in March. ‘They’re really kind of massaging and taking advantage of all the advantages the law provides them.’”

So if you saw this earlier headline from Susan Phillips in StateImpactPA on July 19th, Philadelphia an Unlikely Hub for LNG Exportsdon’t be too quick to believe it. You really do need to “Think About It” because this looks and smells like the tail of Trojan Horse.

Five days later, on July 24, 2013, my head started spinning when Phillips wrote: Marcellus Shale Exports Could Transform Global LNG Market.

If you listen closely, you might hear a few muted cheers coming from the suburbs.

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