Shale industry foresees benefits for region

What can the Marcellus Shale natural gas boom bring to Southeastern Pennsylvania?

Plenty, according to the gas industry, which Wednesday opened a Shale Insight conference that attracted 1,500 people, along with a dozen or so protesters, to the Convention Center.

The five-year-old shale gas boom has been credited with revitalizing two local refineries, creating thousands of jobs, and saving each American household $1,200 in energy costs last year.

But a recurring theme at the conference, sponsored by the Marcellus Shale Coalition, is that the long-term value of cheap and abundant natural gas won't be fully realized until more gas is produced and consumed, displacing imported energy and reviving manufacturing, particularly in the chemical sector.

"Ultimately, the true crux of the value of the Marcellus Shale might lie in its potential to help restart U.S. manufacturing," Drexel University president John Fry said in opening remarks.

The industry's expansion faces political obstacles far larger than the score of protesters who rallied across Broad Street from the Convention Center, conducting a drum-and-horn "noise demonstration" that was inaudible behind the center's thick glass facade.

The protesters were outnumbered by Philadelphia police and private security officers, who had erected steel barricades on the sidewalk. It was much smaller than demonstrations at two previous Shale Insight events.

At a noon speech, Stephen D. Pryor, president of Exxon Mobil Chemical Co., called on the government to approve more than 20 applications to build plants to liquefy natural gas for export, as well as those to build units called ethane crackers to convert natural gas into a material used to manufacture plastic.

"Permit approval times are the leading indicator of how quickly our nation is capturing the benefits of shale energy," Pryor said. "Delays could add billions to project costs, restrain job creation, and erode America's new competitive advantage."

Pryor also called for greater efforts to deliver natural gas to the region to fuel new manufacturing.

Philip Rinaldi, chief executive officer of Philadelphia Energy Solutions, operator of the former Sunoco refinery in Philadelphia, said in an interview that his company's plans to build units at the refinery to convert natural gas to fertilizer and to generate power would require construction of a larger pipeline to deliver gas from the Marcellus region to Philadelphia. The current infrastructure is insufficient to supply "transformative" new industries in the region, he said.

But Rinaldi said construction of a new pipeline posed political and economic challenges, particularly as the route would cross the metropolitan area.

"The obstacle is, how do you get copious quantities of natural gas moved into this region?" he asked.

Rinaldi said the refinery's sale last year to the Carlyle Group would not have occurred without the promise of new long-term supplies of natural gas and domestic oil produced from horizontal drilling techniques and hydraulic fracturing.

"Without those technical developments, none of this would be possible," he said.

The Philadelphia refinery will cut the ribbon next week on a new facility to unload railcars carrying crude oil produced from fracked North Dakota shale. The refinery will be able to take up to 160,000 barrels a day of crude by rail, steering about $6 billion a year to domestic producers that previously was sent overseas for imported crude.

215-854-2947 @Maykuth