PhillyDeals: European visitors get upbeat message on Pa. gas

As European and North American diplomats are inching toward new global free-trade deals, trade representatives from countries including Italy, Germany, Britain, Poland, the Netherlands, and Sweden visited Philadelphia on Nov. 6 for a tour of business sites. They were eager to learn more about importing cheap gas and other fuels and raw materials from Pennsylvania and other states.

"How many of your countries import gas from the Soviet Union?" asked Michael Krancer, a former Pennsylvania environmental secretary. He represents oil refineries and gas-fracking companies as head of Blank Rome L.L.P.'s energy practice.

"I don't need to tell you what energy development means for the good guys in the world," Krancer told the European envoys. "The energy business is centered here in Philadelphia. This is the place to invest your money."

A Belgian Embassy representative, Thomas Lambert, complained of U.S. restrictions on crude oil and liquefied natural gas exports. "I assume you are actively lobbying in D.C. and beyond to have the legislation changed?" he asked.

The recent congressional election results, won by Republicans, "will help oil exports, and the Keystone XL pipeline," which would bring more Canadian fuel to U.S. plants and ports, Krancer said. "The people spoke pretty loudly about what they want to see. The fracturing candidates won."

The Keystone pipeline would rush Canadian fuel to U.S. refineries over the objections of environmentalists and supporters of alternative energy.

"My party wants to advance these projects," said Krancer, a Republican. "[We] want to see results that are good for you and Asia."

He added that it would lower natural gas prices outside North America. (No one mentioned that prices here will presumably rise, if more fuel is exported.)

With higher production from the Marcellus Shale fields of Pennsylvania and other formations, U.S. gas is several times cheaper than what Russian exporters are charging users in Europe and Asia, said V. Steve Herzog, senior vice president for strategy at Philadelphia Energy Solutions, the Sunoco-Carlyle Group partnership that operates Philadelphia's largest oil refinery.

U.S. exports would help world energy prices converge and give nations more freedom to choose suppliers, Krancer said.

"History is all about how society extracts energy and uses energy," he added.

Herzog said U.S. crude oil export restrictions do make it cheaper for Philadelphia Energy Solutions to buy U.S. oil. But another piece of restrictive U.S. legislation - the Jones Act, that mandates the use of U.S. shipping vessels and crews between U.S. ports - has boosted the cost of shipping by sea along the East Coast, he added (though the state-subsidized Aker Shipyard in Philadelphia is among the U.S. shipyards benefiting from the Jones Act's restrictions).

Meanwhile, Philadelphia Energy Solutions has invested in a rail terminal that can handle more than three 100-car oil trains a day. Sunoco is pushing to increase its gas pipeline capacity to the area.

The European visitors kept asking: Can they count on U.S. energy exports to surge shortly?

"Winston Churchill said, 'Americans can be counted on to do the right thing, but only after exhausting all other options,' " Krancer said. "We need to do it doggone quickly."

Andrea Cascone of the Italian Embassy in Washington asked if Pennsylvania was offering incentives to locate energy-related facilities here. Krancer said Pennsylvania's relatively hands-off approach to energy regulation had proven a powerful incentive, so far. Nobody suggested Gov.-elect Tom Wolf is about to change that.

Krancer said he had recently received visits from would-be energy importers from France, Poland, and South Africa, while delegations from Azerbaijan, Brazil, Chile, and Norway have visited with Pennsylvania state officials.

"We'd love to export" more energy, Krancer said. "I think we have enough for the entire world."