Marcus Hook looks at gas for rebound

Marcus Hook complex. (DAVID SWANSON/Staff Photographer)

Stretching along either side of Marcus Hook's busy 10th Street, nearly 800 acres of industrial machinery tower above the placid waters of the Delaware River.

Inside the complex, hundreds of construction workers bustle every day, their hammering and drilling echoing throughout the otherwise-quiet town.

The sprawling facility in the tiny Delaware County borough of 2,400 wasn't always this way: Just three years ago, the complex - once the site of Sunoco Inc.'s oil refinery - sat largely vacant, its smokestacks extinguished, and most of its more than 500 workers long laid off.

For as long as residents can remember, the refinery grounds that long belonged to Sunoco were not just a presence in the borough. They defined it. Dominating the municipality's one square mile of land, the refinery shaped the lives of residents for generations.

So when Sunoco abruptly announced in 2011 that it was shutting down after more than 100 years, thousands worried about the borough's viability. Others worried about their own.

Gradually, owing to Sunoco Logistics, the sister company of Sunoco, new life at the once-busy complex has begun.

Betting big on predictions of inexpensive and plentiful natural gas liquids in the Marcellus Shale in Western Pennsylvania, the facility that once made Marcus Hook an oil town is turning its attention to gas. Close to 200 permanent jobs have returned. A floundering economy - slowly - is forging ahead.

Marcus Hook's history is no different than that of Rust Belt towns across the United States. Built on the tailwinds of the booming industrial sector, the town was shaped by the oil industry - and then shattered by it.

But as it moves toward rebuilding, this time, residents say, they're being more cautious.

"When you build a town on a refinery, and that shuts down, you have an identity crisis," said Marie Horn, 55, a longtime resident. "I'm not sure a gas town is our identity yet."

'No money to spend'

At its height in the mid-1900s, Sunoco's Marcus Hook refinery was processing 170,000 barrels of crude oil per day, the equivalent of filling 250,000 cars with gas.

Entrenched along the Delaware River, the complex can be accessed by ship, rail, and truck. Out of the river's berth, the location is a straight shot to Europe, said Delaware County Council Chairman Mario Civera Jr. Perfect for exports.

It was for this reason that the original Sun Oil company, later to become Sunoco, chose the location in 1901 - and the reason for its boom. During World War II, the Marcus Hook location processed more aircraft fuel for the Allies than any other refinery.

Residents say the 1960s to the 1990s were unlike any other. Street corners brimmed with theaters and department stores. Weekends were filled with riverfront festivals.

At Sunoco, Christmas bonuses flowed freely, and sports leagues for kids were abundant. Loyalty was everything.

"Every part of the Hook was thriving," said John "Cowboy" Michulka, 59, an electrician and lifelong borough resident.

Beyond Sunoco, a refinery owned by Sinclair Oil, later to become ConocoPhillips, was also booming next door in Trainer Borough. Nearly one-fifth of the facility sits on Marcus Hook land.

Marcus Hook, by all definitions, was an oil town.

"Overtime was available constantly," Michulka said. "Guys were financing their homes on overtime alone."

When the 21st century began, more automation in the complex and bad market conditions for East Coast refineries boded poorly for the future. By the time the recession hit, Sunoco employees said they knew times were bad.

In December 2011, Sunoco announced it was closing its doors - effective immediately. Across town in Trainer, ConocoPhillips was doing the same.

Suddenly, employees who financed homes on overtime lost them altogether. Workers who built lives around the refinery found themselves out of work - and with few transferable skills.

With 500 Sunoco employees, many from outside the town, laid off, borough finances were reeling. About half of the borough's $2 million budget at the time came from the earned-income tax, said Bruce Dorbian, borough manager for 30 years until 2014.

And with Sunoco gone, so was half of that tax base.

"It was a ghost town," said Mario Giambrone, owner of Italiano's, a staple restaurant in town. His lunch rush came from the refinery, he said, so when employees lost work, he lost business.

"No money to spend," Giambrone said.

Renewed hope in gas

The financial effects tore through the borough and across the state.

The Chichester School District, which includes Marcus Hook, lost $500,000 in tax revenue after the complex's property value dropped. The borough's police force shrunk 40 percent. Real estate taxes were raised in back-to-back years.

On the brink of distress, Marcus Hook entered the state's early intervention program for struggling municipalities.

One study from the state estimated that for each layoff from both refineries, at least 18 other jobs would be lost. State and local taxes stood to lose hundreds of millions of dollars.

But in 2013 - a little more than a year after the refinery was idled - Sunoco's sister company Sunoco Logistics joined the shale gas movement that was burgeoning. Pipeline infrastructure already existed across the state, and a first-class refinery sat along the water.

Marcus Hook, after all, had a chance to be saved.

After purchasing the Sunoco refinery in early 2013 for $60 million, Sunoco Logistics began moving forward with a plan, called Mariner East 1, to use existing pipeline to transport natural gas liquids - propane and ethane - from Western Pennsylvania to Marcus Hook, where it could then be stored and shipped to domestic and export markets, said Jeff Shields, spokesman for Sunoco Logistics.

Construction crews were brought in and - gradually - the facility, renamed the Marcus Hook Industrial Complex, began to see vitality that resembled the once-booming oil empire.

(All the while, next door at the old ConocoPhillips refinery, Delta Air Lines Inc., through its subsidiary Monroe Energy, was ramping up production of its own jet fuel.)

Since, Sunoco Logistics' ideas have grown. The Philadelphia-based company is currently acquiring approvals for another pipeline, called Mariner East 2, which will move propane, ethane, and butane from eastern Ohio. The company is considering adding another pipeline to the plan, and eventually, it hopes to build a propane cracker - a facility that would take propane and make propylene, the building blocks of modern textiles and plastics.

The Mariner East 1 pipeline, stretching 300 miles, is already moving propane to the complex. Mariner East 2, which will stretch 350 miles, is to be finished by 2016.

In total, the $3 billion projects could add as many as 440 permanent jobs - both directly and indirectly related to the complex - and have a one-time economic impact of $4.2 billion, according to a study by consulting firm Econsult Solutions. Annually, ongoing operations could generate as much as $150 million.

In the meantime, most of the construction jobs are temporary.

Beyond the complex's chain-link gates, along borough streets, activity has returned. On a typical weekday afternoon, dozens of residents pass in and out of local restaurants and bars.

They're eager for the future, they say, and see that things have improved.

"It's a good start," said Michael Pietrazak, who helps manage Marcus Hook News & Tobacco. "I just don't want to see anything bad happen to this place again."

Marcus Hook was once considered the cornerstone of Pennsylvania, said Councilman Michael Manerchia, who was laid off by Sunoco but now is a temporary worker at the complex. He's excited to see that happen again.

But it will take more than a few hundred jobs, he said. Without a definitive agreement that Sunoco will build a production facility like the propane cracker, he said, the pipelines can do only so much.

"We supply the world with what we are," Manerchia said. "Now we just need them to know that."


BY THE NUMBERS

30,140

Jobs, direct and indirect, supported during the construction period of the Marcus Hook Industrial Complex.

$33M

Labor earnings annually from the 440 permanent jobs supported.

345,000

Barrels of natural gas liquids to be transported to Marcus Hook each day via Mariner East 1 and Mariner East 2.

$39,167

Median household income in Marcus Hook.

$86,100

Median home value in Marcus Hook.



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@mccabe_caitlin

This story has been corrected to reflect that aircraft fuel, not jet fuel, was made during World War II.