"PGW still wants to ship LNG up the Delaware"
August 30, 2006
Fueling the Debate
PGW still wants to ship volatile LNG to Port Richmond.
by Gwen Shaffer
Philadelphia Gas Works (PGW) continues to pursue importing liquefied natural gas (LNG) to its storage facility in Port Richmond, despite widespread opposition that killed a deal earlier this year. A PGW official recently told members of the Philadelphia Gas Commission the utility is exploring a partnership with four of the largest energy companies in the world.
PGW spokesperson Doug Oliver says the utility is in a fact-finding phase and that Philadelphia seems to be an ideal location for an import terminal because it's close to both major pipelines and customers. The need for an import terminal hasn't gone away simply because early negotiations with Hess LNG came to an end, Oliver says.
Hess LNG pulled out of negotiations with PGW in March, a month after Philadelphia City Council members passed a strongly worded resolution opposing any plan to ship LNG along the Delaware River. Environmental and neighborhood groups also fought construction of a terminal, which they say doesn't belong in a densely populated area.
The explosion of just one tank carried by an LNG ship could result in a fire extending along the river's surface for more than half a mile, scientists theorize. Homeland security experts also caution that tankers and storage facilities are potential terrorist targets.
PGW, the largest municipally owned gas utility in the country, is about $1 billion in debt. And the storage facility in Port Richmond may be PGW's greatest asset.
The tanks allow PGW to buy natural gas in summer, when prices are low, then liquefy and store it. In the winter, when natural gas sells for 40 percent more, PGW can return it to its gaseous state and sell it to customers.
At a July 26 budget proceeding PGW's vice president of strategic planning David Griesing told the Gas Commission the utility has a fiduciary obligation to the ratepayers to pursue an LNG terminal. During negotiations with Hess LNG, PGW spent $2 million on fees paid to lawyers, lobbyists, consultants and a public relations firm.
Griesing indicated PGW plans to amend the fiscal year 2007 budget to include $122,500 to retain an energy consulting firm through Dec. 31. PGW hopes to determine whether a deal will materialize within the next five months, Griesing says.
After last year's busy hurricane season interrupted natural gas supply in the Gulf of Mexico, and with production slowing in other countries, PGW became convinced it's still early enough in the game to pursue an import terminal, Griesing said during the budget proceeding.
Philip Bertocci, who serves as a public advocate for matters before the Gas Commission, disagrees. By continuing to pursue construction of an LNG terminal, he says the utility is throwing good money after bad.
I thought PGW gave its best shot with the Hess deal, Bertocci says. Given the City Council resolution and the controversial location, an LNG terminal has a slim chance of success.
During last month's hearing Gas Commission executive director Janet Parrish expressed similar concerns. So how long do you see this evaluation continuing before there's an understanding of yea or naywe're finished with this, we move on to something else, or not? she asked Griesing.
Evan Belser, program organizer for Clean Water Action, says PGW is making a huge mistake if it strikes up negotiations with energy suppliers before holding public hearings.
There's no doubt those of us who took up the fight the first time around are more than ready to suit up and step into the ring again, Belser says.
PGW is reportedly exploring potentially less controversial uses for the Port Richmond storage facility as well. For example, it could sell or lease excess capacity to an energy supplier. Another possibility is barging smaller quantities of LNG to Port Richmond from existing terminals in the Northeastern United StatesCove Point in Maryland, for example.
This would prevent massive tankers from conspicuously passing through Philadelphia, but Bertocci is skeptical of the compromise.
Anything that involves the transportation of LNG on the Delaware River raises the same concern, he asserts. People's anxiety levels are raised when they know LNG is on the water.
Vehement opposition from residents and environmentalists has forced energy companies to drop LNG terminal plans in states from Maine to California.
In May the firm Econsult concluded an economic analysis, finding that an LNG terminal in Port Richmond could generate about $2 billion over 45 years. In addition, the project could result in intangible benefits such as more consistent rates for PGW customers, fewer dollars leaving the region and the potential for cleaner generation of electricity, according to the report.
Spokesperson Oliver says PGW commissioned the report to determine the indirect economic benefits of an import terminal, which he says extend far beyond just the security of supply and the additional revenue stream.
Gwen Shaffer (gshaffer@...) last wrote about local efforts to reduce the effects of climate change.