Meehan: Philadelphia Staking Its Energy Claim Again
For much of the last century, Joseph Pew and the Sun Oil Co. he founded put Philadelphia on the map as an energy hub of the United States.
One year ago, all that was built up seemed to come tumbling down when Sunoco, the heir to Pew’s company, decided to exit the refining business. Citing losses of $1 million per day, Sunoco announced it would close the two refineries it operated in South Philadelphia and the nearby borough of Marcus Hook if a buyer could not be found. ConocoPhillips followed by shuttering its refinery next door in Trainer, Pa.
These facilities composed half of the nation’s East Coast refining capacity. Thousands of jobs would be lost, not to mention the harm to neighboring communities.
Those were dark days.
Yet the people of southeastern Pennsylvania refused to give up. Through hard work, common sense and thoughtful investment, Philadelphia is staking its claim as a capital of American energy once again.
Philadelphia’s refineries have had to import heavier crude from across the Atlantic, and they paid higher Brent prices for it. Combined with higher costs caused by Environmental Protection Agency regulations, the economics simply didn’t work.
But two things changed the equation: the opportunity to bring American energy from the Plains’ Bakken Shale to Philadelphia by rail and federal regulators who were now willing to support new, private investment. State and local government sent a direct message to prospective buyers: We want you here.
First, Delta Airlines decided it was tired of paying retail for jet fuel, so it bought the Conoco refinery to make its own. More than 400 direct jobs were saved.
Then the Carlyle Group, given the same Bakken crude and relying on fast-tracked approvals from the EPA, purchased the South Philadelphia facility – the oldest continuously operating refining facility in the world. Eight hundred fifty direct jobs were saved.
Labor played a significant role in both cases, with the building trades and steelworkers coming together with management to make these deals happen.
Philadelphia’s energy future is also brightened by the tremendous value in American natural gas from the Marcellus Shale. These abundant, clean-burning resources to our west not just generate power for our homes, businesses and vehicles but also provide feedstock to the petrochemical industry. And that industry is looking to greater Philadelphia.
Sunoco may be known for its refineries and gas stations, but it also operates 7,900 miles of pipelines from New York to Texas. Kelcy Warren, CEO of Texas-based Energy Transfer Partners, recognized an opportunity. Declaring the Marcellus Shale “the real deal,” Warren and ETP bought the whole company. Sunoco and ETP becomes one of the nation’s largest, most diversified energy businesses prepared to take advantage of the mid-continent crude and Marcellus Shale.
Valley Forge-based UGI Corp. has proposed a $1 billion pipeline to bring shale gas to Philadelphia. Sunoco’s new Mariner East pipeline project will bring propane and ethane from the Marcellus to a revamped Marcus Hook site. Sunoco is also moving forward on its Mariner West project, thanks to three vessels reflagged by Congress, to bring gas liquids to the Gulf of Mexico. Brazil’s Braskem, the largest polypropylene producer in the United States, is making major investments in Marcus Hook, has its North American headquarters in Philadelphia and foresees a long-term future there.
Philadelphia’s energy resurgence is not easily reproducible. An energy policy for the entire nation requires building the Keystone XL oil pipeline, opening deep-water and Arctic areas for environmentally responsible exploration and a federal regulatory structure that does not stand in the way of jobs and growth.
But the past year in Philadelphia shows the possibilities for growth as an energy capital and creating a new economy of the future. It shows what innovative private investment, combined with policies designed to encourage success instead of failure, can do for one region. Imagine what it can do for the entire country.
Rep. Patrick Meehan (R-Pa.) is a member of the Transportation and Infrastructure Committee.