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Posted on Tue, Nov. 16, 2004

PGW wants to be a player in liquefied natural gas

By Michael Currie Schaffer
Inquirer Staff Writer

Mayor Street and much of his administration stood in the shadow of 4 billion cubic feet of liquefied-natural-gas storage tanks yesterday as the mayor officially announced his support for a proposal to turn Philadelphia into a major trans-shipment center for natural gas arriving by ocean-going tanker.

"This is a once-in-a-lifetime opportunity," Street said of a newly issued request for proposals from the city-owned Philadelphia Gas Works. The request seeks a corporate partner to convert PGW's Port Richmond storage facility into a site that could receive super-cooled ship-borne LNG, convert it back into gas, and sell it at a profit up and down the East Coast.

Street called the proposal a key part of his "new river city" initiative, which aims to revitalize Philadelphia's waterfronts. PGW has estimated that the project would create 700 jobs and add $50 million a year to its perpetually empty coffers.

But first, the city must find a corporation willing to make an enormous investment in a long-term relationship with the financially struggling PGW. Once a proposal is received, it must be scrutinized by the Philadelphia Gas Commission, City Council, the state Public Utility Commission, the Coast Guard, and the Federal Energy Regulatory Commission.

"There are going to be a bunch of issues" in the approval process, said Alfred J. Kuffler, a Philadelphia maritime lawyer who has worked on LNG projects in the past.

As gas prices have skyrocketed, more than 30 similar projects have been proposed around the country in recent years, including one by oil giant BP in nearby Logan Township, Gloucester County. PGW said it had a leg up because it already has the Port Richmond facilities.

But the project will also face new concerns about shipping. LNG tankers serving the facility would sail up the Delaware and under four bridges before reaching the Tioga Marine Terminal, which the Coast Guard will examine thoroughly for security and navigation problems.

In a September filing with the Federal Energy Regulatory Commission, BP said a reason it chose the Logan Township site instead of upstream spots was that "channel widths fall below the 800-foot-wide threshold," which company spokesman Tom Mueller said was an internal company standard.

PGW's chief operating officer, Craig White, said the comment was probably preemptive criticism from a would-be competitor. Michael J. Linton, president of the Pilots Association for the Bay and River Delaware, which represents pilots who steer ships to Philadelphia, said navigation was "not a problem."

Street called on critics to "evaluate this project on its merits and reject the fear tactics some will invoke."

The mayor was ebullient at the news conference, where he stood beneath towering gas tanks surrounded by barbed-wire-topped fences at PGW's Port Richmond site.

But as he termed the proposal an important piece of the city's economic-development potential, at least one rhetorical flourish appeared to reach too far. Turning to the facility's role in nationwide energy policy, Street said that "LNG is a crucial part of the nation's strategy for energy independence."

In fact, the Port Richmond facility would likely import the fuel from Africa or the Caribbean.

Contact staff writer Michael Currie Schaffer at 215-854-4565.

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Last modified: 22 October 2005

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