Amendment Allows Sunoco to Move Ahead With Shale Transport
Project
Philadelphia Inquirer
9 November 2011
By Andrew Maykuth,
Three huge 900-foot fuel tankers have little in common with the
sleek yachts that compete in the America's Cup race. But two
Pennsylvania federal lawmakers have found a way to lash the
vessels together in one piece of legislation.
Congress recently approved the America's Cup Act of 2011, which
would waive a law that requires certain vessels that sail in U.S.
waters to be flagged in the United States.
At the behest of U.S. Sen. Pat Toomey and U.S. Rep. Pat Meehan,
both Republicans, the America's Cup legislation was amended to
allow three foreign-flagged tankers to work in the Philadelphia
area for Sunoco Inc.
The massive tankers are the linchpin of Sunoco's Mariner East
project, which the Philadelphia refiner announced last year. The
aim is to transport a liquid byproduct of Marcellus Shale natural
gas to industrial customers on the Gulf Coast.
Mr. Toomey and Mr. Meehan argue that the Sunoco project means jobs
-- 300 to 400 construction workers to build a terminal in Marcus
Hook, and 25 full-time positions once the cargo begins to flow.
"It's kind of hard to argue why you should let a few sailing ships
come in for a few weeks of racing and not put an industrial ship
to work that will be there in place long after the race is done,"
said Mr. Meehan.
The lawmakers had been working to get legislation to allow Sunoco
to reflag the liquefied natural gas vessels.
But then the legislators heard that California lawmakers were
hastily preparing the America's Cup Act to allow 60
foreign-flagged vessels to participate in preliminary races
scheduled to start Saturday in San Diego.
They saw an opportunity to attach the Sunoco proposal to speed up
their objective.
"This is, for me, for our region, an important economic
opportunity," said Mr. Meehan.
The legislation waives the Jones Act, a 1920 law that requires
that all goods transported by water between U.S. ports to be
carried in ships that are owned, built and flagged in the United
States and crewed by U.S. citizens or permanent residents. The
law's aim is to protect the U.S. Merchant Marine.
The Pennsylvania lawmakers argue that it's not much of a stretch
to reflag the liquefied natural gas tankers, named the LNG Gemini,
the LNG Virgo and the LNG Leo. The vessels were built in
Massachusetts in the late 1970s to transport supercool liquefied
natural gas and initially bore U.S. flags. They are owned by
subsidiaries of General Dynamics Corp. and were reflagged in the
1990s to the tiny Pacific republic of the Marshall Islands.
Sunoco wants to hire the ships to carry ethane, a liquid byproduct
of natural-gas production. Ethane is the raw material for
producing ethylene, a building block for plastics.
Marcellus Shale drillers in Western Pennsylvania are producing an
abundance of ethane, which is more valuable than natural gas.
But there is a shortage of ways to transport the material to
markets.
Sunoco plans to convert an existing pipeline across Pennsylvania
to carry ethane and then ship the liquid by sea to petrochemical
plants on the Gulf Coast.
Thomas P. Golembeski, Sunoco's spokesman, said the company has not
officially chosen to locate the terminal in Marcus Hook, where it
operates a dock at its oil refinery. But the legislators talk as
if the Marcus Hook location is a done deal.
Though some anti-drilling staff members of Philadelphia City
Council privately expressed opposition to the Mariner project when
Sunoco first announced it, Mr. Meehan -- whose congressional
district includes Marcus Hook -- regards the project as a way to
generate Marcellus jobs in Southeastern Pennsylvania.
"We are looking at a very unique opportunity for our region to
participate in the bonanza that is the shale gas," he said.
Mr. Toomey said Sunoco plans to spend $300 million to $400 million
on the terminal and storage facilities.
"The net effect is hundreds of millions of dollars of investment,
significant economic growth and hundreds of jobs that begin
virtually immediately when Congress acts to grant the waiver, for
which there is no controversy," Mr. Toomey said at a hearing last
week before the Senate Commerce Committee.
Andrew Maykuth: 215-854-2947, amaykuth@phillynews.com.