Developing an export terminal for liquefied natural gas (LNG) in Delaware County will tap Pennsylvania into the booming global gas market while also generating new jobs and tax revenues for the entire Philadelphia region, according to a study unveiled last week by the Pennsylvania Manufacturers’ Association (PMA).
The report provided a platform for supporters of the proposed Penn LNG project in Chester to take the high road at the final hearing of the Philadelphia LNG Export Task Force on Aug. 22, where a noisy contingent of activists and residents spoke out against the project and the potential effects it could have on both human and environmental health in the more-immediate area.
Rejection of Penn LNG, however, would not only be a missed opportunity for the Chester and the rest of the Philadelphia areas, but for the entire state and its plentiful gas supplies in the Appalachian Basin, including the Marcellus and Utica shale plays.
“The taskforce hearings confirmed what we already knew, the benefits of an LNG terminal are far too great to ignore,” task force member state Sen. Gene Yaw (R-23) told Pennsylvania Business Report. “Boosting LNG exports – of which a Philadelphia port makes entirely possible – will create jobs, support economic development, reduce harmful emissions, and restore energy independence to this country.”
LNG is a fuel source that has lowered worldwide emissions in the past two decades as more power facilities and manufacturing plants transition from coal and oil to cleaner and more efficient natural gas, noted PMA Executive Director Carl A. Marrara in testimony to the bipartisan task force as it begins drafting a recommendation on improving natural gas exports from the state.
“Every indicator shows global LNG demand rising, and with the large quantities of natural gas in Pennsylvania, we can help supply the world, especially as our overseas allies seek to disentangle themselves from foreign adversaries such as Russia and Saudi Arabia,” Marrara said.
The PMA conducted its study using economic analysis based on existing information from the Cove Point LNG facility in Lusby, Maryland. A previous economic impact study completed by Sage Policy Group concluded that over four years of construction to build the Cove Point LNG Terminal, there was an average of 4,323 construction jobs supported, per year. The PMA study used the same inputs for a four-year construction phase and full-time operations of an LNG facility project in Delaware County.
The construction of an LNG facility in Delaware County would support a total of 28,249 direct, indirect, and induced jobs, PMA said. That totals more than $2.3 billion in labor income, $2.8 billion in gross state product or value added, and $4.8 billion in total output. Over the four years of construction, the tax obligation would total $527 million, with $80 million to the state, $390 million to federal, and the remaining to local governments.
Once construction is complete, the study concluded that the ongoing operations of the plant would support 514 permanent jobs, which would in turn support 1,280 indirect jobs in the surrounding community. The potential impact worked out to a rosy $1.5 billion added to Pennsylvania’s gross state product and $2.5 billion in economic output.
“Manufacturing jobs have the greatest multiplier effect of any other industry due to the feedstock required to make a finished good and the distribution of that good to market,” Marrara told the task force at last week’s hearing. “These are high-value jobs in the areas of custom computer programming design, management of companies, truck transportation, and in the medical and educational fields.”
The task force, chaired by state Rep. Martina White, (R-Philadelphia), was formed last fall through a House bill signed by Gov. Tom Wolf. The bipartisan panel has been examining the feasibility of turning Philadelphia’s venerable seaport into a source of LNG exports to the other areas of the nation and the world. The task force will submit a report on its findings to Gov. Josh Shapiro in November.
White said in her opening remarks that economic opportunity was a topic that “resonates with all Pennsylvanians” and that natural gas would play a major role in shaping the state’s future. Pennsylvania’s unique natural gas reserves have the potential to drive economic growth and create new opportunities,” she said.
“We recognize the profound economic impact that a flourishing energy sector can have on our state,” White said. “It’s about opening doors for aspiring engineers, skilled workers and ambitious entrepreneurs to shape their future, which requires sustainable energy.”
Currently, Penn LNG is the only project on the drawing board. The $6.4 billion proposal by Penn Energy America would develop an LNG processing plant and a seagoing tanker terminal for the site of a long-idled auto assembly plant along the Delaware River in the city of Chester. Once operational, the Penn LNG facility would liquefy around 1 billion cubic feet of gas per day – most of it from Pennsylvania – and export some 7 million metric tons of LNG annually.
The project is seen by supporters as one of the biggest and most promising for Delaware County, and an opportunity that shouldn’t be missed. “To your knowledge is there any other manufacturing business of that magnitude looking at this area?” asked Yaw, to which Marrara replied, “In this area, no.”
The PMA report contained scant indications of how Chester itself might benefit financially from the project; Marrara told Yaw the tax data was focused more on income taxes and spending from workers who may or may not live within the city limits. Yaw urged the PMA to look further at the real estate taxes that would be paid by Penn LNG.
“This facility would seem to me to have a tremendous impact on the revenues that go to the school district,” Yaw said.
The prospect of further delays through litigation or political indecisiveness, however, could conceivably keep Pennsylvania on the sidelines in the race to capture a share of the developing LNG boom, which was a largely a product of the Russian invasion of Ukraine. There is also a concern that it would bog down the entire economy as manufacturers seek-out sources of economical energy. The PMA’s report went beyond the employment and revenue projections for Penn LNG and raised the business community’s enthusiasm for streamlining the approval process for energy infrastructure projects that will not only support the LNG trade but help boost the state’s overall manufacturing base.
“Advancing natural gas and pipeline infrastructure in southeast Pennsylvania could make the region a leading LNG exporter in a matter of years, meeting the increased demand overseas while driving economic growth and generating good-paying jobs for Pennsylvanians,” said Stephanie Catarino Wissman, executive director of the American Petroleum Institute Pennsylvania. “What’s needed now are policies and permitting processes that support new investment and the build-out of energy infrastructure, and these types of projects don’t happen overnight.”
Wissman told Pennsylvania Business Report that while gas production in Pennsylvania has been robust, the state’s pipeline capacity was at its limits. “The ability of the U.S. to further ramp up its export capabilities will likely be critical to global energy market stability as well as climate goals,” she said.