Could Philadelphia Become 'Cushing East'?

With some encouragement from state officials, Canopy developed the crude oil unit train concept and secured a lease from Exelon Corp. for a proposed terminal site: an idled coal-fired power plant approximately 15 miles southwest of downtown Philadelphia. The brownfield site boasts river frontage, a rail loop for turning around unit trains quickly and a 200,000-barrel crude oil storage tank. Moreover, it sits within 6 miles of Trainer, Marcus Hook, PES' Philadelphia Refinery, PES Philadelphia's Crude Oil Dock and – across the river in New Jersey – PBF's Paulsboro Refinery.

"There's not much real estate in this area where you can fit a 7,200- or 7,500-foot unit train," said Johnson. "This was about the only place."

Several potential tenants interested in reusing the facility had approached Exelon about the site, but Johnson said that Exelon recognized the potential economic benefit that bringing cheaper crude oil to the East Coast would have on area refineries. Enhancing the economics of refining in the region would help to sustain thousands of manufacturing and construction jobs in a once-bustling industrial center, he explained.

"Refineries are a tremendous producer of well-paying jobs in the area and it would be a tragedy to see them go away," Johnson said. "Exelon took us seriously and we secured a lease on the site."

Having garnered a lease for the crude-by-rail terminal, Canopy now had to find the money to make the $68 million project a reality. Johnson and Galloway initially explored the private equity route, but their due diligence efforts brought them in contact with a representative of Enbridge Energy Co. Their acquaintance with the Canada-based company, whose extensive assets include a 120,000-barrels per day crude-by-rail terminal in Berthold, N.D., to complement its 355,000-barrels per day North Dakota Pipeline System, suggested that Canopy initiate talks to investigate a joint venture (JV).

"When we were approached by Canopy, we looked at the other side and saw that we had an offloading opportunity in Philadelphia, in the East, and it made imminent sense to us to take a hard look at it," recalled Peter Holran, director of U.S. Government Affairs with Enbridge.

"The talks continued and we saw very much the same vision: start small but do it right," added Johnson.


12345678

View Full Article

WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Edward Young  |  May 22, 2013
This is the perfect solution for supplying the Northeast refineries. The cost, time, and regulations to build/rebuild pipelines would be enormous. Forget the differance in transportation costs rail vs pipeline. How many billions of dollars and how many years before an adequate pipeline system could be built. There is another player rapidly coming into the game. The production of crude, diesel, and other liquid and gas commodties being produced from natural gas.Most notably at the wellhead. This technology will recover stranded and flare gas situations and has the potential to take the place of building extensive and expensive pipelines.The economic potential of NG to GTL to a refinery or chemical company can be a leading force of American independence of imported oil or gas.
Randy Parsons  |  May 20, 2013
Nice job. Its Great to see companies doing new and exciting things to use and save the past. As we all know if you would have tried to build a new refinery it would have never got past the permitting process. Thanks