Officials unveil options for 'second life' of Marcus Hook refinery
A consultant on Wednesday said the best hope for Sunoco's idled Marcus Hook refinery site is for it to be reborn as a multipurpose energy-processing facility, fueled by the growing output of natural gas from the Marcellus Shale drilling boom.
Local officials yesterday presented a road map for what Delaware County Councilman Tom McGarrigle called the "economic second life for Marcus Hook," which looks remarkably like its first life - processing hydrocarbons extracted from the earth into fuel and chemicals.
Only in its new life, the raw material feeding the facility would be Marcellus Shale natural gas, not petroleum.
"Today we stand here and look ahead at a new era," McGarrigle said at the Marcus Hook Community Center on the Delaware River waterfront, with the idled refinery as a backdrop. Sunoco shut down the plant last year and has been unable to find a buyer to operate it as a refinery.
The study by IHS Consulting, commissioned by the Delaware County Council for $100,000, reinforces the sense that the 781-acre site is best-suited for the energy industry. It is served by rail, ships and pipelines, and half of the site is occupied by fuel storage tanks. It also has five caverns carved into the granite bedrock for storing liquefied gases.
The 122-page study was released amid the continuing turmoil in the region's refining industry, which was unhinged last year when Sunoco and ConocoPhillips announced plans to shut three refineries in the region because of deteriorating markets for motor fuels.
ConocoPhillips sold its refinery in Trainer for $180 million to Delta Air Lines, which in July will begin a $90 million project to maximize jet-fuel production.
Sunoco, which is in the process of merging with Energy Transfer Partners L.P. of Dallas, remains in talks to sell its Philadelphia refinery to a joint venture headed by the Carlyle Group. Sunoco has pledged to shut down the Philadelphia plant if the sale is not completed by the end of July.
The future of Sunoco's refinery in Marcus Hook, which Joseph Newton Pew began in 1902 to process crude oil from Texas, is less certain, though officials on Wednesday tried to put an optimistic spin on its outlook.
"Marcus Hook is on the cusp of something very, very exciting in the world of energy," said Joseph Waldo, director of state and local consulting for IHS.
Michael Krancer, the secretary of the Pennsylvania Department of Environmental Protection, compared the event to the 1869 completion of the transcontinental railroad in Utah.
"I don't know how many of you appreciate how dramatic and how historic this moment is here today," he said. "I think we're going to be able to capture this - this is something we are going to be able to tell our grandchildren about."
IHS identified several options for repurposing the oil refinery that involve different levels of investment.
One of the more ambitious proposals would be to replace the refinery with a massive, multi-billion-dollar plant to convert gas into liquefied natural gas for export.
Another suggestion is to attract investors to build an ethane cracker to convert natural gas into plastics, similar to the $4 billion plant that Shell Chemicals is considering for Western Pennsylvania.
Another would be to build a plant using South African technology to convert natural gas into diesel fuel.
Such massive plants might easily employ workforces comparable to those at the Sunoco refinery, which employed 590 people before it was idled. But such huge facilities would require the reconstruction of virtually the entire refinery site.
The consultants suggest that the more realistic option is to convert the refinery into a multipurpose facility, reusing the fuel tanks as a storage facility.
Reusing the fuel storage tanks "not only provides a reliable market supply of petroleum products, it avoids any environmental liability associated with demolition and testing of the soil underneath the existing tankage," IHS said.
In addition to a fuel-storage facility, the consultants suggested the site could also house several smaller processing units to convert natural gas into higher-value by-products.
One suggestion is to build a "fractionation" unit at a cost of about $400 million plant to extract such fuels as propane, butane and ethane from natural gas. The high-value by-products are sought by manufacturers.
Another idea is to build a plant to convert propane extracted from natural gas into propylene. The propylene could be sold to Braskem USA, which operates a plant next to the refinery that converts propylene into polypropylene plastic.
But the three options suggested by IHS together would require a capital investment of $650 million to $900 million - not billions - and employ 170 to 230 employees, less than the refinery employed.
Contact Andrew Maykuth at 215-854-2947, @Maykuth on Twitter or amaykuth@phillynews.com.
