June 13, 2019

NG Export Terminal to be Built on Delaware River

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A former dynamite plant in western New Jersey could be converted into a major export terminal for natural gas products like propane and butane in the future. Groups advocating for the environment fear redevelopment of the site for exportation of natural gas products could have significant impacts on the environment and human health.

Investment group Delaware River Partners, LLC (DRP) purchased the former DuPont Repauno Plant on the Delaware River with the intent to use the site as a port for exporting butane and propane to European markets. The Repauno Plant’s location on the Delaware River and the existing features of the plant make it a prime site as an export terminal. DRP plans to spend $450M to expand existing underground caverns beneath the plant to hold up to 3 million barrels of natural gas, fortify rail systems for transport, and build a wharf in the Delaware River that can dock multiple tankers by 2022. Once these renovations are complete, DRP estimates that they will see revenues of $150M annually.

Though no definite plan to export LNG from the Repauno site exists, a partner company of DRP expressed its plan to export LNG through an “unidentified Delaware River port”. This is most likely through Repauno.

There are currently only two active LNG export terminals in the United States: Cove Point, MD, and Sabine, LA. LNG cannot be transported via pipeline for long distances, and there is no exiting pipeline infrastructure from the Marcellus shale play to export terminals, which creates a logistical challenge for natural gas companies in the region seeking to export surpluses. Repauno is located 175 miles south of a proposed gas liquefaction plant in northeast PA, and across the river from a second proposed plant in Philadelphia. Non-liquefied natural gas could be moved through existing pipelines to either plant before it reaches Repauno, making it a prime location for an LNG export terminal for the Marcellus and Utica shale plays.

Its conversion also corresponds with the federal government’s recent push for the exportation of LNG, or what they call, “freedom gas”. The United States has become a net exporter of energy, a major transition largely due to the shale boom. Recognizing the shift in global energy markets, the current presidential administration has pushed for domestic LNG exports to European and Asian markets by expediting the Federal Energy Regulatory Commission’s (FERC) permitting process.

Those opposed to the conversion of the Repauno location cite human and environmental safety concerns, as well as its impact on upstream and midstream development. The New Jersey chapter of the Sierra Club, a national environmental advocacy group, says that the terminal would pose a “threat to the environment and public safety” given the flammability of natural gas and the potential for disaster as seen in Plymouth, Washington in 2014, where a container storing LNG exploded, causing $47.5M in damage. Many in local government have made their ardor for the project known, showing excitement that the previously abandoned plant would be utilized once again.

The economic impacts could span farther than the Delaware River Basin. An export terminal in such close proximity to the Marcellus and Utica shale plays could potentially lead to additional production and/or new pipeline projects.

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