Royal Dutch Shell yields to government actions

From an Article by Tom Fontaine, Pittsburgh Tribune Review, March 18, 2020

Shell Chemicals said Wednesday it will temporarily halt its multibillion-dollar project to build an ethane cracker plant in Beaver County because of coronavirus concerns. The company then plans to gradually ramp work back up at the sprawling site where about 8,000 people have been working.

“The decision to pause was not made lightly,” Shell Pennsylvania Chemicals Vice President Hilary Mercer said in a statement. “But we feel strongly the temporary suspension of construction activities is in the best long-term interest of our workforce, nearby townships and the commonwealth of Pennsylvania,” Mercer added.

The decision came hours after Beaver County government leaders called on Shell to suspend work on the project.

“It’s time to shut down. Do what you have to do, but get to that point where we won’t have anyone on that site,” Beaver County Commissioner Dan Camp said at a news conference late Wednesday morning in front of the county courthouse in Beaver.

Camp, who was joined by fellow Commissioners Tony Amadio and Jack Manning and state Reps. Jim Marshall, Rob Matzie and Josh Kail, said his office had received more than 500 calls in recent days from concerned residents and Shell employees and contractors.

Callers reported crowded conditions on buses that take the project’s thousands of workers to and from the work site, limited hand sanitizer and other problems.

“With 8,000 workers, if something happens there, our health care facilities will not be able to undertake what they will have to do,” Camp said, noting that the Heritage Valley Beaver hospital is equipped with only 40 ventilators.

“There’s potential for a very catastrophic outbreak,” Manning added.

The government leaders said they had been in communication with Shell and Gov. Tom Wolf’s office about their concerns. “I believe Shell understands the problem and our concerns. I have confidence they will do the right thing,” Camp said.

The company did not say how long it would suspend work or how long it might take to ramp work back up to full capacity. “As of now, there is no definitive timeline to return to construction activities,” spokesman Curtis Smith said. “It’s too early to know that. For now, our focus is on the 8,000 workers who have dedicated their time and talent to this project.”

The company said it would spend the coming days installing what it called “additional mitigation measures” at the site. Smith said those measures haven’t been finalized, but could include using additional buses to transport workers to and from the site and installing more sanitizing stations and work tents on the site.

No workers at the site have shown symptoms of covid-19, the illness caused by the coronavirus, according to Smith.

Work on the project is expected to be completed sometime in the early 2020s, Smith said. When the plant begins operating, it will process ethane from the Marcellus and Utica shale reservoirs into ethylene and polyethylene, the building blocks of plastic. Officials have said it will employ about 600 full-time workers, and hundreds of others jobs could be created by spinoff companies related to the plastics industry.

“Our goal is to build a positive, decades long legacy in the region,” Mercer said in her statement. “That means earning our right to live and work here every day. It also means caring for people. While (suspending work is) understandably disappointing to many, we believe this decision honors that approach.”

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Shell ‘s construction crew at risk of COVID-19 sickness

HARRISBURG, Pennsylvania (WPVI) — Gov. Tom Wolf is tightening his directives to businesses to shut down, issuing a dire warning and saying Thursday that all “non-life-sustaining” businesses in Pennsylvania must close their physical locations by 8 p.m. to slow the spread of the coronavirus.

Enforcement actions against businesses that do not close their physical locations will begin Saturday, March 21st, Wolf said in a statement.

You can also find the list at this link.

Open Trench Method not acceptable to Chester County

From an Article by Michael P. Rellahan, Daily Local News, Chester County. PA, January 23, 2020

WEST CHESTER — A Chester County Common Pleas Court judge on January 23rd denied the county’s request for an injunction against Sunoco Pipeline to halt construction on the controversial Mariner East 2 project on two county-owned properties after deciding he did not have the authority to decide the case.

Judge Edward Griffith issued a terse ruling after an hour-long hearing involving attorneys from the county and the pipeline company, saying that he did not have “subject matter jurisdiction” to rule on the matter. He issued no explanation, but his decision effectively means that work on the pipeline at the Chester County Library and Chester Valley Trail can start tomorrow.

A spokeswomen for Energy Transfers, Sunoco’s parent company, company Vice President Vicki Anderson Granado, hailed the decision and indicated that work would begin soon.

The county commissioners, who had filed the request for an emergency injunction last week after being notified by Sunoco that work would commence at their properties on Friday, issued the following statement after Griffith’s ruling.

“The county is disappointed with the court’s ruling and is exploring all legal options that remain available to ensure that Sunoco Pipeline LP adheres to the provisions and terms of the easement that Sunoco drafted,” it read.

But since the judge essentially accepted Sunoco’s argument that the case involves permitting questions involving the state Department of Environmental Protection (DEP) and approvals by the state Public Utilities Commission (PUC), neither of which was included in the county’s injunction request. Thus, the county’s attempt to put a stop to the work was flawed and should be rejected.

Lead attorney Robert L. Byer of the Philadelphia law firm of Duane Morris, noted that the PA DEP and the PA PUC both had given permission for the pipeline to be built and that the company’s use of the “open-trench” construction method was justified in order to protect the public water supply.

Louis Kupperman, the attorney from the West Chester law firm of Buckley, Brion, Morris & McGuire, on the other hand, urged Griffith to find that the issue at hand was purely a contract dispute, over which he had authority, between the county and Sunoco involving a provision in the county’s easement that it have a say in what type of construction method is used in the pipeline as it crossed the library and trail property.

In the hearing, Judge Griffith peppered both sides with questions about the legal case, but also about Sunoco’s need to hasten project construction. The company had been granted permission to resume construction by the PA DEP earlier this month after it levied a $30 million fine against its parent company, Energy Transfer Inc. of Texas. “What’s the rush?”

Mariner East goes 23 miles through the heart of Chester County – including the two county-owned plots — and then another 11 miles through western Delaware County. Eventually, the pipeline will transport hundreds of thousands of barrels of volatile liquid natural gases from the state’s Marcellus Shale region to a facility in Marcus Hook. It has drawn severe attacks from local governments, environmental activists, and residents in both counties.

The project has been plagued by spills and runoffs, while work has been halted several times by the state. Pennsylvania also has slapped millions in fines against the company, but has been unable to stop the multi-billion dollar project, which has the support of labor groups, the chamber of commerce and some public officials.

More than 80 years ago, Sunoco LP’s predecessors acquired a pipeline right-of-way over privately owned lands in West Whiteland. The county subsequently purchased portions of the land, and in February 2017, Sunoco sought supplemental easements for the properties.

Those supplemental easements required Sunoco to install its pipelines using road bore method or horizontal directional drilling method, which would not disturb the surface of the property, or use the traditional open-trench method should conditions necessitate it, according to the county.

The easements stated that the open-trench method of construction may not proceed unless Sunoco provided substantial evidence to the county that conditions beyond Sunoco’s reasonable control necessitate the use of the open-trench method, or that Sunoco received written permission from the county, according to the commissioners’ motion.

However, the company has responded that the county’s suit cannot proceed because it does not list as parties to the action either the PA DEP, which issued approval of the construction permits initially and again this month, and the state Public Utilities Commission, which certified the pipeline project as a public service. Those are the agencies that granted approval for the type of construction, and the county cannot counter their decisions, the company attorneys wrote.

“The county’s petition flatly ignores that the permanent easements specifically contemplate the use of the ‘open-trench’ method,” the company’s motion to dismiss the petition for an injunction stated. “They do not require the county’s written consent to the change.”

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Major Ethane Pipeline Seeking Customers

From a Notice by Paul J. Gough, Pittsburgh Business Journal, February 3, 2020

A major pipeline between Washington County (PA) and Ontario, Canada, is seeking customers that would want to ship ethane.

Energy Transfer LP said it had declared open season for the Mariner West pipeline, which connects the MarkWest plant in Houston, PA, to Michigan and near the industrial center of Sarnia, Ontario.

The binding open season solicits customers for a pipeline, where the companies will be guaranteed transportation of their fluids — in this case, natural gas byproduct ethane — to a certain point.

Mariner West is a project of Sunoco Pipeline LP, a division of Energy Transfer. The 395-mile pipeline, which started operations in late 2013, carries Marcellus Shale ethane from Houston, PA, and other points in Pennsylvania to Marysville, Michigan. It has a capacity of 50,000 barrels a day of ethane.

Mariner East pipeline to transport ethane from OH, WV, & PA across PA to the Delaware River for export to Europe

From an Article by Marc Levy, Associated Press Exclusive News, November 12, 2019

PHOTO — In this Oct. 22 photo, pipes lay along a construction site on the Mariner East pipeline in a residential neighborhood in Exton, Pa. The 350-mile (560-kilometer) pipeline route traverses those suburbs, close to schools, ballfields and senior care facilities. The spread of drilling, compressor stations and pipelines has changed neighborhoods — and opinions. (AP Photo/Matt Rourke)

HARRISBURG — The FBI has begun a corruption investigation into how Gov. Tom Wolf’s administration came to issue permits for construction on a multibillion-dollar pipeline project to carry highly volatile natural gas liquids across Pennsylvania, The Associated Press has learned.

FBI agents have interviewed current or former state employees in recent weeks about the Mariner East project and the construction permits, according to three people who have direct knowledge of the agents’ line of questioning.

The focus of the agents’ questions involves the permitting of the pipeline, whether Wolf and his administration forced environmental protection staff to approve construction permits and whether Wolf or his administration received anything in return, those people say.

The Mariner East pipelines are owned by Texas-based Energy Transfer LP, a multibillion-dollar firm that owns sprawling interests in oil and gas pipelines and storage and processing facilities. At a price tag of nearly $3 billion, it is one of the largest construction projects, if not the largest, in Pennsylvania history.

However, the construction has spurred millions of dollars in fines, several temporary shutdown orders, lawsuits, protests and investigations. When construction permits were approved in 2017, environmental advocacy groups accused Wolf’s administration of pushing through incomplete permits that violated the law.

Wolf’s administration declined comment on the investigation Tuesday. In the past, Wolf and his administration have said the permits contained strong environmental protections and that the Department of Environmental Protection wasn’t forced to issue the permits.

The Mariner East project, along with the overhaul of the Marcus Hook refinery and export terminal near Philadelphia, have had the support of leading public officials and business trade groups.

Wolf himself has said that the pipeline’s economic benefits would outweigh the potential environmental harm, and that the Mariner East would be part of a distribution system that the industry needed.

The state’s building trades unions have seen a huge influx of work on the Mariner East pipelines and Marcus Hook. Exploration firms drilling in the booming Marcellus Shale and Utica Shale fields shipping natural gas liquids through Mariner East pipelines and Marcus Hook have helped the U.S. become the world’s leading ethane exporter.

The roughly 300-mile Mariner East 1 was originally built in the 1930s to transport gasoline westward from Marcus Hook. It was renovated and, in 2014, began carrying natural gas liquids eastward to the refinery from southwestern Pennsylvania’s drilling fields.

Construction permit applications were submitted in 2015 for two wider pipelines, the 350-mile-long Mariner East 2 and 2x, designed for the same purpose, but stretching farther, through West Virginia’s northern panhandle and into Ohio.

Both were projected to be open in 2017. But Mariner East 2 began operating in late December, and Mariner East 2X could be complete in 2020.

The pipelines run past houses, parks and schools in southeastern Pennsylvania, and have been met with protests by alarmed neighbors worried that one leak could ignite a deadly explosion. Sinkholes along the pipelines’ route have opened on lawns and construction has contaminated streams and private water wells.

Food & Water Action Pennsylvania Director Sam Bernhardt released the following statement after the story was published:

“Whether it is provided by the federal judicial system, county District Attorneys, or Governor Wolf himself, justice for communities harmed by Energy Transfer and their Mariner East pipeline means shutting this pipeline down for good.,” he wrote. “The Wolf administration fast-tracked this dangerous, disastrous project, putting communities across the Commonwealth at risk. We have seen sinkholes, spills and water contamination, and a grassroots opposition movement has pushed his administration to stop the project before further disasters strike. Governor Wolf has refused.”

Meanwhile, county and state prosecutors are investigating the pipeline. Chester County’s district attorney, Tom Hogan, opened an investigation last December. In March, Pennsylvania’s attorney general, Josh Shapiro, said his office had opened an investigation on a referral from Delaware County’s district attorney. His office already had an environmental crimes investigation under way into the natural gas industry.

Wolf’s administration also has had run-ins with Energy Transfer in which it accused the company of willfully violating state law.

Still, when the Department of Environmental Protection issued the permits, environmental advocacy groups warned that it would unleash massive and irreparable damage to Pennsylvania’s environment and residents. In general, the permits are required to protect waterways and wetlands from pollution, runoff and obstruction stemming from heavy construction.

Within hours, the Clean Air Council and other environmental advocacy organizations appealed the permits, saying the DEP had approved incomplete and inaccurate permit applications that violated the law “in response to heavy and sustained political pressure.”

At the time, Wolf denied applying pressure to approve the pipeline permits. Rather, he said he had simply insisted the department stick to its own timeline to consider them and that he believed the department had done its due diligence.

The environmental groups’ request to halt construction was denied, but they did win additional protective steps in a settlement.

In depositions and internal documents that became exhibits in the appeal, department employees said the schedule to consider the applications had been sped up, but none said they had been forced to approve permits over their objections.

Acosta Deep Mine, Jennerstown, PA, for metallurgical coal

FACT CHECK: Is President Trump Correct That Coal Mines Are Opening?

From an Article by Reid Frazier of the Allegheny Front, National Public Radio, June 2, 2017

As he announced his decision to withdraw from the Paris climate agreement, President Trump said he was putting American jobs ahead of the needs and desires of other countries.

“I was elected to represent the citizens of Pittsburgh, not Paris,” he said Thursday. Trump said the agreement was “very unfair” for the U.S., especially the U.S. coal industry. And he alluded to some recent good news for the battered industry: the development of new mines.

The Claim

“The mines are starting to open up, having a big opening in two weeks. Pennsylvania, Ohio, West Virginia, so many places. A big opening of a brand-new mine. It’s unheard of. For many, many years that hasn’t happened. They asked me if I’d go. I’m going to try.”

Short Answer

Yes, mines are beginning to open up, including a new one in Pennsylvania. But that doesn’t reverse the overall decline of the coal mining industry from its glory days.

Long Answer

The coal mines that are opening up produce a special kind of coal used in steelmaking and are opening largely because of events unrelated to federal policy, experts say. The market for the kind of coal used in electricity — the biggest use for coal — remains down relative to where it was several years ago.

In other words, the industry has rebounded slightly after years of layoffs and closures caused mainly by competition from cheap natural gas. And a handful of new mines in Wyoming, Alabama, Pennsylvania and West Virginia are either opening or slated to open in the next few years.

The coal mine Trump referred to is the Acosta Deep Mine in Jennerstown, Pa., about an hour east of Pittsburgh. It is scheduled to have an opening ceremony next week, but there’s no word yet on whether the president will be there for the ribbon-cutting.

“We’re staffing up,” George Dethlefsen, CEO of Corsa Coal Corp., which owns the mine, told Bloomberg in February. The mine plans to employ about 70 people.

Betty Rhoads, the owner of the nearby Coal Miner’s Cafe, in Jennerstown, says she has seen an uptick in business from miners at the mine since last year. “You’ll see a group of 12 or 20 of them come in and have a big breakfast after their shift is over,” she says. “It helps the cook get paid. It helps the waitress get paid. It helps us pay our electric bills.”

The mine, as are many of the others slated to open, will produce metallurgical coal, a special type of coal that is used in steelmaking. This is different from “steam” coal, which is used to generate electricity. “Met” coal makes up about 15 percent of worldwide coal production, according to the International Energy Agency.

The Acosta Deep Mine is one of a handful of metallurgical coal mines opening up around the country to take advantage of very high prices for metallurgical coal, says Art Sullivan, a mining consultant and former coal miner in Washington, Pa. He says the uptick in met coal is related to events oversees that have little to do with U.S. policy or politics.

One of these factors is that Australia, the far and away leader in metallurgical coal, has experienced disruptions to its supply chain. There have been problems with rail transport of coal, and Cyclone Debbie further hurt the coal industry there, Sullivan says. Those disruptions, combined with greater-than-expected demand for steel in China — the world’s leading steelmaker — caused prices of this special coal to soar to $300 per ton, triple the price of met coal from three years ago.

“With the disruptions in Australia and continuing high level of demand in China, there has been this upsurge in the U.S. with the planning, development and production from metallurgical coal mines,” Sullivan says.

James Stevenson, director of the coal team at IHS Markit, says the metallurgical coal boom has helped the coal industry rebound. The rest of the coal industry has also benefited from higher natural gas prices.

“I think that the broad-brush characteristic is that things have really improved from the bottom,” Stevenson says. “We really saw the bottom of the U.S. coal market in early 2016.” Since then, the industry has picked up a bit. Several large coal companies have begun to emerge from bankruptcy, buoying the industry.

Still, despite this uptick, the industry isn’t going back to its glory days of a few years ago, regardless of Trump’s pro-coal policies, Stevenson says. He expects natural gas prices to fall and the shortage of met coal to ease. “The direction is downward,” Stevenson says.

“There’s not a whole lot a government can do to change economics, so we don’t really expect a whole lot of change to the coal demand outlook from what any administration really can do,” he says. “Most analysts would agree [Trump's pro-coal policies] are probably a case of slowing the decline [rather than generating] any real upside.”

Coal production reached a 30-year low in 2015, and the number of U.S. coal miners fell from 90,000 in 2012 to 50,000 in 2016, according to the Bureau of Labor Statistics. The number of U.S. coal mines dropped from 1,831 in 2006 to 1,159 in 2015, according to the Energy Information Administration.

Overall, coal industry analysts say this rebound will pick the industry up, but not to the levels seen at its height around 2011. Blame fracking.

“Natural gas is the big reason why coal use for electric power has declined,” says Jay Apt, a professor of engineering and public policy at Carnegie Mellon University’s Tepper School of Business. Apt says natural gas from the fracking boom has replaced coal on the electric grid; natural gas recently overtook coal as the largest source of electricity in the country.

A recent Columbia University study found that regulations accounted for 3.5 percent of coal’s decline, while competition from natural gas accounted for around 49 percent.

Trump’s pro-coal policies certainly won’t hurt the industry, but the broad trends pushing the industry down are likely to continue, experts say. It’s simple economics.