Marcus Hook’s Fortunes Rest on Buried Treasure: Gas
For more than 100 years the Sunoco oil refinery served as the bedrock for the town.
📅 Tue October 06, 2015 - Northeast Edition
Nick Malawskey - Pennlive.com
Dan Gleiter | email@example.com Photo.
Drilling proceeded so quickly it not only outpaced regulations, but also the infrastructure necessary to transport it to market.
MARCUS HOOK, Pa. (AP) Out on the dark waters of the Delaware River, massive freighters glide up and down the waterway.
Each of these ships is almost twice the length of a football field, rises some eight stories from the waterline and weighs in at more than 20,000 tons (18,143 t), making them among the largest moving objects in the world. The ships’ massive diesel engines rumble in the warm July air, so powerful at times that vibrations can be felt on land.
For almost a century these giants have plied the waters of the river, from the wide Atlantic Ocean and up the Delaware River to the piers at Marcus Hook. They came largely to feed the two sprawling oil refineries that bracket this small town, the site of a recent rebirth that’s attached to Marcellus and the natural gas it has yielded.
At times, Marcus Hook makes the rust-belt towns and cities of western Pennsylvania look pastoral. It is roughly L-shaped, the stem of which, roughly three blocks wide and 12 blocks long, runs from the northwest to the southeast, dead-ending at the river.
Market Street, which runs down the center of the stem, is lined with the standard shops and businesses, old brick row homes and a few modern colonial homes that have gone up in recent years to house the 2,300 people who live here. To the southwest, rising beyond the rooftops is the Sunoco Refinery and, to the northeast, beyond the graveyard at Bible Presbyterian Church, where graves date to the 1800s, the tank farms of the Monroe Energy refinery.
The refineries powered the nation, fueled Ally fighter planes during World War II and provided the lifeblood of this tiny square-mile-sized borough. In its heyday, folks say, the town had a population of more than 5,000 — and 36 bars.
Dwarfing the Hook itself, the refineries seemed immutable — permanent, near sacrosanct reminders of the power of American ingenuity and industrialization. As long as there was oil, there would be the Hook.
“Everyone always said, ’Oh, the Sun will never set on Marcus Hook,’” said Michael Manerchia, a borough council member.
For more than 100 years the Sunoco oil refinery, commonly called Sun Oil in reference to Sunoco’s predecessor and its builder, served as the bedrock for the town. Generations of men worked there, fathers, sons and grandfathers.
Then one Friday — now almost five years ago — the company called the town’s mayor on the phone. Sunoco’s refinery operations had been hemorrhaging money for years, losses driven primary by then-high crude oil prices and the downturn in the economy. The company had been shopping for a buyer and when one didn’t emerge, it determined it was going to cut its losses.
Sunoco told the mayor the Marcus Hook refinery would be shutting down. The 500-odd men working there were done.
“The whole town just went crazy,” Manerchia said.
Marcus Hook’s fortunes have always risen and fallen with the tides of the Delaware River. The river is deep here and it flows fast toward the Atlantic Ocean, about 80 miles to the south. Each day it twice rises and falls roughly six feet, driven by the inexorable forces of the sun and the moon.
It was the tides that carried the first Swedish settlers here in the early 1600s — prisoners pardoned in exchange for settlement in the new world. And it was the tides that led to the creation of the Hook’s early shipbuilding and fishing industries.
The river proved a natural highway for commerce between the burgeoning city of Philadelphia to the north and the outside world, traffic that passed by — and stopped at — Marcus Hook. Bereft of the customs and officialdom of the city, the town became a haven for the pirates, privateers and shady traders of the early 1700s.
Town lore holds that Blackbeard was a regular visitor and kept a mistress on Market Street. The waterfront was lined with boardinghouses and taverns along the colorfully named Discord Lane, now Second Street.
It was from this history as a crossroads that modern Marcus Hook was forged at the end of the Gilded Age, when oil magnate Joseph Pew, of Sun Oil, bought a steam ship to transport oil from Texas north.
The first oil well might have been drilled in Titusville, but by the 1900s the bulk of oil production had shifted from Pennsylvania and Ohio to the vast fields of Texas. Crude was plentiful, but the markets were still in the industrialized Northeast.
Pew — and rival Union Petroleum Company — needed a way to bring oil from Texas to the Northeast. In other words, they needed a port. Both parties settled on Marcus Hook — at the time a small town surrounded by farm fields and woodlands —and both bought land on either side of the recently incorporated borough.
Pew acquired an 80-acre plot of land that somewhat ironically had been an amusement park (think Coney Island, but for Philadelphia) and started building.
Tankers would depart Texas, cross the Gulf and swing around Florida before traveling up the coast to the Hook. There, at the two refineries, the crude oil would be refined into heating oil, gasoline, diesel and other products. Met with almost immediate success, Sun Oil (and Sinclair Oil, which purchased Union Petroleum’s refinery) rapidly expanded refinery operations to a massive scale.
The oil flooding into Marcus Hook drew other industries as well. In 1910 American Viscose opened a sprawling plant in town–eventually building a planned village to house its workers. A few years later, a steel mill opened just over the Delaware boarder in Claymont, a stone’s throw from the Sun Oil refinery.
Between 1900 and 1920 the town’s population increased fivefold to its peak of 5,300. Driven by oil and the nation’s growing, insatiable hunger for it, the sun was rising on Marcus Hook.
When prohibition came the town hardly slowed down. Instead, alongside tankers unloading oil, the Hook became a port-of-call for bootleggers. There’s an urban myth that the then-governor of Delaware, whose home overlooked the river and could see them coming, often met the ships at the piers to pick up his favorite whiskey.
Business boomed, and in 1930 Sun Oil built a pipeline from Marcus Hook west, through the central part of the state and out into the western reaches, to quickly transport oil products (namely home heating oil) to market.
Over the next 80 years the refinery continued to expand. In the 1960s miners carved five massive caverns into the granite, some 300 ft. (91.44 m) below the refinery, capable of storing two million barrels of crude oil. Miners and their equipment were lowered down, the granite, blasted, drilled and dug out of the ground, was hauled up.
There is a photograph that is famous in Marcus Hook — a lunch gathering set inside the first of the caverns to be completed. Hard-hatted men in business suits are seated at tables covered with white cloth, framed amid the massive granite pillars that stabilized the rock roof above them.
It is an arresting photograph — a snapshot in time of an age when it seemed anything was possible.
But nothing lasts forever.
When the end came, it came hard.
American Viscose had shut down in the 1980s, leaving behind the corpse of a industrial giant — abandoned brick and steel buildings on Route 13, and a sprawling complex largely gone to seed, a memorial of a once-great manufacturing empire.
In 2011, Sunoco began idling the Marcus Hook refinery, laying off hundreds of workers. On the other side of town, ConocoPhilips, then-owner of the Sinclair refinery, also began to shut down operations.
Two years later, a few days before Christmas, the steel mill in Claymont, the last large-scale manufacturing operation in town, closed its doors.
Ownership of the mill had bounced around since the venerable Phoenix Steel Corporation had sold it in 1988 to a Chinese investment company. The Chinese subsequently sold it to an American equity firm, who in turn sold it to a Russian investor.
“Right before Christmas, they just let us all go. No severance, nothing,”’ said Ben Van Cleve, who worked at the mill for 15 years. “Just get the **** out.”
Van Cleve said the workers had seen the end coming, to some degree — the sale to the American equity firm was a dark omen — but it still rocked the Hook. Times, already tough, became tougher as workers used to making good union wages tried to find ways to make ends meet.
Van Cleve applied for manufacturing-related jobs (he was a crane and forklift operator), often at a much reduced wage — “anything is better than zero,” he said — but wasn’t able to find anything.
Today he tends bar at Clank’s Bar and Pizza, on Market Street in the heart of town. It boasts the best pizza in Delaware County, which is better than anything you’ll eat “upstate,” as Van Cleve refers to central Pennsylvania.
Clank’s, like much of this town, is imbued with the history of the Hook. Old photos hang on the walls, mementos of events, framed newspaper stories of the bar’s softball team and a fireman’s axe from one of the refineries’ fire companies.
It is a microcosm of the town itself, a town where a proud past is tightly woven into the fabric of the community. But as the plants idled and unemployment rose the town was left with a dire prospect: No longer a showcase of the industrialized might of the United States, instead it would become a museum showcasing the slow death of manufacturing, the empty plants living exhibits to a dying way of life.
The graveyard of American Viscose, once just a reminder of the past, was starting to become a harbinger of the future.
After more than 100 years, it appeared that the Sun was finally setting on Marcus Hook. The tide that had brought the great ships and the lifeblood of oil to this port was rolling back, the waters of the Delaware River, like time itself, quickly rushing past.
Two hundred and fifty miles west of the Delaware River, on a hilltop near the small town of Hickory, Range Resources made history. It was February 2006, and the company was preparing to drill the first horizontal well in Pennsylvania.
Range was searching for gas in the Marcellus Shale formation, and in May the Pennsylvania department of Environmental Protection reported that the drilling rig was set up, the frack tanks filled.
Five months later the drilling was complete, and the race to the Marcellus was underway.
Over the next seven years the amount of natural gas produced in Pennsylvania would increase 20-fold, pumped out of the ground at a prodigious rate in the rural hills of western and northern Pennsylvania.
Drilling proceeded so quickly it not only outpaced regulations, but also the infrastructure necessary to transport it to market.
As it comes from the wellhead, natural gas is not a singular compound. Rather it is a blend of other hydrocarbons, including ethane and propane, commonly referred to as natural gas liquids, or NGLs for short.
Although these fuels can be separated out, the sheer volume of gas being produced means that the infrastructure necessary to do so hasn’t kept pace, and, according to a 2014 report by the Public Utility Commission, “a significant amount of NGLs are simply sold directly into the natural gas system.”
Four years before Range drilled its well, Sunoco had spun off its vast pipeline network into a new company, Sunoco Logistics, headquartered in Philadelphia. It included the pipeline built by Sun Oil, which continued to pump oil products — gasoline, diesel, etc. — from the coast to the west.
In 2012, Sunoco, still looking for a buyer for the Marcus Hook refinery, was itself bought by another company, Energy Transfer. In Philadelphia, the folks at Sunoco Logistics saw an opportunity and did the math:
There was a glut of natural gas products sitting in western Pennsylvania.
The company had an existing pipeline running through the area to the coast.
There was an 800-acre refinery for sale down the road, with massive storage space and port terminals.
It was time to roll the dice.
At the 800-acre Marcus Hook Industrial Complex, close to a thousand men are working nearly around the clock, their time punctuated by the steady, rhythmic pounding of a pile driver.
The industrial park is a massive, sprawling affair. A bewildering web of pipelines, compressors and storage tanks flows in every conceivable direction through the site.
Near the port terminals, giant storage tanks are rising above ground. Taken as a unit, they are capable of holding close to 800,000 barrels of propane and ethane. Cranes hover overhead while ant-sized contractors build the giant tanks.
At the piers, The Atlantic Gas, call sign OWMB2, is being loaded with propane at a rate of 2,500 barrels per hour. In a few days, it will set sail for Tarragona, Spain, before stopping at Gibraltar and returning to Marcus Hook.
Sunoco Logistics is spending roughly $2.5 billion on the Mariner East projects, ripping out old oil refinery equipment and replacing it with the tools and machinery necessary to store, process and ship billions of gallons of propane and ethane. When the upgrades are completed, the rate at which ships can be loaded will increase 10-fold.
At the same time, it has repurposed the old Sun Oil pipeline to bring propane from the Marcellus Shale region to the east. A second pipeline, Mariner East II, is currently going through the permitting process, and Sunoco Logistics announced earlier this year it is considering a third.
The demand and potential is such that in Denmark the company Evergas is purchasing (at a price around $1 billion) a fleet of eight new ships, monikered as the “Dragon class,” dedicated to the Marcus Hook operation. Each ship is more than 500 ft. (152.4 m) in length, and capable of carrying more than 35,300 cu. yds. (27,000 cu m) of petrochemical gas, the largest ethane carriers of their type in the world.
Not all of the propane is destined for other markets. At its peak, the plant can load 10,000 to 14,000 barrels per day from its storage tanks and caverns onto trucks destined for the local market, primarily during winter when demand for propane is high.
The Mariner East projects are both large and small in scale. While they will connect the western part of the state to the port at Marcus Hook, Sunoco Logistics will use a small fraction of the former-refinery-now-industrial-park.
The jobs that Marcus Hook lost when the refinery shutdown also will not be coming back in waves. Sunoco Logistics said it only plans to employ around 200 people when the propane and ethane station is fully operational.
Instead, Sunoco Logistics is betting that it can lure other companies onto the former refinery, which could use its propane and ethane to create other products. Some of the rest of the industrial site is already being leased to tenants — a natural gas power plant and a plastics manufacturer.
Four blocks to the northeast, beyond the Hook’s row homes and churches, the Monroe Energy refinery also is busy. At the same time Sunoco Logistics was buying the Sunoco refinery, Monroe was buying the old ConocoPhilips plant down the street.
Monroe wasn’t interested in shale gas. Rather, its parent company, Delta Airlines, was looking for fuel. High oil prices had increased the price of jet fuel, so in 2012 Delta decided that rather than buying it from a third party, it would make its own.
Despite the drop in oil prices, Delta’s bet has paid off. It bought the refinery for $150 million, and, over the last year, Monroe has posted a profit of $300 million.
Marcus Hook is a study in contrasts. It is surrounded by the might of the petrochemical industry, and yet it dead-ends against the banks of the river in a verdant green park, softly shadowed by old oak trees. There is a pavilion, a band stage and monuments to the men and women from the town who served in the nation’s wars.
Against the river, there are benches where the town’s older residents gather daily, watching the ship traffic on the Delaware River and fishing from a pier. In September the park will host the annual pirate festival, an homage to the Hook’s colorful past.
And yet within spitting distance of the park are the twin refineries, the sprawling plants that for more than 100 years have defined this town. Flames flare from a stack at the Sunoco Logistics park while a massive oil tanker is bellying up to the Monroe Energy piers, massive engines shaking the ground.
The wind is blowing off the river, as it often does. It brings with it the faint smell of the sea, and the promise of a wider world beyond the mouth of the Delaware.
Out on the Delaware River, the great ships are once again sailing for Marcus Hook, born by a rising tide.
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