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Roadblocks present for petrochemical expansion in region

| Monday, June 27, 2016, 11:00 p.m.
Steven Adams | Tribune-Review
Construction continues in Potter along Route 18 in Beaver County at the site of Shell's new ethane cracker plant in this Tuesday, June 7, 2016, photo.

Attracting companies such as Royal Dutch Shell to build their petrochemical plants along the Ohio River was the easy part, as far as Keith Burdette is concerned.

The challenge will come in accommodating a related manufacturing complex that officials in three states hope to establish around ethane crackers, said Burdette, executive director of the West Virginia Development Office.

“We're not trying to build a facility anymore. We're trying to build an industry,” he told several hundred people Monday at a petrochemical conference in Downtown Pittsburgh. “Building an industry is a lot more complicated.”

As Shell prepares to start construction of a multibillion-dollar facility in Beaver County, and two other companies weigh building crackers in Ohio and West Virginia, officials at the conference said they must make sure the region has the infrastructure, workforce and real estate that the industry needs to expand.

“We have to work that much harder with respect to what our next steps are,” said Dennis Davin, secretary of Pennsylvania's Department of Community and Economic Development.

Shell this month said it made the decision to go ahead with construction, nearly five years after it started looking in the region. The cracker, which will convert ethane liquids from Marcellus shale wells to the building blocks of plastics, is expected to attract manufacturers interested in using its products.

Davin said those companies will need a place to build.

“Our issue right now is that in Western Pennsylvania ... we don't have enough construction-ready sites for things that we know are going to happen in follow-on investment from this,” he said. “We know that there are going to be plastics manufacturers, fertilizer manufacturers ... and downstream companies that are going to look for sites.”

As his boss, Gov. Tom Wolf, goes into another state budget deadline period this week, Davin said officials are looking to shift state money toward redevelopment funds that can aid in preparing real estate for such businesses.

The state also needs to collaborate with Ohio and West Virginia to ensure companies have enough trained employees, starting with 6,000 construction workers for the Shell plant, Davin and others said.

Contractors are working directly with union locals to plan for increased demand for welders and other craftsmen, said Sam Lyon, a manager at Bechtel, which did engineering and design work for the Shell plant.

“There will be demand in excess of local union” membership, said Lyon, who expects those locals to get help from affiliates across the country.

Nagging issues of inadequate infrastructure remain a problem.

Burdette said plans are afoot to find places to store liquid ethane in the region for use at crackers and other facilities.

Energy consultant Kathryn Klaber noted bridges in Beaver County require upgrading. More pipelines must be built to carry gas and liquids from the shale fields to demand centers.

“We know that they need to get the gas to market,” Davin said. But he acknowledged that opposition to pipeline projects stands in the way.

Opposition from groups that don't want fossil fuel industries to expand threaten to squelch growth, several people said.

“They are whipping the you-know-what out of the business right now when it comes to public sympathy and public buy-in,” said attorney Mike Krancer, a former Pennsylvania Department of Environmental Protection secretary.

Klaber, a former head of the Marcellus Shale Coalition, said the industry learned lessons from the initial drilling boom that can help as it moves to secondary manufacturing. It starts with trying to be a good neighbor.

“That community engagement, you cannot do enough of that,” she said.

Such outreach should also happen between government agencies and companies looking to take advantage of the cracker and its products, said Dean Calland, an environmental attorney at Downtown firm Babst Calland.

Manufacturers looking to build near the cracker will need help navigating complex permitting and regulatory hurdles, he said. Large companies like Shell have experience and people devoted to those processes, Calland noted. Other firms might not.

“These are not slam-dunk issues. These are issues you need to work through,” he said.

The Northeast U.S. & Canada Petrochemical Construction Conference continues Tuesday at the Marriott City Center, when Shell Appalachia Vice President Ate Visser is scheduled to speak.

David Conti is the assistant business editor at the Tribune-Review. Reach him at 412-388-5802 or dconti@tribweb.com.

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