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Petrochemical facility building boom could delay Beaver County cracker plant, expert says

| Thursday, Nov. 15, 2012, 12:01 a.m.

A petrochemical building boom planned in the Gulf Coast makes it unlikely that Royal Dutch Shell plc could open a proposed cracker plant in Beaver County sooner than 2020, an industry expert said on Wednesday at a Downtown conference.

State leaders have said they think the plant could open by 2017, if Shell moves forward with the anticipated $4 billion project. Shell is expected to decide by the end of the year whether it will build a plant that would convert natural gas into ethane for use in making plastics, Styrofoam and other petrochemical products.

But Bradley Olsen, vice president at the Houston-based energy investment bank Tudor, Pickering, Holt & Co., said four other projects to build new petrochemical facilities in the Gulf Coast appear to be further along than Shell's.

“There are a limited set of engineering and construction companies that specialize in these large-scale petrochemical or refining projects,” Olsen said at the DUG East conference for oil and gas professionals at the David L. Lawrence Convention Center, noting it's been more than a decade since a new cracker plant was built in the United States.

“When everyone tries to build the same thing at the same time, budgets get inflated and timelines get pushed back,” Olsen said. “If you don't have all your ducks in a row by 2013, there is real doubt if you'll have a chance to get your project done by 2017 or 2018. I think 2020 is more realistic.”

Jerry L. Bradshaw, a retired Texas A&M University engineering lecturer who worked on four cracker construction projects, agreed. “Six years is about as fast as you can build one of these on completely bare ground,” said Bradshaw, 74, of College Station, Texas.

Thomas F. Hoffman, president of Upper St. Clair-based Carbon Communications Consultants, described Olsen's comments as “a new wrinkle I don't think I've ever heard before,” noting discussion often focuses on whether the region will be able to produce the skilled workers needed to run the plant, not whether Shell will be able to find skilled workers able to build it.

Shell spokeswoman Kayla Macke would not comment on Olsen's remarks. She would not say when the company will decide whether to build the plant or, if the project gets a green light, when it might open.

Steve Kratz, a spokesman for the Department of Community and Economic Development, said all incentives offered by the state such as tax credits and a property-tax exemption “would be performance-based and would not be realized until the project moved forward.”

More than 3,000 industry professionals attended the conference. Karl Rove, former deputy chief of staff and senior advisor to President George W. Bush spoke at the conference's luncheon.

Tom Fontaine is a staff writer for Trib Total Media. He can be reached at 412-320-7847 or tfontaine@tribweb.com.

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