Beaver County firms place wager on Shell building petrochemical plant
After eight years of up and down business, Ed Vescovi is hoping the best is yet to come for the dormant biodiesel plant he oversees on the banks of the Ohio River in Beaver County.
There are plans to revive the site with as many as 85 new workers, including a new river dock and wastewater treatment plant for Marcellus shale gas drillers. The ultimate bet is even bigger, that a multibillion-dollar petrochemical plant Royal Dutch Shell plc may build just down the road could help turn the largely wooded and hilly site in Potter into a booming industrial park.
“I've got a lot of time in here, so I'm very interested in getting this running. It's a shame to see all these millions sitting here being wasted,” Vescovi said. “It's a great opportunity. If Shell comes in, it's an added bonus.”
The chance at that bonus — to get an early position on spin-off business from what would be a largely new industry in Western Pennsylvania — was a big motivator for the site's new owner, Weavertown Transport Leasing Inc., CEO Dawn Fuchs said. It paid more than $2 million to buy the 125 acres in October, she said, declining to cite exact figures.
All around Beaver County leaders are seeing a similar push: Industrial parks are beefing up, engineering companies are moving in, and new offices, hotels and housing are on the way. While many Pittsburgh businesses are still hanging back until Shell decides, it's clear that some are already moving fast to try and make it big.
For those that are waiting, “the first thing I'd say is that ‘You're already late,'” said R.T. Walker, an oil and gas specialist at the real estate company CBRE Inc., Downtown. “I don't think Beaver (County) knows what it's in for.”
Walker has been one of the project's biggest cheerleaders, adamant that it will happen. But that's far from certain. Shell leaders have never committed to building during two years of deliberating since they picked Pennsylvania as the potential host. It has an option to buy the Horsehead Holding Corp. zinc smelter site, and, after three extensions, its final deadline to buy is coming next month, County Commissioner Joe Spanik said.
Shell leaders will be updating a working group of local and state officials on Thursday in Hopewell, Spanik and Commissioner Dennis Nichols said. The parent company has been facing sagging profits and last week its global leaders said they will cut capital spending by a fifth and pull back from some shale development in the United States. Shell has, however, continued to invest millions into Beaver County. It spent $1.87 million in December to buy the 5.5 acres home of Cubbyhole Self Storage on Frankfort Road to help reroute Route 18 along the Horsehead site. Shell talked to other property owners in the area, the seller said. Shell is also paying for ongoing demolition work to help clear part of the Horsehead site, both companies have said.
Plants like this — called ethane crackers — do tend to bring regional impacts. They can draw manufacturers that work with the chemicals to make plastic products, cleaners, paints and even fabric. State Department of Labor & Industry research has estimated every one permanent worker at this kind of plant would lead to 15 more permanent jobs at other companies, including drillers that would hire more to produce more ethane for the plant.
Walker said the other petrochemical hubs have the biggest business impact over a radius of about 150 miles, though this region's hills and valleys could make that radius shorter here. At Ambridge Regional Distribution & Manufacturing Center, 11 miles up the Ohio from the Shell site, they're planning for a 25- to 30-mile zone for spin-off businesses, said Gene Pash, president of site owner Value Ambridge Properties Inc.
In part because of the cracker, the company is working on its first master plan update in 25 years. Its new plan maps out the addition of as many as six new buildings to provide top-class office and workspace for expanding industry, Pash said.
“We're moving forward at warp speed,” he said. “The cracker will be bigger for us than the drilling. ... The drilling will come and the drilling will go; the manufacturers that use that (gas) will be here for a long time.”
Other businesses expanding their reach into Beaver County include engineering firms looking to work with energy-related industries and communities as they build infrastructure.
“My opinion is, things are going to happen there with or without Shell. Shell could be the tinder on the fire,” said Marty Muggleton, chief development officer for Williamsport-based Larson Design Group.
The company this month announced its acquisition of engineering firm Daniel C. Baker Associates in Beaver. Green Tree-based Gateway Engineers Inc. also is looking at expanding in Beaver County. Ryan Hayes, director of business development, said developers, especially in the hospitality industry, are reaching out to the firm to make plans there.
The attention and enthusiasm have been noticeable for two years, the commissioners Spanik and Nichols said. Now in the past two to three months, action has started to follow, they added.
They mentioned new hotels going up, housing developments in the works and the first activity in two years on the planned Bridgewater Crossing mixed-use development. An unnamed developer is taking on the site, and has said the plans will get bigger if Shell commits, they said.
“Since the mills went down in the late 70s/early 80s, I don't think you've seen this much positive stuff,” Nichols said.
The region's drilling boom has helped give these businesses a foundation to build on, they said. Carnegie-based Weavertown, at its Potter site, is moving up emergency spill response equipment and some of its stone business into a satellite operation to serve the drillers increasingly working north of Pittsburgh.
That type of business is growing enough to justify a somewhat speculative investment, fostering belief that it will turn a profit even if Shell never builds, Weavertown's CEO Fuchs said. The company is planning $15 million to $20 million more to develop the whole site, according to county commissioners who helped Weavertown apply for state grants.
“With any growth strategy, you have to be in early because then you'll get short-listed more quickly.” Fuchs said. “We're opportunistic.”