Analysts: Economic benefits of petrochemical plant could be huge
If Shell Oil Co. builds a multibillion-dollar petrochemical plant in Beaver County, the Pittsburgh region could be to the natural gas industry what Houston and Dallas are to America's oil industry, an economist said on Thursday.
The economic benefits to Western Pennsylvania would go far beyond a single ethane "cracker" plant, potentially creating a boom in new manufacturing employment here, said Kurt Rankin, an economist with PNC Financial Services Group Inc.
"You could potentially see plastics manufacturing get a boost, but you need to outfit that plant and outfit the (natural gas) rigs and be able to supply what those operations need in order to remain in operation," Rankin said.
The region's manufacturing employment in general would "get a boost from natural gas in the coming decade," Rankin said.
Shell stressed that no decision to build the plant has been made. While it's been estimated that the plant, which would break down components of natural gas into the building blocks for plastics, could cost between $1 billion and $4 billion to build, the company has not said what it might spend.
Shell Oil is the U.S. subsidiary of Netherlands-based Royal Dutch Shell plc. Royal Dutch Shell CEO Peter Voser told an energy industry conference in Houston this month that it could be years before the company green-lights the plant.
"There are many hurdles to clear before we can even take an investment decision to build the proposed petrochemical complex," Dan Carlson, general manager of new business development for Shell Chemicals, said yesterday.
"We need to confirm the suitability of the site, secure ethane feedstock supply, complete the engineering and design work, confirm the support of customers for our products, receive all the necessary permits and confirm that the project is economically robust and competitive."
Despite those hedges, some local officials said just having the Pittsburgh region picked for the Shell plant is a major accomplishment.
"Today's announcement is historic," said Dennis Yablonsky, CEO of the Allegheny Conference on Community Development, the region's lead economic development agency. "This project will be the single largest 'from-the-ground-up' industrial investment in the Pittsburgh region in a generation."
With the decline of the steel industry around Pittsburgh in recent decades, the region has promoted itself as a hotbed for jobs in education, medicine and technology. But manufacturing remains an important and vital part of the economy, said David N. Taylor, executive director of the Pennsylvania Manufacturers' Association.
There is "tremendous opportunity" for Western Pennsylvania to attract manufacturing companies that want both inexpensive energy from natural gas and will make products from what Shell produces, such as plastics, pharmaceuticals and paints, Taylor said.
Construction of the plant could support thousands of highly skilled jobs, state Rep. Robert Matzie, D-Beaver County, said in touting the potential economic benefits.
The spinoff effects of the plant could support more than 10,000 permanent jobs in the chemical industry in the state, according to the American Chemistry Council, an industry group.
Along with the addition of high-paying jobs at Shell, which the council has estimated could average $70,000 a year, there is the possibility of more manufacturing jobs being created at companies that either support the plant or buy its materials, said Frank Gamrat, an economist with the Allegheny Institute for Public Policy in Castle Shannon. And those jobs have a good "multiplier effect" in the community, meaning the pay is high enough that the workers' spending supports many more jobs at restaurants, retailers and other businesses, he said.
The impact should spread beyond just the Pittsburgh region, said Kathryn Klaber, president of the Marcellus Shale Coalition, which represents natural gas companies.
"While located in Pennsylvania, the supply chain and potential economic impact of this project will span the multi-state region while serving as an anchor in the resurgence of the domestic manufacturing sector," she said.
Aliquippa had been portrayed as the front-runner in the county for the cracker plant, on former LTV Steel property owned by developer Charles J. Betters, but officials said that community will likely benefit as well, as related businesses usually spring up near cracker plants.
Betters said he was not disappointed and was aware that Shell had been looking at the Horsehead site.
"However it got to Beaver County, it doesn't matter as long as it wound up there," Betters said.
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Student arrested at Shaler High School in round up of 35 Allegheny County drug dealers
- New movie studio coming to McKees Rocks
- Woman taken into custody for fatal stabbing of male companion in Duquesne
- Ex-judge in Philadelphia charged with bribery, conspiracy in sting case
- Steelers’ defense on pace for fewest sacks in 16-game season
- Cops: Washington County surplus store sold stolen items
- Starkey: Century mark beckons for Ben
- Flyers continue mastery of Penguins at Consol
- Harlem Wizards will take to the court against Connellsville All Stars
- Pitt offense eyes healthy balance
- WPIAL, coaches are still looking to schedule Week 9 rivalry games