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Corbett signs ethane cracker tax bill

| Saturday, June 30, 2012, 10:56 p.m.
Shell Chemicals announced this spring that the Horsehead Plant shown here in Potter and Center Township, Beaver County was chosen as a potential location for a cracker plant. File photo

HARRISBURG - Gov. Tom Corbett signed legislation late Saturday establishing an unlimited tax credit to encourage petrochemical companies to move to Pennsylvania in hopes that it will create a "new industrial revolution" in the state.

Corbett, who asked the Legislature for the measure, is negotiating with Royal Dutch Shell plc to build a plant in Beaver County on the Center-Potter line near the Beaver Valley Expressway.

The House approved the bill, part of a broader tax code legislation, by a 140-56 margin Saturday night. It won Senate approval Friday night.

"My goal, our goal, is to transform Pennsylvania, so we're not only a supplier of natural gas, but also a processor and manufacturer," Corbett said.

"This credit will work to keep the industry and our resources here in Pennsylvania, grow jobs, and grow our economy.

"Simply put: We will usher in a new industrial revolution in Pennsylvania," the governor said.

"While creating jobs, this new industry will help us recover and clean up former brownfields as new facilities are built."

Rep. Jim Christiana, who sponsored a tax credit bill, called it a "historic opportunity" to bring a thriving industry to Pennsylvania.

It's an industry that would utilize natural gas reserves in the Marcellus shale formation. The so-called ethane cracker would produce ethylene, used in the manufacture of various plastics.

Christiana, R-Beaver County, said the proposed Shell facility would be the first cracker plant built nationwide in 10 years, and would be the first in the Appalachian region.

"There's an opportunity here to have several crackers," Christiana said. "There's enough ethane here to power two or three crackers."

There's been debate over the job predictions, but the Corbett administration stands by the estimate of 10,000 construction jobs: several hundred at the plant, and up to 10,000 more in spinoff industries.

Corbett had proposed a $66 million a year tax credit. That number was removed in the Senate.

"There is no minimum or maximum," Christiana said.

"There's no cap," he said in response to an interrogation by Rep. Greg Vitali, D-Delaware County.

Senate Minority Leader Jay Costa, D-Forest Hills, who supported it, called it a "game changer" for Western Pennsylvania's economy.

The tax credit was inserted into the 2012-13 state tax code bill that accompanied the budget even though the tax credit won't be available until 2017.

The legislation requires a minimum $1 million plant investment and creation of 2,500 jobs to qualify for the tax credit.

There's no guarantee that the jobs will go to Pennsylvanians, said Rep. Mike Sturla, D-Lancaster. "One could live in Ohio or West Virginia and drive to Pennsylvania every day," Sturla said.

Rep. Eddie Day Pashinski, D-Luzerne County, said an estimated $1.6 billion is going to a multi-national corporation that bought property already in a tax-free zone. Shell can "sell the tax credits without the guarantee of hiring Pennsylvanians," Pashinski said.

"There's going to be Pennsylvania jobs," said House Majority Leader Mike Turzai, R-Bradford Woods.

Rep. Madeleine Dean, D-Montgomery County, said there was little time to review the complex tax bill, which also included an expansion of tax credits for student scholarships to private schools.

The tax credit language wasn't publicly available until Friday afternoon, hours before the Senate voted on it Friday night.

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