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Shell offers to compensate for tax losses to get cracker plant

| Tuesday, Oct. 2, 2012,

Royal Dutch Shell has offered to compensate local governments and a school district for property taxes they would lose if the company is granted a tax break for a petrochemical plant it hopes to build in Beaver County.

The company seeks economic incentives from the state that would make the 300-acre site in Potter and Center townships, where Horsehead Corp. operates a zinc smelter plant, a tax-exempt zone for 22 years.

Shell proposes to pay 110 percent of the zinc plant's property taxes to the county, Potter and Central Valley School District to win their support for its application for a tax-exempt Keystone Opportunity Expansion Zone designation, county officials said Monday.

“I think it shows they have a lot of experience working with local communities in that their concerns are heard and dealt with,” said state Rep. Jim Christiana, R-Beaver County. “I think this is another positive development.”

Shell, which has an option to acquire the site from Horsehead, is exploring plans to build the Northeast's first cracker plant there. A cracker plant converts natural gas into a form that can be used to make plastics, Styrofoam and other petrochemical products.

The proposed payment in lieu of property taxes is the maximum allowed under state law. It could amount to more than $300,000 a year for the school district and about $44,000 a year for Potter, using figures Shell presented this year to state officials. It was unclear what the county could receive.

Local taxing authorities and Shell will hash out the details over the next several months, said county Commission Chairman Tony Amadio.

“This is a win-win for the municipalities and the school district,” he said.

Representatives with the county, townships and schools met last week with officials from the Beaver County Corporation for Economic Development and the Pittsburgh Regional Alliance to discuss Shell's proposal, he added.

Each taxing body would have to adopt resolutions backing the tax-exempt zone and the payment-in-lieu-of-taxes deal, Amadio said.

The plant could pump nearly $5 billion into the regional economy each year, according to an economic analysis released this month by the Allegheny Conference on Community Development, the region's chief economic development group.

The project could create 10,000 construction jobs and 8,000 supply-related jobs at its peak, the Pennsylvania Economy League of Greater Pittsburgh said.

Once operational, the cracker plant could employ 400 people and create between 2,000 and 8,000 other jobs. The annual economic impact would be $4.8 billion, according to the analysis.

Shell's land-option agreement with Horsehead runs through this year.

The state this summer approved a 25-year tax break on ethane the company purchases to be used at the plant. Shell officials are still working on deals to make sure such a plant could obtain the amount of ethane required for operations.

“There are some hurdles we have to overcome,” Christiana said. “But this shows we are moving forward.”

Jason Cato is a staff writer for Trib Total Media. He can be reached at 412-320-7936 or jcato@tribweb.com.

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