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Shell gets extension on decision to buy land for Beaver County plant

| Wednesday, Dec. 26, 2012, 12:00 p.m.

Shell is waiting to commit to buy land for a much-anticipated petrochemical plant in Beaver County, but local and state officials said on Wednesday they don't believe the delay will hurt the project's chances.

“People are getting nervous because it's not moving fast enough, but they told us last March it was going be a time-(consuming) process,” county Commissioner Tony Amadio said. “They're keeping us in the loop ,and each time we meet we move a step forward, meet a person higher up the chain at the company. So that tells me we're progressing.”

The chemical arm of Royal Dutch Shell plc had a Dec. 31 deadline to buy land in Center and Potter, but the company and landowner Horse­head Corp. signed a six-month extension, officials from both companies said. Shell may build a multibillion-dollar ethane processing plant on the site but needs more time to assess its suitability, Shell spokeswoman Kimberly Windon said in an email.

An official at Horsehead could not be reached for comment.

State leaders and others courted Shell officials and pitched the project as a potential economic boon. The plant would take ethane, a byproduct of gas drilling in the Marcellus shale, and convert it into the building blocks for plastics.

County officials said they knew for weeks that Shell might get an extension. The company has been very deliberative, sending surveyors and engineers to study the site, now a zinc smelter, and test for environmental contamination. The company has to gauge competition nationally, industry experts have said.

“It's not unusual for this type of thing to happen. It doesn't mean that they're backing out or thinking of it, necessarily, but ... they certainly haven't committed themselves and they could have,” said Glenn Giacobbe, a Houston-based analyst who has studied petrochemical plant investments for the consulting firm IHS. “What you're uncovering here is the usual dance. Each little step itself is not a game-changer, but it's part of the puzzle.”

Hope for the project has been building for more than a year. Spurred by supply of shale gas from the Marcellus and Utica formations, Shell announced in June 2011 it might build the first ethane-to-plastics plant in Appalachia. Its construction might require up to 10,000 workers and the plant itself may employ 400, Shell officials have said.

Pennsylvania, Ohio and West Virginia all competed to land the plant — commonly called a cracker — based on estimates that its spin-off businesses would create up to 8,000 jobs. Pennsylvania offered a tax-free zone for the plant and other credits for ethane use that probably will be worth more than $1 billion over 25 years.

Shell struck a deal with Robinson-based Horsehead for its 300-acre site on the Ohio River but has never publicly committed to build. Some national experts have been skeptical of the project in part because of increasing competition, all drawn by cheap shale gas. About 10 other similar projects are on the drawing board — several further along than Shell's — crowding the market to sell the products made from the plastics and even to get the construction workers to build the plant, experts have said.

“It's too early for it to be a concern. Quite frankly, I don't think Shell has all its ducks in order,” said Kent Moors, scholar in residence at the Institute for Energy and the Environment at Duquesne University. “If I were Shell, I'd be under no particular pressure to make a decision now … on land that clearly isn't going anywhere.”

Timothy Puko is a staff writer for Trib Total Media. He can be reached at 412-320-7991 or tpuko@tribweb.com.

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