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Shell again delaying plans for Beaver County petrochemical plant

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By Timothy Puko
Friday, June 28, 2013, 4:15 p.m.

Shell again delayed its decision to buy land for a petro­chemical plant in Beaver County, officials said Friday.

A Shell spokeswoman and government and civic leaders said the announcement is not a bad sign for the project, a multibillion-dollar plant called a “cracker” that will help turn ethane into plastic.

The company intended to take years to evaluate the site and sought the option to extend its deadline for buying riverside property in Center and Potter, spokeswoman Kimberly Windon said.

“We're still on track. We're still continuing to evaluate the site,” Windon said, noting the company is studying transportation to the site, working on government permits and communicating with people in the county.

Shell struck a deal in March 2012 with Robinson-based Horsehead Holding Corp. for its 300-acre site along the Ohio River. It has an option to buy the land but never fully committed to buy or build on it. The option expired this weekend, but the company received its second six-month extension since December.

Terms of the deal are confidential, both companies said.

State and local leaders have been big boosters for the project because of its economic potential. Industry estimates expect construction to employ as many as 10,000, with 400 permanent employees to run the plant. The billions in investment could open 2,000 to 8,000 jobs at manufacturers that work with the plant's products, according to state and industry estimates.

Some national experts are skeptical of the project, in part because of increasing competition with cheap gas from shale formations such as the Marcellus and Utica. About 10 similar projects are planned for the Gulf Coast and Canada, several of which are more advanced than Shell's. That crowds the market for the products it makes, and could make it difficult to get construction workers Shell needs to build the plant, experts have said.

Other companies doing similar work have sought partners to share in the investment, said Andy Walberer, a chemical industry consultant at A.T. Kearney. Shell would be building in an area isolated from all other petrochemical plants, and figuring out those obstacles may be time consuming, he added.

“They have probably more things to figure out and get comfortable with than they would if they were on the Gulf Coast, because there's kind of nobody else there,” Kearney said. “If you were them, why would you lock into anything before you had to? If there's nobody else competing for this parcel, then there's no downside to waiting.”

To lure Shell here, instead of Ohio or West Virginia, state leaders offered a tax-free zone to build in and potentially more than $1 billion in other tax credits for using ethane from Pennsylvania and selling its products to Pennsylvania manufacturers. Gov. Tom Corbett called Friday's announcment “good news ... another step in Shell's process of evaluating Horsehead as their preferred site.”

The plant would take ethane, a byproduct of gas drilling in the Marcellus shale, and convert it into ethylene. Another plant in the complex could turn that into polyethylene — small plastic pellets — or some other derivative.

Timothy Puko is a staff writer for Trib Total Media.

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