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Western Pennsylvania scrambles to land Shell plant

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By Timothy Puko
Tuesday, Jan. 17, 2012
 

Beaver County and Western Pennsylvania could be big winners if Pennsylvania beats out other states for a chemical plant, fed by natural gas, that Royal Dutch Shell plc is planning.

The plant is likely to bring thousands of jobs and more than $1 billion in investment just from Shell, which would take ethane from shale gas and reduce it to ethylene, a building block for plastics, according to a range of experts and observers. The draw is so large that Pennsylvania officials, including Gov. Tom Corbett, have been involved in a months-long, high-stakes competition with leaders in Ohio and West Virginia -- all candidates to host the plant.

"We fit the bill perfectly because we're in the heart of the Marcellus and the Utica drill sites," said Charlie Camp, a former Beaver County commissioner. "And, yeah, we've got plenty of site-ready, shovel-ready industrial sites that have up to seven miles of riverfront and rail access, (and) heavy highway access."

All three of Beaver County's commissioners and its two top economic development officials have signed confidentiality agreements with Royal Dutch Shell's U.S. subsidiary, Shell Oil Co., Commissioner Joe Spanik said. Anyone involved in the process, including state officials, has had to sign, said Patrick Henderson, the governor's energy executive. But other political, business and industry experts said Beaver County is a prime target because of large, redeveloped old steel mills on the Ohio River.

Shell wants 350 to 400 acres, river access and freight railroad access, said state Sen. Tim Solobay, D-Canonsburg. After Shell's announcement in June that it plans to build in Appalachia, Solobay tried to work with colleagues to find a plot of land in Washington County that could be sold to Shell, but there were no sites that big. Beaver County is probably the best possibility in the state, he said.

"It's really an exciting opportunity because the job opportunities will capture the whole region," he said. "If we get this plastics stuff really cranking again, there are a lot of specialty places here in Washington County that could benefit from having the raw plastic a few miles away instead of having it shipped from a few states away."

A spokeswoman at Shell Oil Co.'s headquarters in Houston said officials expect to decide early this year but have no update from the sparse announcement in the summer. Officials at Shell's regional offices in Marshall were told to expect a decision by mid-February, said Bill Langin, who oversees Shell's Appalachian exploration.

The plant, known as a cracker, works with ethane, a valuable hydrocarbon that commonly surfaces with natural gas in parts of Western Pennsylvania and eastern Ohio. By heating the ethane, processing plants can reduce it to a smaller chemical compound, ethylene. That compound is used for products such as garbage bags, adhesives, automotive parts and pipes.

Ethane crackers nationwide average about 10,000 to 14,000 permanent jobs, said Kent Moors, scholar in residence at the Institute for Energy and the Environment at Duquesne University. Shell's project could cost more than $2 billion and bring thousands more temporary jobs during construction, he said.

The larger hope is that it would create yet more jobs by expanding the region's petrochemical industry, Moors and others said. Like an anchor tenant committing to a mall storefront, a cracker plant is likely to draw other businesses to the region to process the ethane on its way to the plant from local gas wells and then to process the products it makes or the byproducts it can't use, they said.

"One company's byproduct is another company's starting point," said David W. Patti, chief executive officer at the Pennsylvania Business Council. "There are petroleum companies that would be glad to see it -- even if it's another company -- in Pennsylvania because the petrochemicals business is so incestuous. They buy from each other all the time."

Shell has estimated 10,000 construction jobs, said Steve Kratz, spokesman for the Department of Community and Economic Development, which is handling negotiations for Pennsylvania.

An industry study estimated that, for every permanent plant job, a cracker plant creates another 5.5 jobs working with the products it makes, he added.

"It's huge," Kratz said. "You're talking about a potential project that could lead to the potential reindustrialization of Southwest Pennsylvania. When you couple that with everything that's going on with the technology renaissance of Pittsburgh ... it would be a huge boost for the region and Pennsylvania as a whole."

Additional Information:

Locating a chemical plant

Kent Moors, who directs the Energy Policy Research Group at Duquesne University, says these are the top factors for a company looking to locate an 'ethane cracker' chemical plant.

First: Find a region with accelerating natural resource production, such as Western Pennsylvania has with natural gas.

Other needs: Infrastructure, transportation and a literate work force.

Bonus factor: A major metropolitan area that can support a major plant's supply and technical needs, with research and talent development at research universities, as in Pittsburgh.

 

 
 


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