Iconic Shell could become face of Western Pennsylvania industry
Bob Spehar has sold gasoline on Spring Garden Avenue in Pittsburgh for 20 years, the last eight under the Shell brand.
Some customers don't understand that, as owner of Marshall's Shell station, he's an independent businessman.
"They look at you like you're some big corporate," Spehar said. "But we're local individuals just trying to make a living like everyone else."
Most Western Pennsylvanians are familiar with the logo outside Spehar's gas station and convenience store -- the iconic, century-old seashell that identifies more than two dozen of Shell's franchised stores in the region and more than 14,000 franchises along streets and highways across America.
But with Shell Oil Co.'s announcement on Thursday that it chose a site in Beaver County where it could build a multibillion-dollar petrochemical plant, the average person in coming years could see much more of one of the world's biggest and farthest-reaching companies.
The plant outside Monaca could cost up to $4 billion to build and could employ hundreds. Its presence could create thousands more jobs at suppliers and ancillary businesses throughout the region.
Houston-based Shell Oil is the U.S. subsidiary of Royal Dutch Shell plc, a nearly $500 billion-a-year enterprise based in The Hague, Netherlands. Ranked No. 5 last year on Forbes magazine's Global 2000 list, it operates on every continent except Antarctica, employs 93,000 people and sells its brand from 43,000 petroleum stations.
"It's a formidable company," said Fadel Gheit, an analyst with Oppenheimer & Co. Inc. "It does business in 100 different countries and has one of the strongest brands in the world."
Royal Dutch Shell traces its roots to Marcus Samuel, a London merchant who in the 1880s started an import/export business to bring seashells and other goods from Asia to England, the company's website states. Samuel's Shell Transport and Trading Co. in 1897 began shipping oil and partnered with Royal Dutch Petroleum Co., which produced oil in the Dutch colony of the East Indies.
The two companies created Royal Dutch/Shell in 1907 and expanded. It remained a joint venture until 2005, when it merged into one publicly traded company.
Royal Dutch Shell has developed oil and gas reserves in recent years to catch up with competitors, said Brian Youngberg, an analyst with Edward Jones & Co.
"They've been more mega-project focused than most of the other companies," Youngberg said. "Shell puts more of their eggs all in one basket."
Its investments could boost the company's cash flow by 50 percent over the next several years, Gheit said.
Its U.S. operations, which produce about a quarter of Royal Dutch Shell's profits, primarily have focused on oil exploration in Alaska, Canada and the Gulf of Mexico. It owns oil refineries, chemical plants, pipelines and eight wind operations. On the retail side, in addition to gasoline stations, it owns Jiffy Lube oil change shops and Quaker State and Pennzoil motor oils.
All that gives Shell more than 20,000 American employees.
Good corporate citizen
About three years ago, Shell made a "huge strategic bet" on natural gas, which it hopes will define the company's fortunes going forward, Gheit said.
"They believe natural gas is the fuel of the future," he said.
Shell operates four cracker plants in the United States -- two each in Nocor, La., and Deer Park, Texas, said Philip Weiss, an analyst with Argus Research Corp.
"Like many other integrated oil companies, Shell has operated a chemicals business for many years," Weiss said.
Those plants are similar to what Shell could build here, except they create petrochemicals from oil rather than natural gas. Its only natural gas cracker is in China, the company has said. It has more than two dozen chemical and other plants around the globe.
In Deer Park, Texas, Mayor Wayne Riddle said Shell is a good corporate citizen.
"Deer Park is here because of Shell," Riddle said, noting the small town grew up around Shell more than 80 years ago. "They stay involved with our community."
Shell was the first chemical producer in the city of about 32,000 near Houston. More than 25 chemical companies operate there now, and Shell and Dow Chemical Co. are expanding, Riddle said.
Recent player in region
Shell only recently emerged as a player in Western Pennsylvania's Marcellus shale gas industry.
The company's $4.7 billion acquisition of Marshall-based East Resources Inc. in 2010 gave it access to 700,000 acres of mineral rights in the shale formation stretching from southern New York through Western Pennsylvania and into Ohio and West Virginia. It has access to natural gas in Canada, Wyoming, Texas and Louisiana.
Shell's Appalachia division, headquartered in Marshall Township, employs 185 people and concentrates on drilling in Tioga County.
Exxon Mobil Corp. and Chevron Corp. are other world-class oil and natural gas companies that have joined Shell in tapping energy reserves in this region. But plentiful drilling has caused natural gas prices to decline in America.
That's where the "cracker" comes in, said Kent Moors, a Duquesne University professor and energy industry expert. The plant will extract ethane from natural gas and convert it into the raw material for making plastic products, earning Shell additional profit on its gas, Moors said.
"If you're a major vertically integrated company like Shell, then you really want to control the whole operation," he said.Additional Information:
Royal Dutch Shell plc ranks No. 2 in the world among the largest publicly traded oil and natural gas companies.
Rank, Name, Headquarters, 2011 revenue
1. Exxon Mobil Corp., Houston, $486.4 billion
2. Royal Dutch Shell plc, Netherlands, $484.5 billion
3. BP plc, London, $386.5 billion
4. Chevron Corp., San Ramon, Calif., $253.7 billion
5. ConocoPhillips Co., Houston, $244.8 billionAdditional Information:
Royal Dutch Shell plc's U.S. subsidiary, Shell Oil Co., has significant operations.
• Based in Houston
• Operations in 50 states
• 3.5 million acres of natural gas mineral rights
• 20,000 employees
• 15,000 miles of liquid pipeline*
• 14,300 gasoline stations*
• 2,000 Jiffy Lube franchises
• Seven oil refineries*
• Four petrochemical plants
(* includes partnerships with other companies)
Add Alex Nixon to your Google+ circles.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Quarantine fears jeopardize volunteer work in Ebola-stricken West Africa
- Plum upsets Penn Hills, 17-6, in 1st-round playoff game
- Young leads Pitt’s new-look lineup past IUP in exhibition opener
- Peters Township boys top USC to win back-to-back WPIAL Class AAA titles
- West Allegheny’s stout defense paves way for 38-0 victory over Knoch
- Central Catholic fights its way through decisive win over Norwin
- Mt. Pleasant steamrolls Shady Side Academy, 38-0
- Woodland Hills’ potent rushing attack deflates North Hills, 41-2
- Penn State renews ‘rivalry’ with Big Ten foe Maryland
- Penguins GM Rutherford: Malkin’s play belies fact he missed training camp
- Steelers defense takes aim at Ravens QB Flacco