Sun | Aug 20, 2017

Shell commits to ethane cracker plant

Published:Wednesday | June 8, 2016 | 6:00 AM

Shell Chemical Appa-lachia LLC is building a petrochemical plant in northwestern Pennsylvania that will create up to 6,000 construction jobs and 600 permanent jobs once it begins production early next decade, the company announced Tuesday.

Construction will begin in the next 18 months, with the goal of bringing the plant online early in the 2020s, the company said.

The company had committed tens of millions of dollars acquiring the site, a former zinc- smelting operation in Potter Township, Beaver County, as well as other related improvements, including helping a nearby water authority retool. Still, the company had not formally committed to the project estimated at US$2 billion to US$6 billion by various elected officials and experts until Tuesday, when Shell officials declined to comment on the overall cost.

The decision, coupled with recent decisions to build chemical plants in Louisiana and China "demonstrates the growth of Shell in chemicals and strengthens our competitive advantage," the company said in a statement.

INDUSTRIAL INVESTMENT

Governor Tom Wolf, who called the project a "game-changing plant." and other elected officials and economic development agencies hailed the decision.

"This announcement signals Shell's re-entry into the North American polyethylene market," said Dennis Yablonski, CEO of the Allegheny Conference on Community Development.

"The plant will be one of the largest of its kind in North America the largest single 'from the ground' up industrial investment in the Pittsburgh region in a generation."

"The success of this project is part of a much-needed, longer- term plan to translate our abundant resources to make Pennsylvania a leader in downstream production," Wolf said.

The plant will 'crack' ethane-gas molecules from Marcellus and Utica shale wells into base petrochemical 'building blocks' that can be refined to create polyethylene, a plastic used in applications ranging from food packaging to auto parts.

The plant's location is ideal because the region is loaded with the gas wells that will feed it, and because 70 per cent of Shell's polyethylene customers are within 700 miles of the plant, the company said.

The plant will produce about 1.6 million metric tons of polyethylene annually. Shell sells about 17 million metric tons of the plastic each year.

Former Republican governor, Tom Corbett, in 2012, approved legislation to give Shell tax credits worth US$1.7 billion over 25 years to build the plant.

Shell announced in March 2012 that it was considering the 340-acre former Horsehead zinc-plant site, but said it would not formally commit to the plant until years of study.

Shell spent nearly US$4 million extending land options on the site before paying US$13.5 million for the site in November 2014. Shell spent about as much buying nearby properties, then committed to spending US$80 million to clean up industrial contamination from the zinc plant and previous users.

The state Department of Environmental Protection has approved a plan to cap the former plant site with about six feet of soil before roads, buildings and other facilities are built. Environmental activists have criticised the project, including some air-quality permits approved by the state last year.

The company has also agreed to pay the Centre Township Water Authority some US$69 million to relocate its Ohio River water intake and building a treatment plant.

Rich Fitzgerald, chief executive in neighbouring Allegheny County, said the plan for the plant is equivalent to building 25 sports stadiums.

"What a thrilling announcement today for our region," Fitzgerald said.

- AP