Business leaders see broad impact from Shell cracker decision
June 8, 2016
Mike Bradwell and Rick Shrum
The news of Shell’s decision to build an ethane cracker plant in Beaver County was given a unanimous thumbs-up by business and industry leaders across the region Tuesday.
“Shell’s decision to move forward with this world-class facility, which will put thousands to work across our region through utilizing clean-burning domestic natural gas for decades to come, is welcomed news, especially given the challenging market conditions,” said David Spigelmyer, president of Marcellus Shale Coalition, which represents oil and gas exploration and development companies and their supply chain partners working in the Marcellus and Utica shales.
A Shell priority
Shell said in a news release the cracker plant, which it projects will be capable of producing 1.6 million tons of polyethylene per year from natural gas sourced from the tri-state’s Marcellus and Utica shales, will now become a priority.
“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 – and the first major U.S. project of its type to be built outside the Gulf Coast region in 20 years,” said Dennis Yablonsky, chief executive officer of Allegheny Conference on Community Development.
Shell said the project will need as many as 6,000 construction workers to build the facility, which will employ 600 permanent workers when completed, which should be early in the next decade.
Many officials looked beyond the building phase to who would use the output of the cracker.
Both Spigelmyer and Yablonsky said the announcement bodes well for the future of the manufacturing industry in the region.
“This investment also reflects the fact that domestic manufacturing’s potential is near limitless thanks to our abundant and stable energy supplies from natural gas,” Spigelmyer said.
“We believe that a capital investment of this magnitude indicates to other companies in the energy, petrochemical and plastics industries that Southwestern Pennsylvania should be on their short list of locations for new facilities and expansions,” said Yablonsky.
While production from the plant is several years away, at least one industrial park was already swinging into action.
“We’re anticipating that we’re going to get a lot of people who will be making things” from the feedstock produced by the cracker plant, said Dan Reitz, executive director of Washington County Council on Economic Development, which is in charge of Starpointe Business Park. Starpointe, just outside of Burgettstown, is about 20 miles from Monaca.
“Our broker is already contacting companies that don’t have operations here,” Reitz said.
Robbie Matesic, executive director of Greene County Department of Economic Development, said while Greene County will be a contributor of some of the natural gas to the cracker, there will be other important offshoots.
“It’s in the supply chain that the opportunities lie,” she said, noting services and equipment will be needed not only for the maintenance and operation of the cracker plant itself, but also for the other industries that may develop in the area to take advantage of its product.
“It will be a good opportunity to continue our efforts to diversify our economy,” Matesic said.
“We are going to see tremendous investment in the area, and Don Chappel (executive director of Greene County Industrial Developments Inc.) and I are working to try to capture some of that investment,” she said.
Washington County Chamber President Jeff Kotula said Shell’s decision to build the cracker plant is the logical extension of a vision the county had when it declared itself an energy center for the Marcellus Shale gas-drilling activity nearly a decade ago. At the time, the county designated itself “The Energy Capital of the East,” but Tuesday, Kotula took it a step further.
“(Shell’s decision) fulfills the vision of Southwestern Pennsylvania as a true center for energy in the world,” he said.
“I consider it to be the most important economic development since the advent of the Marcellus,” said Pat McCune, president and chief executive officer of Community Bank, who also was a founder of the Tri-State Oil & Gas Expo in the early days of the Marcellus. “This is going to cement Pittsburgh as a petrochemical destination with all of the commensurate services related to that. I think it will have a near-immediate impact, and the local business community will do well, including banks.”
Tejas Gosai also believes the cracker could be a pipeline to prosperity.
Gosai recently lamented how the downturn in drilling was wreaking havoc on his primary vocation – hotels – in particular. He and his father, Kam, own four Western Pennsylvania motels and were selling three of them because occupancy fell because of the decline in drilling.
They still hold all four, although they are in talks with suitors for their 83-room Best Western and 61-unit Holiday Inn Express in Bentleyville, which were up for auction May 31.
With drilling not expected to pick up until mid-2017, Gosai was wary of the future of their hotels.
He would like to recant.
“My calculations may have been wrong,” he said Tuesday. “This changes everything in Western Pennsylvania, eastern Ohio and northern West Virginia.”
Greene County bureau staff writer Bob Niedbala also contributed to this story.