Shell commits to Western Pennsylvania ethane cracker plant
June 8, 2016
Shell Chemical Appalachia LLC said Tuesday it’s building a petrochemical plant that will create up to 6,000 construction jobs and 600 permanent jobs once it begins production early next decade.
Construction will begin in the next 18 months, with the goal of bringing the Western Pennsylvania plant online early in the 2020s, the company said.
The company committed tens of millions of dollars acquiring the site, a former zinc smelting operation in Potter Township, Beaver County, and other improvements, including helping a nearby water authority retool. Still, the company had not formally committed to the project – estimated at $2 billion to $6 billion by various elected officials and experts – until Tuesday, when its officials declined to comment on the 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.
Democratic Gov. Tom Wolf, who called the project a “game-changing plant,” and other elected officials and economic development agencies hailed the decision.
“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 Allegheny Conference on Community Development said Shell’s announcement signals its re-entry into the North American polyethylene market.
“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,” conference CEO Dennis Yablonsky 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 food packaging and auto parts.
The plant’s location is ideal because the region is loaded with the gas wells that will feed it and because 70 percent of Shell’s polyethylene customers are within 700 miles of it, 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 Gov. Tom Corbett in 2012 OK’d legislation to give Shell tax credits worth $1.7 billion over 25 years to build the plant.
Shell spent nearly $4 million extending land options on the site before paying $13.5 million for the site in 2014. Shell spent about as much buying nearby properties, then committed to spending $80 million to clean up industrial contamination from the zinc plant and previous users.
The state Department of Environmental Protection approved a plan to cap the former plant site with about 6 feet of soil before roads, buildings and other facilities are built. Environmental activists criticized the project, including some air quality permits approved by the state last year.
Rich Fitzgerald, chief executive in neighboring 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.