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Cawley Says Pennsylvania And Shell Are Still In "Early Negotiations" Over Ethane Cracker

Scott Detrow / StateImpact Pennsylvania

Jim Cawley presides over a Marcellus Shale Advisory Commission meeting

This morning, Lieutenant Governor Jim Cawley told reporters he didn’t have any comment on Pennsylvania’s negotiations with Shell over a possible $1.7 billion tax break. He then proceeded to tell them that Pennsylvania is still deep in negotiations with the company, as it considers building a multi-billion dollar ethane cracker in Beaver County.
(What’s an ethane cracker, you ask? Click here to read about the chemical plant.)
“We are still in early negotiations, it’s fair to say, with Shell,” Cawley said, explaining why he couldn’t give more explanation for why the Corbett Administration wants to give the company a $1.7 billion tax cut, spread over 25 years. “”We mutually agreed that we wouldn’t talk about the agreement outside the negotiating table, except for those things that need to come to the fore. Like this tax agreement.”
Why are negotiations still continuing, if Shell already agreed to build the plant in Beaver County? Because the company hasn’t actually made that commitment yet. “What Shell announced 2 months ago – there wasn’t an agreement, necessarily – was they would stop their due diligence in [pursuing cracker sites] in Ohio and West Virginia, and focus exclusively on the Beaver County site. But there are still a great many issues that need to be worked out,” said Cawley.

The proposed cracker site is located in what’s called a “Keystone Opportunity Zone,” which already allows Shell to avoid paying state taxes at the location for 15 years. When Shell announced it was focusing on Pennsylvania in March, Governor Corbett credited a bill expanding those opportunity zones with helping Pennsylvania beat out Ohio and West Virginia.
Was this 25-year tax break part of Corbett’s sales pitch, too? “I can’t say how much Shell places a priority on this,” Cawley said today. “That’s more of a question for Shell.”
Here’s what the company has to say, in an emailed statement: “Shell continues to evaluate our proposed project over a range of potential market conditions.  Our approach to investing is to advance only those opportunities that are likely to provide long-term shareholder value.  Shell supports and endorses incentive programs provided by state and local authorities that improve the business climate for capital investment, economic expansion and job growth.  We will carefully consider it as one of a variety of factors to determine the economic viability of our proposed petrochemical project before taking an investment decision.”
The company earned $31 billion last year, according to its corporate earnings report.
The Corbett Administration views the ethane cracker as a way to boost Western Pennsylvania’s economy, and turn the region into a chemical and plastics manufacturing hub. “This administration has been committed to creating job opportunities for Pennsylvanians,” said Cawley.

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