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Shell Extends Cracker Decision Window Into 2013

Scott Detrow / StateImpact Pennsylvania

An antique Shell gasoline pump at an Ohio oil and gas museum

Royal Dutch Shell won’t be making a decision any time soon on whether or not to proceed with plans to build a major petrochemical plant in Beaver County. The energy giant’s agreement with Horsehead Corp, which owns the potential site outside Monaca, required Shell to make a determination of whether or not to proceed with its project by the end of 2012.
But as the Post-Gazette reports, the company has extended its deal for another six months. 
That means Shell has until June to decide whether or not to move forward with plans to build a western Pennsylvania ethane cracker. The Tribune-Review has more details on the extension:

The chemical arm of Royal Dutch Shell plc had a Dec. 31 deadline to buy land in Center and Potter, but the company and landowner Horse­head Corp. signed a six-month extension, officials from both companies said. Shell may build a multibillion-dollar ethane processing plant on the site but needs more time to assess its suitability, Shell spokeswoman Kimberly Windon said in an email.

The facility would convert the ethane found in shale deposits into ethylene, which is used to produce plastics.

If the company builds the plant, Shell will receive generous state tax breaks. The potential site would be exempt from state and local taxes for fifteen years. Shell would also get a production tax credit on ethane it purchases from Pennsylvania-based drillers. The credit could turn out to be the largest tax break in state history. Ohio and West Virginia also tried to woo Shell with economic incentives, but in March the company chose to focus on the Beaver County site.
The Corbett Administration is betting big on the ethane cracker, hoping it kick-starts an industrial production corridor. But as StateImpact Pennsylvania reported this summer,

The tax break is a gamble, really, since Shell’s plant would only create about 500 jobs. The rest of the 17,000 Corbett is promising only come if other companies build processing plants, too. (That figure is based on an industry-funded study.)
But Corbett is confident the tax break will pay off, and makes it clear he’ll continue to spend money on energy, even as he holds the line on the state budget. “What this does — it talks about whoever is governor after me, two or five governors after me,having an economy that is growing based on manufacturing that does not exist right now,” he said. “So they will have money for education, for social services.”

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