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What's An Ethane Cracker?

Background

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In June 2016, Shell Chemical Appalachia announced it plans to build a massive, multi-billion dollar petrochemical plant (known as an ethane cracker) in Potter Township, Beaver County, about 30 miles northwest of Pittsburgh.

“Cracker” is industry lingo for a plant that takes oil and gas and breaks it into smaller molecules, to create ethylene, which is used in plastics manufacturing.

The location was chosen because of its proximity to gas supplies, creating shorter and more reliable supply chains than those for comparable facilities on the U.S. Gulf Coast, and because it will be within 700 miles of North American polyethylene customers, the company said.

Construction is expected to begin in 2017, creating some 6,000 construction jobs, the company says. Commercial operation is due to begin “early in the next decade” and will employ about 600 people permanently. The operation is due to make 1.6 million tonnes a year of ethylene which is used in products ranging from food packaging to automotive parts.

The announcement ended years of speculation about whether or not the project would go forward.

In 2011, Shell Chemical said it wanted to build an ethane cracker in the northeastern U.S. So Pennsylvania, Ohio, and West Virginia officials all did their best to woo the company. On March 15, 2012, Shell announced Pennsylvania had won the “cracker sweepstakes.”

Pennsylvania attracted Shell by granting the company a fifteen-year tax amnesty window. Former Governor Tom Corbett successfully pushed for an additional tax break that will grant Shell a $2.10 credit for every gallon of ethane it purchases from Pennsylvania-based natural gas drillers.

Over a 25-year window, the credit has been valued at $1.65 billion, making it the largest tax break in state history.

 

Latest Posts

West Virginia Hangs On To Ethane Cracker Hopes

West Virginia may have lost out – for now – on the chance to host Shell’s ethane cracker, but Secretary of Commerce Keith Burdette says Pennsylvania’s neighbor is working on wooing three similar chemical processing plants. More from the Charleson Gazette: Burdette told the Rotary Club of Charleston as of Monday that he had signed non-disclosure [...]

As Drillers Focus On “Wet Gas,” The Price of Ethane Drops

The market price for ethane is “collapsing.” At least, that’s how the Wall Street Journal characterized the compound’s pricing trend last week. As natural gas prices have fallen, drillers have focused on extracting “wet” gas, which contains materials they can sell to bolster profits, like ethane, propane and butane. But as more and more companies have [...]

Pennsylvania Legislators Weigh Drilling Moratorium (But Not For Marcellus)

You read the headline correctly. The same legislative leaders who have embraced Marcellus and Utica Shale drilling as an economic boon are considering placing a moratorium on natural gas drilling. The formation in question is the South Newark Basin, which lies underneath southeastern Pennsylvania. More from the AP:

DEP Secretary Krancer Stumps for Natural Gas Processing Facility in Delaware County

Department of Environmental Protection Secretary Michael Krancer took the microphone multiple times at a press conference this week aimed at promoting the conversion of the idled Sunoco refinery into a natural gas processing facility. Krancer wanted to assure any prospective investors that they would experience a friendly and expedited permit process. “We as a Department [...]

Ethane Cracker Deal Lifts Spending Cap

The AP has a bit more more information on changes to the tax credit on ethane purchases Governor Corbett is pushing for, as he tries to convince Shell to build an ethane cracker in Beaver County. The most important development is that legislators are lifting the annual $66 million cap on the break, which means [...]

Corbett And Legislative Leaders Agree On Cracker Tax Break Deal

The AP’s Marc Levy has the details on an agreement that will change the dynamics of the tax break Governor Corbett wants to give Royal Dutch Shell, as it weighs building an ethane cracker in Beaver County: Under the agreement, there would be no limit on the tax break—Corbett had proposed capping it at $66 [...]

Corbett Administration Downsizes Ethane Cracker Job Claims

The Tribune-Review points out members of the Corbett Administration have downsized their projected jobs claims for an ethane cracker in Beaver County. Members of Gov. Tom Corbett’s staff cited job projections on Tuesday that were half what they touted this month while promoting a proposed petrochemical plant in Beaver County and related tax breaks. Royal [...]

A Closer Look At The Initial Ethane Cracker Tax Break

As legislators prepare to vote on Governor Corbett’s $1.65 billion ethane cracker tax credit, PublicSource takes a closer look at the tax break that has already been signed into law: a “Keystone Opportunity Zone” expansion giving Shell a 15-year exemption from state and local taxes: Earlier this year, the Pennsylvania Senate introduced a bill to [...]

Ethane Prices Are “Collapsing,” According To The Wall Street Journal

The supply curve is once again hurting natural gas drillers. The increase in domestic gas production brought on by shale drilling has led to the lowest natural gas prices in a decade. Drillers combated that trend by focusing on “wet gas” – pockets that contain byproducts like ethane, which can be sold to boost revenue. [...]

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