YOUNGSTOWN, Ohio -- Shell Chemical LP, a subsidiary of Royal Dutch Shell, announced today that it has signed a land option agreement to evaluate a site near Monaca, Pa., for construction of its $3.2 billion petrochemical plant. The site straddles Potter and Center Townships in Beaver County, Pa., and lies on the banks of the Ohio River. The chemical complex would manufacture plastic from the natural gases extracted from well sites in the Marcellus shale play.
In a statement released to news organizations, Shell emphasized the project remains in its earliest phases.
"This positive development marks another phase as Shell continues to assess the commercial feasibility of a petrochemical complex in the Appalachian region," the company said. "The next steps for this project include additional environmental analysis of the preferred Pennsylvania site, further engineering design studies, assessment of the local ethane supply, and continued evaluation of the economic viability of the project."
Shell has previously estimated the cracker plant would create several hundred permanent jobs at the facility, and as many as 10,000 construction jobs. According to the Pittsburgh Post-Gazette, in 2010 Shell paid $4.7 billion to acquire the drilling rights for 650,000 acres in the Marcellus shale play.
Pa. Gov. Tom Corbett described Shell's decision as "the single biggest industrial project in the state's southwest in a generation."
Shell operates four cracker plants in Louisiana and Texas.
On Tuesday Ohio Gov. John Kasich told reporters he didn't expect the cracker plant would be located in Ohio, but no matter where it was built in the Midwest, the state's economy would benefit greatly. “There is still no guarantee that they will build this — that decision will come over the next two years," he told The Dispatch.
West Virginia officials also courted Shell in hopes of landing the cracker plant. Numerous tax incentives were offered by Ohio, West Virginia and Pennsylvania.
The proximity of the project to Ohio could still bring 8,500 direct and indirect jobs to Ohio's chemical industry, according to an estimate by the Ohio Chemical Technology Council, and similar numbers for spin-off industries locating in West Virginia. For Pennsylvania, the American Chemistry Council says the project could mean 17,000 jobs in the related industries.
“We are very pleased to have signed this site option agreement,” said Dan Carlson, general manager of new business development for Shell Chemicals, in a prepared statement. “This is an important step for the project, and we look forward to working with the communities in Pennsylvania, and gas producers across Appalachia, as we continue our efforts to develop a petrochemical complex.”
Shell did not specify a timetable to begin construction of the plant. Terms of the purchase option were not disclosed.
The site is owned by Horsehead Holding Corp., which said in a news release that it would move its zinc production operations there to a new plant under contruction in North Carolina.
Shell said in its announcement that it "looked at various factors to select the preferred site, including good access to liquids rich natural gas resources, water, road and rail transportation infrastructure, power grids, economics, and sufficient acreage to accommodate facilities for a world scale petrochemical complex and potential future expansions.
"In addition to an ethane cracker, Shell is also considering polyethylene (PE) and mono-ethylene glycol (MEG) units to help meet increasing demands in the North American market. Much of the PE and MEG production would be used by industries in the northeast," the company said.
"As an integrated energy company and a leader in worldwide gas technology, Shell has an array of long-term options to monetize natural gas. This includes extracting ethane and other natural gas liquids for petrochemicals production; shipping solutions for LNG (liquefied natural gas); proprietary gas-to-liquids technology to produce fuels, lubricants and chemicals; and LNG for heavy duty vehicles, marine and rail transport."
U.S. Rep. Jason Altmire, D-Pa. 4, whose district includes Beaver County, said in a statement that should "Shell's final decision [be] to locate this facility in Beaver County, it would be the largest industrial new start in western Pennsylvania in decades."
Altmire noted "all levels of government, community leaders and the private sector have joined forces to promote western Pennsylvania as the best location for this new facility. This announcement is proof that when we work together, great things will happen for our region."
Published by The Business Journal, Youngstown, Ohio.