Shell takes final extension on Pa. site for proposed ethane cracker

Shell Chemical has signed a deal with the owners of a Beaver County industrial site that would give the company more time to decide whether to buy the land and build a multi-billion dollar petrochemical plant called an ethane cracker.

It is the third time Shell has extended a land option with Horsehead Corporation, the company that owns the 300-acre site in western Pennsylvania near the Ohio border.

“We expect that this will be the last land option extension before making a final decision on whether to proceed with the proposed project,” Shell spokeswoman Kayla Macke said in an e-mailed statement.

Under the deal, Shell will also pay for demolition work to prepare the site for potential construction. Beaver County property records show Shell recently bought a 5.5 acre parcel adjacent to the site for $1.87 million, according an Associated Press review.

Spokespeople for both Shell and Horsehead declined to say how long the extension would be, citing the confidential terms of the agreement.

Shell announced it would consider the site in March 2012 for a plant that would convert or “crack” ethane into ethylene, an essential ingredient for making plastic. The plant would draw on the vast amounts of ethane being produced in western Pennsylvania shale fields.

The project is a top priority for Governor Tom Corbett who hailed this latest development in a statement.

“Just six years ago, Pennsylvania imported 75 percent of our natural gas needs,” Corbett said. “Today, we are competing with the Gulf Coast, a long established energy hub, for major energy capital projects.”

Shell recently abandoned plans for a natural gas-to-liquids plant in Louisiana, an encouraging sign for Pennsylvania has the company makes choices about where to invest capital. Governor Corbett has tried to woo Shell to the Keystone State with a $1.65 billion tax break, the largest in state history.

The latest development for the cracker project comes one week after the Pennsylvania Supreme Court gave local governments the power to zone and regulate natural gas drilling – a ruling that has come as a blow to the Corbett administration and the industry. The head of the Marcellus Shale Coalition, an industry trade group, has warned that the decision will hurt the state’s business climate.

As StateImpact Pennsylvania previously reported, Shell had expressed concerns about how the court might rule. The law was originally written to allow the state to preempt local zoning restrictions to permit drilling.

“Obviously, it’s concerning,” Mike Rader, a spokesman for state Sen. Elder Vogel (R-Beaver) said regarding the Supreme Court’s decision. “It creates some dangerous precedent. We don’t know what the casualties are. It’s obviously a good sign that Shell continues to extend the land agreement.”

Governor Corbett’s Energy Executive Patrick Henderson would not comment on specific talks with Shell, but noted in an e-mail to StateImpact Pennsylvania that companies “have been watching the court’s deliberations carefully.”

“What the Court has shaken is the predictability to both operators and municipal governments that Act 13 offered,” Henderson wrote.