Shell will evaluate Pennsylvania location for possible new ethane cracker

March 15 2012

After months of suspense, Shell Chemical LP on March 15 announced it has signed a land option agreement and will evaluate a site in Pennsylvania for a potential new petrochemical complex, including a new ethane cracker that would process natural gas from the Marcellus Shale.

Shell had been considering several sites in Ohio, West Virginia and Pennsylvania, and each state spent several months wooing the petrochemical giant. In the end, Shell decided to sign an option for land owned by the Horsehead Corporation in Potter and Center Townships in Beaver County, near the town of Monaca, roughly 30 miles northwest of Pittsburgh. However, the site is very close to the borders of Ohio and West Virginia, so both states are still likely to see significant economic benefits if and when construction begins.

Contractors have been anxiously awaiting news about Shell’s plans. If it moves forward, the project will be valued in the billions and take several years to complete, presenting a huge opportunity for TAUC members and local unions.

However, Shell was careful to point out that it has not made a final decision.

“This positive development marks another phase as Shell continues to assess the commercial feasibility of a petrochemical complex in the Appalachian region,” Shell said in a statement. “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.”

At a press conference, Pennsylvania Governor Tom Corbett also stressed that the decision isn’t final. According to the Associated Press, he said the announcement about the land option was “the first pitch in a nine-inning game.”

“We are very pleased to have signed this site option agreement,” added Dan Carlson, Shell Chemical’s General Manager for New Business Development. “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 said that the Pennsylvania site’s proximity to natural resources and various modes of transportation (water, road and rail) gave it the edge over other locations.

In addition to an ethane cracker, Shell said it is also considering building polyethylene (PE) and mono-ethylene glycol (MEG) units on the site.

According to press reports, the optioned area covers more than 300 hundred acres. If Shell decides to buy, Horsehead would have to vacate the property by April 30, 2014.

Horsehead recently announced plans to close a nearby zinc factory and relocate to North Carolina next year, so if Shell decides to move forward with the cracker, it could be good news for the factory’s 600 workers.