Shell given six more months to buy land for Pa. cracker

January 10, 2013
Shale Play


Shale Play

MONACA, Pa. - Officials in West Virginia and Ohio pointed fingers and cast blame on one another upon learning in March that Royal Dutch Shell planned to build a multibillion-dollar ethane cracker in Pennsylvania.

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But Shell has yet to acquire the land in the Keystone State from Horsehead Corp. - a company in the process of moving its zinc production operations from Monaca, Pa., to North Carolina. Horsehead and Shell officials said the oil and natural gas giant has six more months to decide whether to complete the deal to buy the land along the Ohio River for the large petrochemical complex.

The original terms of the deal called for Shell to complete the purchase from Horsehead by the end of 2012.

"We are still in the assessment phase of the project to determine the site's suitability. Among the many factors we continue to assess are the ethane feedstock supply, engineering and design work, customer support confirmation for our products, permit approvals and confirmation that the project is economically robust and competitive," Shell spokeswoman Kayla Macke said.

During a conference in Pittsburgh last year, Pennsylvania Lt. Gov. Jim Cawley said the commonwealth was glad to be chosen as Shell's preferred site, but he acknowledged that local and state government issues still needed to be resolved before construction would begin.

For months in 2011 and early 2012, officials in Ohio and West Virginia worked to secure the large petrochemical plant because they said it should generate about 10,000 construction jobs, hundreds of high-paying chemical jobs and thousands of related development jobs. Ohio Gov. John Kasich flew to Houston, Texas, to meet with Shell officials to try to attract the cracker, while West Virginia Gov. Earl Ray Tomblin and Secretary of Commerce Keith Burdette also actively worked to entice Shell to build in the Mountain State.

Immediately upon learning Shell likely would build at Monaca, Pa., public officials and industry leaders in both Ohio and West Virginia began criticizing one another for failing to attract the cracker. Officials believe Shell's preferred West Virginia location would have encroached on land owned by Mountaineer Casino, Racetrack and Resort.

In addition to the costs of building a new facility, Mountaineer would face a vote regarding the use of its gambling devices if it needed to move outside Hancock County.

Ohio officials indicated Shell was interested in building the plant in Belmont County south of Bridgeport along the Ohio River.

Reasons West Virginia and Ohio officials cited for losing the cracker to Pennsylvania included problems with labor unions, tax structures, railroad connections and access to a direct supply of ethane from Shell's Keystone State natural gas operations.

In addition to ethane, other natural gas liquids produced in the wet Marcellus and Utica shale gas include propane, butane and pentane. These elements must be stripped away from the dry methane natural gas at processing plants - such as the soon-to-open Dominion Resources Natrium facility - so the methane can be sold by utility companies.

Once separated from the gas stream, the propane and butane will be kept in tanks on the Dominion site to be marketed. However, this cannot be done with ethane because of the product's volatility, so Dominion is looking to ship the ethane to a user.

Because there is no ethane cracker in the Utica and Marcellus regions, some companies are now shipping the product for cracking at facilities in Canada or along the Gulf Coast.

Although Shell announced plans to build in Pennsylvania, Aither Chemicals recently signed an agreement with Bayer Corp. to "determine the market interest for chemicals and plastics" for an ethane cracker that would be built in the Charleston area.



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