Shell picks site near Pittsburgh for refinery

Ohio, W. Va. sought project worth billions

3/15/2012

PITTSBURGH -- Shell Oil Co. has chosen a site near Pittsburgh for a major, multibillion-dollar petrochemical refinery that could create thousands of construction jobs and provide a huge economic boost to the region.

Dan Carlson, general manager of new business development, said Thursday that Shell had signed a land option agreement to evaluate a site near Monaca, about 35 miles northwest of Pittsburgh.

Ohio, West Virginia, and Pennsylvania all had sought the plant and offered Shell major tax incentives. Monaca is about 15 miles from both the Ohio and West Virginia borders, so workers in all three states are likely to benefit.

The so-called ethane cracking, or cracker, plant would convert ethane from bountiful Marcellus Shale natural gas liquids into more profitable chemicals, such as ethylene, that are used to produce everything from plastics to tires to antifreeze.

The plants are called crackers because they use heat and other processes to break the ethane molecules into smaller chemical components. A cracker plant looks very similar to a gasoline refinery, with miles of pipes and large storage tanks. The final complex could cover several hundred acres.

Shell has said that it could spend several billion dollars to build the plant, and that the complex would attract a wide range of industry and suppliers to nearby locations. But actual construction is years away. The company said the next steps are environmental and design studies and further economic analysis, then permits.

In a report last year, the American Chemistry Council estimated the petrochemical complex could attract up to $16 billion in private investment. Shell estimated the core plant could employ several hundred people and create up to 10,000 construction jobs.

Gov. Tom Corbett said at a press conference the plant could lead to the "renewal of a significant manufacturing base in southwestern Pennsylvania." He cautioned the announcement is "the first pitch in a nine-inning game."

If the plant is built, Shell would be able to supply it partly with gas from its own wells, giving it more control over supply and costs. The company paid $4.7 billion in 2010 for drilling rights to about 650,000 acres in the region.

Frank Snyder, secretary-treasurer of the Pennsylvania AFL/CIO, said the announcement was "some of the most positive economic news for the working families of western Pennsylvania in over a generation."

Shell's choice may reflect how the industry values vast gas reserves in nearby underground shale rock formations.

The Marcellus Shale, thousands of feet underground, has attracted a wave of major oil companies that have drilled almost 5,000 wells in five years.