Still no movement on Pa. ethane cracker

WHEELING – West Virginia and Ohio leaders pointed fingers at each other in March 2012 upon learning that Royal Dutch Shell would take its multibillion-dollar ethane cracker plant to Monaca, Pa.

But more than 15 months after Shell officials announced that land owned by the Horsehead Corp. would be the location for the ethane cracker, the global oil giant still has not purchased the property from Horsehead. If built, the project is expected to result in 10,000 construction jobs, hundreds of high-paying chemical jobs and thousands of related development jobs.

The original terms of the deal called for Shell to complete the purchase from Horsehead by the end of 2012. After extending the option-to-buy term to the end of June, Shell and Horsehead announced Friday they would again extend the option-to-purchase term by another six months.

“The site evaluation process for a proposed project of this scale typically takes several years to complete, and we expect similar timing in this case,” said Shell spokesman Destin Singleton regarding the term extension.

For months in 2011 and early 2012, officials in Ohio and West Virginia worked to secure the large petrochemical plant. 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 actively worked to entice Shell to build in the Mountain State. However, Shell eventually settled on the Monaca, Pa. site along the Ohio River.

Because there is no ethane cracker in the Utica and Marcellus shale regions, some companies are now shipping the product for cracking at facilities in Canada or along the Gulf Coast. The Bluegrass Pipeline project is expected to send 200,000 barrels per day of mixed ethane, propane and butane to the Gulf Coast by 2015, with the capacity to eventually be increased to 400,000 barrels per day.

The Bluegrass would accompany Chesapeake Energy’s plans to send 75,000 barrels of ethane produced from the Marcellus and Utica shale regions for cracking along the Gulf Coast on the soon-to-open ATEX Express pipeline.

Even with all of this ethane slated to be piped away from West Virginia, Ohio and Pennsylvania, officials remain optimistic about landing a cracker plant.

Tomblin said last month in Fairmont that he believed the state was still in contention to get an ethane cracker. Friday, Pennsylvania Gov. Tom Corbett said Shell’s extension of its option agreement with Horsehead is “good news” for his state.

“This project would be the single-largest industrial investment in southwest Pennsylvania in a generation. It will develop a market for the state’s natural gas supply, helping to create new jobs and the prosperity that comes with them,” Corbett said. “A petrochemical facility of this size will result in 10,000 construction jobs, at least 400 direct jobs and more than 10,000 jobs created in chemical and supply chain industries.

“My administration, local officials and economic groups continue to work in support of Shell Chemical as it continues a deliberate evaluation of this project,” he said. “We are all dedicated to ensuring, once built, that this facility is successful.”