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Cleveland
Plain Dealer...
Shell
chooses Pennsylvania, not Ohio, for a multi-billion dollar refinery
Thursday,
March 16, 2012
By Robert
L. Smith, The Plain Dealer
Drill crews
like one in Carroll County have struck not only dry natural gas in the
Utica
shale but also wet gas like ethane, a discovery that could have helped
lure a
huge chemical plant to Ohio. On Thursday, Shell Oil Co. announced it
has chosen
a site near Pittsburgh for a world-scale refinery.
The biggest
prize to date in the emerging shale gas play will be going to
Pennsylvania, not
Ohio, but Ohioans are expected to enjoy some of the fruits of a major
new
manufacturer just over the border.
In a much
anticipated announcement, Shell Oil Co. said Thursday it had chosen an
industrial site near Pittsburgh for a world-scale petrochemical
refinery. The
oil company may eventually invest billions into a complex that could
create
hundreds of jobs and spark new industries.
Dan
Carlson, Shell’s General Manager of New Business Development, said the
company
signed a land option agreement with Horsehead Corp. to evaluate its
fading zinc
smelter near Monaca, about 35 miles northwest of Pittsburgh.
Ohio, West
Virginia and Pennsylvania had all sought the refinery and offered Shell
major
tax incentives. Monaca is just 20 miles from both Ohio and West
Virginia, so
workers and industries in all three states could benefit.
Carlson
said the Monaca site, along the Ohio River, had the right mix of
resource and
transportation strengths “to accommodate facilities for a world scale
petrochemical complex and potential future expansions.”
Ohio
Governor John Kasich said his office worked hard for the plant but that
the
deck was stacked in Pennsylvania’s favor.
“This
wasn’t a surprise,” Kasich said Thursday afternoon. “We pitched hard
and are
disappointed, of course, but always understood that Shell leaned toward
building where they owned the gas and liquids. They own 700,00 acres of
leases
over there that they don’t have here. The added cost of a pipeline to
ship
their gas and liquids over here wasn’t something they wanted to do.”
Tom
Waltermire, chief executive officer of Team Northeast Ohio, said Ohio
does not
come away empty handed. Shell’s decision puts lucrative chemical
ingredients
“right in our neighborhood” and that should strengthen the state’s
chemical
industry.
“Most of
this stuff is made down in Texas and Louisiana,” he noted. “This is
another
sign of the significance of our gas play.”
The
so-called ethylene cracker would convert natural gas liquids into
other, more
profitable chemicals, which then go into everything from plastics to
tires to
antifreeze. The plants are called crackers because they crack ethane
molecules
into smaller chemical components.
A cracker
resembles a gasoline refinery, with miles of pipes and large storage
tanks. The
final complex could cover several hundred acres.
“They made
it clear to me yesterday that there is still no guarantee that they
will build
this -- that decision will come over the next two years,” Kasich said.
If the
cracker rises, other manufacturers will want to build nearby, Kasich
said.
“A lot of
those plants will make plastics,” he added, “and our 100-year
leadership in
plastics will give Ohio an enormous edge in competing for those
facilities and
jobs.”
Shell’s
choice may signal how strongly the industry feels about the vast gas
reserves
in the region’s shale formations. Any plant must be competitive with
existing
plants in Louisiana, Texas and overseas, Carlson told the Associated
Press.
The
Marcellus and Utica shale formations have attracted a rush of major oil
companies, who have drilled almost 5,000 new wells in the last five
years. The
ancient shale beds lie deep beneath large parts of Pennsylvania, Ohio
and West
Virginia.
The three
states made all-out efforts to attract the refinery. West Virginia
offered to
slash property tax rates for 25 years while Pennsylvania offered 15
years of
tax breaks.
Governor
Kasich visited with Shell executives in Houston and delivered support
letters
from Ohio’s legislative leadership. Shell executives also came to Ohio
and
toured sites with officials of JobsOhio.
The
preferred site in Ohio was the Belmont County community of Dille’s
Bottom, near
the Ohio River, south of Shadyside, The Plain Dealer has learned. The
state
reportedly offered Shell assistance with infrastructure preparation,
tax
incentives related to job creation, and worker training.
“We knew we
were at a disadvantaged position from the beginning,” Ohio Senate
President Tom
Niehaus said in an interview in Columbus Thursday, after addressing a
crowd of
1,500 at the winter conference of the Ohio Oil & Gas
Association.
“Shell owns
a pipeline and feeder stations in Pennsylvania,” said Niehaus, a New
Richmond
Republican. “That gave Pennsylvania an inherent advantage, but there
will be
spinoffs. Other companies will locate nearby in Ohio.”
Thomas
Stewart, executive vice president of the oil and gas association, said
Shell
chose an area rich in wet gas, a mixture of gases including ethane.
Drillers
are also finding wet gas in Ohio’s Utica shale.
“We all
needed the cracker,” Stewart said.
Plain
Dealer reporters John Funk and Reginald Fields and the Associated Press
contributed to this story.
Read this
and other articles at the Cleveland Plain Dealer
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