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Shell Will Purchase Pennsylvania Land for Multi-Billion Dollar Cracker

More than two years after it signed an option to buy a 300-acre plot of land in western Pennsylvania for its proposed multi-billion dollar ethane cracker, Royal Dutch Shell plc affiliate Shell Chemical LP is moving forward with its purchase and will soon begin preliminary site development.

Shell confirmed an announcement on Friday from the property's owner, Horsehead Corp., that it is exercising its option to purchase the land, "having determined that the site is suitable for the potential development of our proposed facility," said Shell spokeswoman Kimberly Windon in an email. 

"However, we have not made a final decision to build the project. We will make that decision when our full project evaluation is complete," she added. "The land purchase is a necessary step for Shell to advance the permitting process and allows us to proceed with some preliminary site development work."

No closing date was set for the purchase, and Shell declined to release what it agreed to pay for the property.

Speculation about whether the facility would be built has been mounting since Shell said in June 2011 that it would likely build a cracker in the region (see Shale Daily, June 7, 2011) . The company had signed three amended purchase agreements for the property prior to Friday's announcement (see Shale Daily, Dec. 26, 2013). The company has consistently said, however, that all the necessary state and federal permits required for the project must be obtained before it can make a final investment decision.

Even if Shell ultimately elects not to construct the facility, Windon said, it will begin preliminary site development after Horsehead, which once operated a zinc smelting plant on the property, finishes its demolition work.

"The preliminary site development work would happen either way," she said. "This preliminary work would allow Shell to maintain or accelerate the project schedule, if we decide to build the facility."

In a 715-page air quality permit application filed earlier this year with the Pennsylvania Department of Environmental Protection, Shell said construction activities are planned to start in late 2015 and continue for two years until operations at the facility begin in 2018 (see Shale Daily, Aug. 5). Shortly after the application was filed, state regulators told NGI's Shale Daily that it would take months to approve.

The complex would convert locally sourced ethane into ethylene and polyethylene, which are key building blocks for plastics. According to Shell's application, the facility would be capable of producing 1.5 million metric tons of ethylene per year and another 1.6 million metric tons of polyethylene per year.

The facility would be constructed on a 400-acre site adjacent to the Ohio River in Potter and Center townships in Beaver County, PA, about 35 miles northwest of Pittsburgh. It would also employ about 400 people, according to Shell.

Thus far, three other ethane crackers have been proposed for the Appalachian Basin, including a small-scale facility by Appalachian Resin Inc. and a larger facility by Aither Chemicals LLC (see Shale Daily, Feb. 6, 2013; Jan. 19, 2012). A $3.8 billion complex proposed by Odebrecht Organization last November is comparable in size to Shell's facility (see Shale Daily, Nov. 14, 2013). That company has already applied for state permits as well (see Shale Daily, May 19).

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