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Shell's Cracker Project Progressing After Administration Waives Steel Quota

Shell Chemical Appalachia LLC can continue constructing its multi-billion dollar ethane cracker in western Pennsylvania without delay after the Trump administration last week eased restrictions on imported steel from South Korea, Argentina and Brazil.

President Trump signed a proclamation allowing the Department of Commerce to provide targeted relief from quotas, or restrictions on the amount of product that can be imported, that were imposed on the countries in March. Companies can now apply for quota exclusions based on insufficient product quantity or quality available from U.S. steel or aluminum producers.  

Piping for Shell’s massive facility has been sitting in port for months under the control of U.S. Customs and Border Patrol, unable to move to Pennsylvania because of the quotas. Last March, the Trump administration imposed a 25% tariff on steel imports and a 10% tariff on aluminum imports. The tariffs took effect for most countries on March 23. After negotiations, quotas were placed on steel imports from Argentina, Brazil and South Korea and for aluminum imports from Argentina in lieu of the tariffs. Shell’s pipe, which is from Brazil, can now be delivered to the construction site.

Shell’s decision to build the cracker in Pennsylvania marks the first time in more than 20 years that such a facility has been built in the United States outside of the Gulf Coast. The facility, which is expected to enter service in the early 2020s, is designed to consume a little more than 100,000 b/d of ethane to produce 1.5 million metric tons/year (mmty) of ethylene and 1.6 mmty of polyethylene. Late last year, Shell transitioned from site remediation and early works, such as sewage, electricity and foundations, to the primary construction phase during which the actual plant is being built.

Companies have also been able to apply for exclusions from the tariffs if U.S. producers can’t supply a given product in sufficient quality or quantity. The American Petroleum Institute said in July that its member companies were frustrated with the exemption process, however, noting at the time that it was too slow, with 80 petitions submitted and just 17 ruled on.

Last week’s proclamation for targeted relief of quotas came after Sen. Pat Toomey (R-PA) urged the administration in a letter to lift the restrictions. Toomey pointed specifically to Shell’s project, warning of construction delays and workforce impacts.

The project, being built in Beaver County, about 30 miles northwest of Pittsburgh, is expected to employ 6,000 people during construction and another 600 permanent employees once it’s operational. The company is currently working to fill full-time positions at the facility.

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