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Tax Break Bill Could Help Pennsylvania Lure Ethane Cracker

A state official said a bill advancing in the Pennsylvania General Assembly that offers tax breaks to large businesses could also be used to help the state lure an ethane cracker and the thousands of jobs it would provide.

SB 1237 would add up to 15 new Keystone Opportunity Zones (KOZ) to the state and offer incentives -- namely tax exemptions, deductions, abatements and credits -- for 10 years. Companies that invest at least $1 billion and create at least 400 new, permanent, full-time jobs within seven years would qualify for another five years of the incentives, for a total of 15 years.

"We believe that this will be a tremendous economic development tool, not only for downstream Marcellus Shale opportunities but also for other industry and business as well," Steve Kratz, spokesman for the state Department of Community and Economic Development (DCED), which administers the KOZ program, told NGI's Shale Daily on Thursday. "This is a program that has been a tremendous economic development tool in the past and we're very supportive of it."

SB 1237 was resubmitted to the House Appropriations Committee on Jan. 25. The state Senate gave final passage to the measure on Dec. 7, 2011 by a 47-2 vote. The bill was also unanimously passed in two roll call votes in the state House of Representatives on Jan. 25, 188-0.

Royal Dutch Shell plc has proposed building a "world-scale" ethane cracker -- a facility that would create thousands of jobs -- with a capacity to process between 60,000-80,000 b/d in the Marcellus Shale region, in Ohio, Pennsylvania or West Virginia (see Shale Daily, Dec. 5, 2011; Sept. 7, 2011; June 7, 2011). The company said it was still evaluating what products to make at the facility, but the leading option is polyethylene.

Asked if Pennsylvania was doing anything else to lure Shell, Kratz said a binding agreement between the company and the state government prevented him from talking about specifics. "However, I can tell you that the [Gov. Tom] Corbett administration and other agencies within the state government have been actively engaged in the process," Kratz said. "We are pushing hard to get this facility in Pennsylvania."

Spokespersons for Corbett and Sen. Dominic Pileggi (R-Glen Mills), the primary sponsor of SB 1237, could not be reached for comment Thursday.

The KOZ program began in 1999. SB 1237 also allows the 12 current KOZ areas, which total more than 46,000 acres, to expand and have their incentives extended for another seven to 10 years.

Last week, West Virginia Gov. Earl Ray Tomblin signed a bill offering tax breaks to companies that build an ethane cracker there (see Shale Daily, Jan. 30). He then traveled to Houston to meet with Shell executives and make a pitch for his state.

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