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Shell Eyeing More Land Around Pennsylvania Cracker Site

Royal Dutch Shell plc has been in negotiations with several landowners who own property around a site in western Pennsylvania that the company is considering for a "world class" ethane cracker, a sign that Shell could be moving forward with the project.

In March 2012 subsidiary Shell Chemical LP signed an option to purchase 300 acres from Horsehead Holding Corp. (see Shale Daily,March 16, 2012). The site, a former zinc smelter, is near Monaca in Beaver County's Potter Township.

Rebecca Matsco, chairwoman of the Potter Township Board of Supervisors, told NGI's Shale Daily negotiations between Shell and surrounding local landowners began earlier this year.

"Because these are private negotiations, we have avoided making it a public thing at all," Matsco said Friday. "We are not intimately connected in any way with the negotiations that are going on, but we were aware that they were happening.

"I don't actually know how many or which landowners are involved. We probably won't know until money changes hands at some point."

On Friday, Shell spokeswoman Kimberly Windon confirmed that negotiations had taken place, but she was unable to provide details.

"Shell has been in contact with a limited number of landowners around the site in Beaver County that is currently under evaluation for the potential development of petrochemical complex," Windon said. "Shell will not discuss ongoing negotiations, and the terms and conditions of any agreements are confidential."

Steve Kratz, spokesman for the Pennsylvania Department of Community and Economic Development (DCED), said state officials also knew about the negotiations for some time.

“A lot of members of the media and others were starting to get nervous about the project,” Kratz said Friday. “But in our interactions with company officials, from the very top to the project managers, all indicators point that they are moving ahead on schedule, and they are continuing to advance through their site evaluation due diligence process.”

Matsco said Shell was concentrating its efforts on an industrial corridor along State Route 18.

"There are different kinds of parcels available in that industrial corridor," Matsco said. "Some of them are just private folks, some of them are businesses that have been located in the township for some time. I'm sure that those probably began dependent on their proximity to the proposed cracker."

Matsco added that the township was in the process of rewriting its zoning subdivision ordinances and land use planning. "We will probably wait until Shell makes a commitment before we complete the process," she said.

Last week, officials from West Virginia and a Brazilian company, Odebrecht Organization, announced plans to explore building a multibillion-dollar ethane cracker and three polyethylene plants in Wood County, WV (see Shale Daily,Nov. 14). The news followed conflicting reports that Shell was either abandoning or moving forward with its own cracker in Pennsylvania.

Matsco said she was optimistic.

"I think that it's a very good sign for Shell making a positive investment decision in Potter Township," she said. "I also believe that there is enough supply to support more than one cracker in the region. Although it's a competitive industry, I don't see the [Odebrecht] project as a threat to this. I think there is enough feedstock for more than one plant of this kind."

Kratz concurred. “[Odebrecht] is at the point where Shell was when they first announced the land option in March 2012,” he said. “They’re very early in the process.

“But we don’t view this as an ‘either-or.’ We’ve held, and we stand by today, that the Appalachian region is an ideal location for the placement of multiple crackers to create a cluster similar to the Gulf Coast, and feel that there’s enough supply to warrant having multiple crackers here.”

Last June, Shell asked for and received a six-month extension to decide whether to purchase the site from Horsehead. It was the second time the deadline had been extended (see Shale Daily,July 2;Dec. 28, 2012).

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