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Shell: Ohio, Pennsylvania, West Virginia Are Cracker Finalists

Royal Dutch Shell said it expects to decide by the end of the year where it will build a "world-scale" ethylene cracker in the Marcellus Shale region, and it said the three states where it is considering construction of the facility are Ohio, Pennsylvania and West Virginia.

Shell spokeswoman Kelly op de Weegh told the Associated Press the company would invest "several billion" dollars for a facility, which may include several specialized crackers.

In a report in March, the American Chemical Council said such a facility would cost about $16.2 billion, generate about 17,000 jobs in the chemical industry and another 395,000 jobs in other areas, and $4.4 billion in federal, state and local tax revenues.

"It shows that the Marcellus Shale is real, that its natural gas supplies are enormous and that the industry is here to stay for the long run," Jeff Eshelman, spokesman for the Independent Petroleum Association of America (IPAA), told NGI's Shale Daily on Tuesday. "The investment and commitment that Shell is showing is proof positive that the Marcellus is the real deal."

Travis Windle, spokesman for the Marcellus Shale Coalition (MSC), concurred.

"Investments on this scale are further affirmation of the Marcellus Shale's long-term significance, both regionally and nationally," Windle told NGI's Shale Daily on Tuesday. "As more wells are drilled and more American energy is responsibly harnessed, we'll continue to see genuine economic benefits like this generated."

Eshelman said the IPAA was unaware of any of the three states having an inside track to landing the Shell facility. Windle declined to speculate and deferred the question to Shell officials.

"Shell is a great corporate citizen and one of several world-class corporations reviewing the possibility of locating a cracker in the Appalachian region," West Virginia Commerce Secretary Keith Burdette told NGI's Shale Daily on Tuesday. "We believe there will be at least one and very possibly more than one facility that will be located in this region. West Virginia is aggressively competing for those sites."

Burdette added that he believed West Virginia was the best candidate for the facility due to the state's workforce, ethane supplies and logistics, points the state and businesses have made in the past (see Shale Daily, Aug. 26; July 18; May 6; Dec. 23, 2010). In a possible swipe at the other two states, he added that West Virginia has "a state budget that is balanced and is creating surpluses, and an administration that is systematically reducing taxes and creating regulatory predictability. We can offer a company stability that many other places cannot."

But Burdette added that a facility would benefit the entire Marcellus Shale region, "regardless of in which state a cracker might ultimately be located."

Steven Kratz, spokesman for the Pennsylvania Department of Community & Economic Development, told NGI's Shale Daily on Tuesday that the state "is working with companies, local officials and local economic development groups to actively pursue these types of Marcellus Shale-related opportunities. We are very aware of the potential economic benefits of Marcellus Shale-related business opportunities as they represent potential economic impact in Pennsylvania, in terms of direct jobs and private investment." He declined to discuss any specifics.

Dennis Ginty, a spokesman with the Ohio Department of Commerce, also declined to comment on the proposed Shell facility.

Shell said it was evaluating derivative choices for the facility last summer (see Shale Daily, June 7). The company said the leading option is polyethylene (PE), a raw material for items such as packaging and adhesives to automotive components and pipe. Most of the PE production would be used by northeastern U.S. industries, Shell said. Demand for PE in North America is expected to grow, so the economic and efficiency benefits of a regional cracker make this configuration attractive.

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