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Pennsylvania Cracker Tax Break Deal Could Total $1.675B

Pennsylvania Gov. Tom Corbett is reportedly seeking up to $1.675 billion in tax credits over the next 25 years for Royal Dutch Shell plc and other companies willing to locate an ethane cracker in the state.

Steve Kratz, spokesman for the state Department of Community and Economic Development (DCED), told NGI's Shale Daily that discussions are continuing between Corbett administration officials and lawmakers over the governor's proposal to extend up to $66 million in annual tax credits starting in 2017.

"Like other tax credit programs, [the $66 million] would be a cap and would have to be approved on an annual basis within the tax code," Kratz said Tuesday. "This is something that we just started discussing with the legislature in recent weeks."

Last March, Shell Chemical LP said it had signed an option to purchase land in Beaver County for a petrochemical complex that presumably would include a "world-scale" ethane cracker that would serve the Marcellus Shale region (see Shale Daily, March 16). Shell has said such a facility would be capable of processing 60,000-80,000 b/d of ethane.

"The real benefit of having a natural resource like natural gas isn't necessarily where it's produced but where it's used," Kratz said. "Part of our overall goal, when dealing with this resource, is determining how we can develop new markets and build new industries within the state to maximize economic growth and job creation.

"This is about making sure that the ethane that's contained within the wet gas is not only being extracted in Pennsylvania, but is being used in Pennsylvania to build a robust petrochemical industry."

Kratz confirmed that under the current version of the tax credit proposal companies that purchase ethane in Pennsylvania would be eligible for a 5 cent/gallon tax break, up to 20% of their eligible Pennsylvania tax liability.

"This is a credit that would be available to any cracker facility that would locate in Pennsylvania [and] any manufacturer purchasing natural gas containing ethane as a petrochemical feedstock," Kratz said. "We're looking to use this to attract multiple projects. The overall goal of this is to attract as many cracker projects as possible and grow a new industry in the state centered on manufacturing."

During a radio interview last month, Corbett said he was hopeful that Sunoco Inc. may ultimately decide to convert one of its idled refineries in the Philadelphia region into an ethane cracker (see Shale Daily, May 16).

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