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Pennsylvania, Shell Officials Say Due Diligence Continuing on Cracker

Contrary to a media report, there is no time frame for when a subsidiary of Royal Dutch Shell plc will make a decision over whether to build a proposed "world scale" ethane cracker in western Pennsylvania, state and company officials told NGI's Shale Daily.

The Pittsburgh Business Times reported Friday that it had interviewed Pennsylvania Gov. Tom Corbett, and that during the interview he said he wasn't expecting a decision on whether Shell Chemical LP would build the cracker until 2014.

But Steve Kratz, spokesman for the state Department of Community and Economic Development (DCED), said the publication had basically badgered the governor into providing the 2014 date, and hinted that it was misleading.

"[Shell] has not given us an exact time frame," Kratz said Monday. "The governor said that in the editorial board meeting with the business journal. They pushed him a little on when he thought that a decision could be reached, and that's when he got to the point where he said that it could be this year, it could be as late as next year.

"Certainly the governor's action team -- who are the lead economic development organization for DCED -- have been in contact with folks at Shell at different levels, and they continue to be in contact with them as Shell moves forward with their due diligence process. All indicators point that they are moving in the right direction, that they're continuing to move forward with evaluating the site in Beaver County."

In March 2012, Shell Chemical LP signed an option to purchase a 300-acre site near Monaca from zinc producer Horsehead Holding Corp, presumably for a major petrochemical complex that would include a cracker. The original terms called for the deal to be concluded by the end of 2012, but Shell was granted a six-month extension last December (see Shale Daily, Dec. 28, 2012; March 16, 2012).

Shell spokeswoman Kayla Macke also told NGI's Shale Daily that the company did not have a specific time frame for making an announcement about the proposed cracker.

"It's still yet to be determined," Macke said Monday. "June 30 is just the expiration date with Horsehead. It's not necessarily a timeline or driver as to when we would make an announcement to go forward with the [cracker] project."

Macke added that she didn't know if the option with Horsehead would be extended again. "The site is still under assessment, and there are still several steps to cross before we can make that decision. But there's no timeline set for the decision at this point."

Horsehead spokesman Ali Alavi told NGI's Shale Daily that there has so far been no indication that Shell would ask for another extension on their purchase option to the property.

"They're continuing to work at the site," Alavi said Monday. "They're continuing to do their due diligence activities. We're not privy to what exactly it is they're doing, but I suspect that they're looking at site layouts and design, and other elements of typical due diligence in this kind of a situation. But yeah, they've been around still."

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