The first round in the three-way battle between Pennsylvania, Ohio and West Virginia to entice a petrochemical manufacturer to build an ethane cracker in the Northern section of the U.S. for Marcellus and Utica production has been won by Pennsylvania. Shell Chemical LP signed an agreement for an option to purchase Horsehead Corp.'s zinc plant in Monaca, Pa., for an undisclosed fee.
Shell will evaluate the site as a potential location for an ethane cracker that would handle volumes from the Marcellus and Utica shales. The option, if exercised, would require Horsehead to vacate its Monaca site by April 30, 2014.
Should Shell choose to proceed with construction at the site, located in Potter Township in Beaver County, it would take roughly four years to build the facility, which is expected to cost approximately $2.5 billion. It would be the company's fifth ethane cracker in the U.S.
"For several months, I have been actively engaged and working with Shell officials, as have members of my cabinet, to get Pennsylvania to this point in the process," said Gov. Tom Corbett. "Shell now knows what we all do: Pennsylvania is ideal for this project. Not only do we sit atop the richest known reserves of natural gas in the world, but we have a world-class workforce, an expansive transportation network including rail, roads and air; excellent educational institutions; and a thriving quality of life here in Pittsburgh."
Each state offered financial incentives to companies to select them for construction of the petrochemical plant, including Pennsylvania's Keystone Opportunity Zone program. This program provides owners or businesses in certain locations with reduced or tax-free status for a certain period of time and is expected to generate millions of dollars in incentives to Shell.
Corbett told The Pittsburgh Post-Gazette that the project could be the largest industrial project in the southwestern portion of the state in a generation. "I know that we were in competition with West Virginia and Ohio. I would spend hours at the governor's residence in my library on my computer on Google Map, pulling up the Ohio River the whole way, and saying where are the best facilities, not even knowing what they were, just looking for open areas. I kept coming back to the facility that was selected."
Jim Hensler, Horsehead president and chief executive, stated that the company would move its zinc production operations to a new plant in North Carolina, which is expected to start up in Q3 2013. "We believe this option provides the best value proposition for Horsehead among the several alternatives we are considering for this site," he said in a news release.
Contact the author, Frank Nieto, at fnieto@hartenergy.com.
Recommended Reading
Matador Stock Offering to Pay for New Permian A&D—Analyst
2024-03-26 - Matador Resources is offering more than 5 million shares of stock for proceeds of $347 million to pay for newly disclosed transactions in Texas and New Mexico.
NOV's AI, Edge Offerings Find Traction—Despite Crowded Field
2024-02-02 - NOV’s CEO Clay Williams is bullish on the company’s digital future, highlighting value-driven adoption of tech by customers.
Hess Corp. Boosts Bakken Output, Drilling Ahead of Chevron Merger
2024-01-31 - Hess Corp. increased its drilling activity and output from the Bakken play of North Dakota during the fourth quarter, the E&P reported in its latest earnings.
The OGInterview: Petrie Partners a Big Deal Among Investment Banks
2024-02-01 - In this OGInterview, Hart Energy's Chris Mathews sat down with Petrie Partners—perhaps not the biggest or flashiest investment bank around, but after over two decades, the firm has been around the block more than most.
Petrie Partners: A Small Wonder
2024-02-01 - Petrie Partners may not be the biggest or flashiest investment bank on the block, but after over two decades, its executives have been around the block more than most.