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.