Shell Nears Decision on Where to Build $2B Cracker Plant

Shell Oil is “nearing a decision” on where to build a multi-billion dollar ethylene cracker plant in the Marcellus region, and states in that region—specifically Pennsylvania, West Virginia and Ohio—are aggressively competing to have the plant built in their state. (See MDN’s petrochemical primer for details on how shale gas drilling relates to the chemical industry).

The stakes are high indeed. The cost to build the plant will exceed $2 billion, and it’s estimated the plant will attract some $16 billion in associated industry expenditures and provide more than 17,000 jobs in those associated industries.

The scale of the multibillion-dollar project is unlike anything seen for decades in the region, said David Hounshell, a professor of technology and social change at Carnegie Mellon University.

"I think it’s a radical shift," Hounshell told the Associated Press. "The region has really focused, since the 1980s, on looking more towards a service economy."

Shell spokeswoman Kelly op de Weegh said the company plans to decide soon where to build the so-called ethylene cracker plant, which would convert natural gas liquids to other chemicals.

"For this project, we are concentrating on three states – Pennsylvania, West Virginia and Ohio – and we expect to have a decision on a location by the end of this year," op de Weegh told the AP.

The industrial complex would likely attract many smaller, specialized chemical plants, since the main product, ethylene, is then used to produce chemicals that go into everything from plastics to tires to antifreeze, according to the American Chemistry Council.

The council, in a recent report, estimated the new petrochemical complex could attract up to $16 billion in private investment and create more than 17,000 jobs and billions in tax revenue. Shell’s investment alone could be "several billion," op de Weegh said.

Other U.S. and overseas companies are also considering similar projects in the region, so there could be more than one complex.

Politicians in the three states are lobbying hard for the plant, and Pittsburgh-based Bayer Corp. is negotiating to sell land at industrial parks it owns in New Martinsville or Charleston, W. Va.

"We’ve been having discussions with several companies, some in the U.S. and some not in the U.S.," Bayer spokesman Brian Iams told the AP.

West Virginia Commerce Secretary Keith Burdette said the negotiations are picking up speed.

"We intend to compete with the last breath in our body to attract one or more crackers," Burdette said. He acknowledged the states are "very aggressively competing" but said the most important thing is that the cracker or crackers get sited in this region.*

*Fort Worth Star-Telegram/AP (Sep 3, 2011) – Pa., W.Va., Ohio vie for huge new Shell gas plant