Bloomberg News

Shell May Build Chemical Plant Near Pittsburgh to Tap Gas

March 15, 2012

Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, selected a site northwest of Pittsburgh for a chemical complex that may manufacture plastic from a glut of natural gas produced in the region.

The company’s Shell Chemical LP unit has an option to buy the site in Potter and Center Townships near Monaca, Pennsylvania, Shell said today in an e-mailed statement.

Shell last year joined competitors including Dow Chemical Co. (DOW) and Chevron Phillips Chemical Co. in proposing an ethane cracker, which makes raw materials for plastic, that would take advantage of low gas prices relative to oil. The plant may also make polyethylene, the most widely used plastic, and mono- ethylene glycol, a raw material for polyester, to meet rising U.S. use, The Hague, Netherlands-based Shell said today.

Shell didn’t disclose a cost or time frame for construction or operations. The project depends on adequate supply, continued economic viability and environmental and engineering studies, Shell said.

The Pennsylvania site is currently used by Horsehead Holding Corp. (ZINC), a zinc producer. Horsehead plans to move its operations to a plant under construction in North Carolina, the Pittsburgh-based company said today in a statement.

The Marcellus Shale, an area of dense rock that includes Pennsylvania and New York, holds about 141 trillion cubic feet of recoverable gas, the Energy Information Administration said on Jan. 23.

Hydraulic fracturing, a method that involves shooting water, sand and chemicals underground to release trapped gas and oil, has boosted production in the area and helped reduce prices to a 10-year low on the New York Mercantile Exchange.

Pennsylvania enacted incentives to lure Shell’s cracker this year. They include 15 years of tax exemptions, deductions, abatements and credits for any business making a $1 billion investment and creating 400 jobs in seven years, in any area designated a Keystone Opportunity Zone.

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Romy Varghese in Philadelphia at rvarghese8@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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