By Dick Miller
WE.CONNECT.DOTS: Was PA Governor Tom Corbett played by the promise of Dutch Royal Shell’s proposed ethane cracker plant in Beaver County?
Was PA Governor Tom Corbett played by the promise of Dutch Royal Shell’s proposed ethane cracker plant in Beaver County?
For months, there has been a growing underground current that Shell will never build the $2 billion chemical factory in Monaca. Some claim Shell never intended to build in PA, only using that story to get huge tax breaks from Corbett and the legislature.
Now Pittsburgh Business Times (PBT) has dared call the project into question. Writer Malia Spencer, in a PBT banner story this week, claims factors point to Shell not needing the cracker.
“It’s a classic chicken-and-egg scenario,” she writes. “To support an ethane cracker in Western PA, infrastructure, including pipeline, storage and processing, needs to be built up. Once these pipelines are in service to carry the natural gas liquids away, the need for a cracker diminishes.”
Five pipelines scheduled to come online by 2015 will be able to handle over 700,000 barrels per day of natural gas and liquids from deep under Western PA and Eastern Ohio in the Marcellus and Utica shale regions. These pipelines will transport product to Canada and the East and Gulf Coasts where cracker plants and necessary infrastructure already exist.
Was Shell’s announced intention to construct in Beaver County in early 2012 coincidental? Certainly, Corbett’s approval numbers in poll after poll were in the toilet. He could have been overeager to show his economic development programs were working.
While major transportation funding and privatization reforms seem to allude the Governor, he had little problem getting the biggest tax break in PA history past the legislature last year. To locate in Beaver County, Corbett offered a $1.65 billion incentive package spread over 25 years. Corbett stuffed the sweeteners inside Act 85 of 2012.
With $1.65 billion in tax breaks offsetting a $2 billion project, Corbett had to reach for cheers about the deal. True, building the ethane cracker would require 10,000 construction jobs. The state AFL-CIO and the Building Trades councils fell into line and delivered their share of legislative votes.
However, Shell estimated operating the cracker would require only 400-500 jobs. Moreover, this job gain in Beaver County would be entirely offset by the displacement of at least that many jobs. Shell holds an option on acreage now used by Horsehead Holding to employ 600 to process zinc metal, dust and powder and zinc oxide from recycled sources. Horsehead said it would relocate to another state.
Corbett climbed over that argument, however, by revealing job numbers of the aftermath. First, he said supporting infrastructure would require another $2 billion in investment and “more than 10,000 jobs created in chemical and supply chain industries.”
The Governor has not addressed two most recent challenges to his optimism. First, ethane crackers provide raw material for the plastics industry. Whether by blow or injection molding processes, the industry is notorious for paying little more than minimum wages and even less fringes. Second, why build in a location that requires such additional huge monies for infrastructure when the gas can be piped to cracker plants that are now underutilized.
None of this deterred Corbett and his Republican legislative leaders from their goal of rolling over for the energy industry to unparalleled lengths.
Another bill Corbett pushed re-interpreted language in decades old leases between drillers and landowners in regards to pooling.
The issue here is existing leases that can be assigned or purchased by another driller. Old law required the new lease owners to negotiate with landowners before pooling with adjacent properties.
Added at the last minute, new legal language gives drillers the right to pool if not otherwise stipulated by the old lease. This may jeopardize Corbett’s re-election votes from farm owners and Republicans’ continued hold on the state Senate.
BOTTOM LINE: This is likely another nail in Corbett’s re-election coffin.
