PITTSBURGH - Shell Oil Co. has chosen a site near Pittsburgh for a major, multi-billion-dollar petrochemical refinery that could create thousands of construction jobs and provide a huge economic boost to the region.
Dan Carlson, Shell's General Manager of New Business Development, said Thursday that the company signed a land option agreement with Horsehead Corp. to evaluate a site near Monaca, about 35 miles northwest of Pittsburgh.
The so-called ethane cracking, or cracker, plant would convert ethane from bountiful Marcellus Shale natural gas liquids into more profitable chemicals such as ethylene, which are then used to produce everything from plastics to tires to antifreeze.
By the Numbers: Natural Gas Refinery
$2.7 billion: Estimated cost to build proposed Shell Oil Co. petrochemical refinery plant in Western Pa.
10,000: Number of construction jobs that could be created under the proposal.
$16 billion: Estimated amount of private investment that could be attracted by this plant.
Several hundred: Estimated number of permanent employees that could be hired at the plant.
$4.7 billion: Amount Shell Oil Co. paid in 2010 for drilling rights in the region.
650,000: Number of acres on which Shell owns drilling rights in the region.
5,000: Number of wells drilled into Marcellus Shale region in the past five years.
The plants are called crackers because they use heat and other processes to break the ethane molecules into smaller chemical components. A cracker plant looks very similar to a gasoline refinery, with miles of pipes and large storage tanks. The final complex could cover several hundred acres.
Ohio, West Virginia and Pennsylvania had all sought the plant and offered Shell major tax incentives. Monaca is about 15 miles from both the Ohio and West Virginia borders, so workers in all three states are likely to benefit.
Shell has said that it could spend several billion dollars to build the plant, and that the complex would attract a wide range of industry and suppliers to nearby locations. But actual construction is still years away. The company said the next steps are environmental and design studies and further economic analysis, then permits.
Officials Thursday tempered their disappointment that Shell Oil Co. didn't pick Ohio for its $2.7 billion natural gas cracker plant with optimism the area will get some spinoff benefit.
''We'll eventually get some manufacturing related to the raw materials that come out of the plant - plastics and resin,'' Eric Planey, the Regional Chamber vice president for international business attraction, said after Shell's announcement it will evaluate land at Monaca, Pa., for the plant.
Shell Chemical LP announced Thursday its site of choice of Monaca, Pa., for the massive plant, capping a six-month long, three-state competition to capture the jobs and revenues the project would bring to the Upper Ohio Valley.
Shell, however, says the project is still in the preliminary stages. A final decision will be made only after engineering and design studies are completed on site and the economic viability of the project is calculated
''I'm disappointed but still happy for the region. There are still opportunities,'' said U.S. Rep. Bill Johnson, R-Marietta, who was in Boardman to meet with Plumbers and Pipefitters Local 396 on ways to help area workers gain jobs from the shale drilling boom.
Planey said companies that make plastic products may locate in the area because they can benefit from the cracker plant by getting a faster, more secure supply of products than if they were located farther away.
He said he's mentioned the plant to a couple of companies in the last six months who expressed interest and asked to be kept informed.
Construction of the massive plant also will trickle into the Mahoning Valley, Planey said, along with the need for hotel rooms, restaurants and retail services.
Area skilled trades workers stand to benefit as work on the plant draws workers from other projects.
''It's the 'rising tide lifts all boats' mentality. We should be happy,'' he said.
Johnson noted Shell's announcement means the Monaca site is the primary location it will evaluate, leaving the final decision still to be made. He said Shell made it clear ''their decision took into account a combination of factors like geography, infrastructure and proximity to 'wet gas' in leading them to the site'' in Pennsylvania.
''I will continue to work with interested parties to bring future projects to Eastern and Southern Ohio because we have a superb workforce and are blessed with so many natural resources,'' Johnson said.
U.S. Rep. Timothy J. Ryan, D-Niles, was remaining optimistic.
''This is great news because many people from Northeast Ohio will benefit from the economic investment that is being made. Some of our folks will work there, I'm sure, and the ripple effect will be felt by businesses and families throughout the Valley.''
West Virginia Secretary of Commerce Keith Burdette said disappointment is a natural after that state invested much time and energy into obtaining the project.
''If Shell exercises its option ... and ultimately builds the plant, we'll all benefit,'' Burdette said Thursday. ''A cracker produces feedstock that is essential to the production of plastics and chemicals, and that means companies will locate close by to take advantage of that. What we've been working toward, at the end of the day, is for the whole region to benefit from this. All of the three or four sites considered by Shell are within a 50-mile radius, so the impact on the region is going to be substantial regardless of where it is.''
Marcellus Shale Coalition president Kathryn Klaber called Shell's decision "a win-win for the region's workforce and economy and further demonstrates the tremendous resource contained in both the Marcellus and Utica shale."
"While located in Pennsylvania, the supply chain and potential economic impact of this project will span the multi-state region while serving as an anchor in the resurgence of the domestic manufacturing sector," Klaber said. "As a Beaver County native, it's particularly gratifying to see that the economic revitalization of the river communities may be just around the corner."