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Royal Dutch Shell A : Shell shovels millions into proposed Beaver County plant site

08/02/2015 | 06:11am US/Eastern

Aug. 02--Driving south on Route 18 from the Beaver Valley Expressway, it's hard to believe Royal Dutch Shell isn't building something on the land it bought in Beaver County.

For nearly a mile, a fleet of trucks and workers in matching yellow outfits have turned the land brown on both sides of the state road, removing nearly every structure and patch of vegetation from the Ohio River south to the hillsides above.

"It's exciting to watch. There's so much going on. It's staggering the amount of change," said Rebecca Matsco, chair of the township supervisors in Potter, where most of the site sits.

Leaders are quick to caution that the accelerating scale and scope of work at the site does not necessarily mean that Shell will build the petrochemical plant known as an ethane cracker that it first proposed for the site in 2012. Yet there's no indication anyone has drawn up a formal contingency plan in case the company decides not to build.

The state Department of Community and Economic Development would not answer questions about a back-up plan.

"Although Shell has not yet made a final investment decision, the recent developments such as the closing on the former Horsehead property and the issuing of the air quality plan approval by the Department of Environmental Protection allow us to remain optimistic about the future of the project in Beaver County," DCED spokeswoman Lyndsay Kensinger wrote in an email.

"From the perspective of the Pittsburgh Regional Alliance, we are and have been optimistic that Shell will decide to locate its world-class petrochemical facility on this site," said alliance CEO Dennis Yablonsky. "If the site were to become available for another purpose, then the PRA would do what we're established to do -- work with state, county and local officials and with Shell to promote this opportunity in our regional market."

Shell has made it clear it might spend years remediating the former zinc smelter site, clearing nearby properties and even building a bridge over Route 18 just to decide not to invest billions on a sprawling plant that would convert ethane from Western Pennsylvania shale wells into materials used to make plastics.

"To a normal person, $30 million seems like a lot," Steve Lewandowski, global business director for Olefins at Houston-based energy analyst IHS, said about the industry estimate of what Shell is spending on land and engineering. Paying out that much money doesn't guarantee the world's fourth-largest company will invest upwards of $5 billion on the final project, he said.

Shell, which would own the 900-acre site even if it decides not to build, has not said how much it might spend on land preparation before its final decision.

"There's a certain amount of impatience. People have been hearing about this and want it to come about," said County Commissioner Dennis Nichols, noting a constant stream of talk about the work.

Some 'sure things'

Even if the hoped-for investment doesn't materialize, officials cite a list of benefits they expect from Shell's work, and the chance someone else would invest in a prime spot along the river.

"If the cracker doesn't get built, Beaver County will get a property that's been remediated. They've committed to that," said John Poister, a spokesman for DEP, whose agency in June issued four air, land and water permits that allowed site prep and construction to begin.

Shell said the work it's doing includes moving high-voltage power lines that cross the site, removing foundations and underground utilities from the Horsehead facilities, moving railroad tracks south toward Route 18 and clearing vegetation.

The earth-moving, which involves excavating part of the hill south of 18, is "to prepare a flat, homogenous site for potential construction," spokeswoman Kimberly Windon said.

The Department of Transportation issued Shell a permit to build a bridge to carry heavy truck traffic over Route 18 and authorization to build temporary road crossings at grade and culverts underneath. The company is working on a permit to shift the highway south.

It told the state it would not move the road until it decides to move forward with the plant, according to PennDOT District Executive Dan Cessna.

The new bridge "is a sure thing" regardless of whether Shell builds the plant, Matsco said.

Shell's work in advance of a decision to build involves "a considerable amount of earth to be moved," according to Poister, who said the Beaver County Conservation District is making weekly visits to ensure there are no problems with erosion.

'A prime location'

Shell has said it would prepare the site so that, if its senior leadership approves building the plant, construction can begin quickly.

"Their message has been consistent for the last three or four years," IHS' Lewandowski said. "They're on course. It takes time to make this kind of decision."

A partnership that Shell formed in 2011 to build a petrochemical plant in Qatar canceled the project in January.

Shell and other potential cracker builders initially looked at converting ethane into plastics in Appalachia because the alternative, an oil-based product, was more expensive. Then oil prices crashed last year.

"The question is, what's your view of crude over the next four years?" Lewandow­ski said.

Shell last week said it expects oil's downturn "could last for several years." Based on falling profits tied to the lower prices, it said it would "review both the ongoing projects under construction, and the medium term investment options, to balance returns, affordability and medium term growth potential."

IHS predicts oil prices will go up, moving the cost advantage back to ethane, a liquid that comes up with gas in some Marcellus and Utica shale wells.

Those wells and their ethane make a remediated, riverside site with highway and rail access quite attractive to another company if Shell decides against building.

"All the elements will be there," Matsco said. "That said, Shell is the owner. So a step forward would be in Shell's hands."

She and others said they have heard that some unnamed companies have expressed interest in the site. They would work with the Pittsburgh Regional Alliance, state officials and others to attract them if necessary.

"Even if they don't build, we're still in the early stages of natural gas development," Nichols said. "All the work makes it a prime location."

David Conti is a staff writer for Trib Total Media. He can be reached at 412-388-5802 or dconti@tribweb.com.

___

(c)2015 The Pittsburgh Tribune-Review (Greensburg, Pa.)

Visit The Pittsburgh Tribune-Review (Greensburg, Pa.) at www.triblive.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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