Pa. may pay for cleanup of Shell refinery site
Saturday, June 9, 2012
HARRISBURG, Pa. (AP) — Lawmakers briefed on Gov. Tom Corbett's package of financial incentives for a planned petrochemical refinery in western Pennsylvania said Friday that it could also include the cost to clean up pollution from the zinc smelter that has operated there for decades.
The revelation by two state senators is the latest about Corbett's negotiations on the facility with Shell Oil Co., a subsidiary of Netherlands-based oil and gas giant Royal Dutch Shell PLC.
The Republican governor's administration has shared with the public sparingly those plans on what lawmakers say would be the biggest package of taxpayer-paid incentives in Pennsylvania's history for a project being billed as the reindustrialization of the state.
Two senators briefed on the project, Sen. John Blake, D-Lackawanna, and Sen. John Wozniak, D-Cambria, said the project deserves serious consideration. Blake cautioned that the Corbett administration must show that the cost of the incentives must match the potential economic benefit to the state.
The projected multibillion-dollar ethane cracking plant would convert ethane from the area's 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.
Blake said the administration's financial incentive plans for Shell revolve around a recently disclosed tax credit worth up to $1.65 billion over 25 years and a newly created tax-free zone for the site that the Legislature approved in February.
Department of Community and Economic Development Secretary Alan Walker and the other administration officials who briefed Blake and Wozniak on Wednesday could not immediately provide a figure on the value of the newly created tax-free zone site to Shell, the senators said.
The tax-free zone "is a very lucrative tool, and I don't think we could have lured Shell without it," said Blake, who briefly served as the department's secretary under former Gov. Ed Rendell.
But because Shell likely would have no state tax liability, it could sell up to $66 million in tax credits a year to companies that use its feedstock as a way to encourage a local market in Pennsylvania, senators said.
"If they don't do business here, they can't use the credits," Blake said.
The tax credits will need legislative approval.
In the meantime, some of the wet gas from the Marcellus Shale region is already under contract to be piped down to ethane crackers on the Gulf Coast, taking the lucrative business elsewhere.
"If we have our ethane facility and all the manufacturing around it," Wozniak said, "we are getting the value added, and that's where you're going to be getting the jobs and building the manufacturing base."
Besides the potential of offering a taxpayer-paid cleanup of the zinc smelter, the administration officials did not mention any other potential taxpayer-paid incentives for Shell, the senators said.
But Wozniak said the cost of an environmental cleanup would be limited since the site is being turned into another industrialized use.
"You're not making a park out of it," Wozniak said.
A spokesman for the Department of Community and Economic Development, asked whether the Corbett administration had offered taxpayer money to clean up the site, responded that any company purchasing a potential brownfield site could apply to a state land recycling program.
In March, Shell announced that it had picked a site on the banks of the Ohio River, near Monaca, about 30 miles northwest of Pittsburgh, and signed a land option agreement so it can further evaluate the site. Ohio and West Virginia also had sought the plant and offered Shell substantial tax incentives.
The Horsehead Corp. zinc smelter that is billed as the country's largest and is operating on the site is shutting down. In September the company announced plans to shut the factory by 2013 and relocate to North Carolina, along with most of its 600 workers.
Horsehead has said it would have to vacate the 300 acre-plus site by April 30, 2014, under the terms of the option agreement with Shell.
Horsehead and Shell did not immediately respond to messages seeking comment on Friday.
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