Where It Stands
Last December, Shell extended their option on the Beaver County purchase of the Horsehead Corp. facility in Beaver County by 6 months. This prompted concern in the Marcellus shale region, and Beaver County in particular that the project might not be getting the green light.
PA Governor Corbett assured an audience at the Hart Energy Marcellus-Utica Midstream Conference that “If they’re going to build it, they’re going to build it here”.
How We Got Here
Shell’s game-changing proposal to develop an ethane cracker in Beaver County is an important development to the region and an indication of the long-term investment being considered. It also offers an example of how an outlook of low gas prices, while problematic to producers and royalty collectors, are rippling through the economy and generating competitive opportunities in manufacturing and refining. This could prove to be the second leg of the economic boom in the region.
Shell’s Proposed Petrochemical Plant Discussed at Energy Inc.
Dennis Nichols, Commissioner of Beaver County, PA offered the following background information about the Beaver county site at the Energy Inc. Conference in August 2012:
Beaver County, which is northwest of Allegheny County and Pittsburgh, is home to 171,000 people. A new era began on March 15, 2012 when Shell announced they had selected the Horsehead property in central Beaver County as the potential site for a new $2 billion ethane cracker plant. Workers in Beaver County are experienced in iron, steel, coal, glass, pottery, and zinc manufacturing and will adapt well to the new chemical industry. We have major transportation resources – highways (I-376), nearby Pittsburgh airport, river transportation, rail (Conway Yards), and a county owned bus company (Beaver County Transit).
He expects the results will be:
• 450 permanent industrial jobs
• 10,000 construction jobs
• 18,000 ancillary jobs
• $2 billion investment in plant
• $4-6 billion total investment in the area
Economic Impact Analysis of the Shell Ethane Cracker
An Economic Impact Analysis was conducted by the Pittsburgh Regional Alliance (PRA) and released at a community education meeting in Monaca, PA. This meeting was not attended by Shell representatives, nor did Shell contribute to the impact study. It is based on a widely used economic impact model (IMPLAN) which projects both direct and indirect job creation and economic output.
At just two pages, the release is short on details for those looking to dig further with their own analysis, but it offers a good summary of the project to date as well as some basic assumptions and expectations.
Links to the impact study release are in the references section below.
Timeline of Development
According to Shell’s own website specifically set up for this project, a facility of this size typically takes five years or more from planning to start-up. However, much analysis has yet to be completed before the final investment decision is made.
Educating the Community
A concerted effort has been made by Shell representatives and regional outreach groups to ensure the public is well informed about this potential investment, the timeframe that can be expected, and the potential effect on both jobs and the regional economy overall. While the benefits are clear, Shell is tempering expectations about the pace of development of such a complex project while also being sensitive to environmental concerns. Many factors continue to be evaluated prior to the final green-lighting of an investment of this size.
Below is a timeline of events that have unfolded over the last 8 months and include some of the community engagement geared toward explaining how this type of investment could benefit the community. It is also indicative of the type of outreach that can be expected as things move along over the next few years.
|March 15, 2012||Shell’s site selection announcement||Shadow Lakes, Aliquippa||Dan Carlson – Shell manager of New Business Development;Beaver County Commissioners|
|June 14, 2012||Explaining Tax Credits||CCBC, Monaca||PA DCED Secretary Alan WalkerPA Rev Secretary Dan Meuserother cabinet members & state legislators|
|June 21, 2012||Trip to Shell Plant in LA||Geismar, LA||13 Gov & Econ Dev|
|August 7, 2012||Webinar: How to Do Business with Shell*||Online||Shell; 600+ attendees|
|August 14, 2012||PBT’s Energy Inc.*||Convention Center – Pittsburgh||Beaver County Commissioner Dennis NicholPaul Ayoub, PhD, Shell Project Manager|
|August 15 & 22, 2012||PRA – Community Education*||Central Valley HS – Monaca||Shell, Pittsburgh Regional Alliance (PRA)|
|Sept. 16-18, 2012||US Hispanic Chamber of Commerce’s Annual Meeting||Los Angeles, CA||Shell Supplier Diversity Group|
|Sept. 18, 2012||PRA – Community Education*||Central Valley HS –Monaca, PA||PRA (Not attended by Shell representatives)|
|Oct. 28-31, 2012||National Minority Supplier Development Council’s Conference and Business Opportunity Fair||Denver, CO||Shell Supplier Diversity Group|
|Dec 26, 2012||Horsehead Corp Extends Purchase Option||Potter Twp, PA|
*indicates meeting attended by EKTi representative
Doing Business with Shell
On Aug 7, 2012 Shell hosted a webinar on “How to do Business with Shell” during which they outlined the process of engaging shell, their policies on working with small and minority-owned enterprises, and the capabilities and cultures they are looking for in potential service providers. The webinar drew over 600 attendees and included a Q&A session at the end. This webinar is not available on demand, however our readers can view our webinar notes on this previous post:
Related Post: Doing Business With Shell
Some of the highlights we noted from the webinar:
- Shell Procurement website – www.uacontractor.com
- Shell now spends $700 million to minority and small businesses, would like to go to $1 billion.
- Do your research then network with Shell and its subcontractors
- What is special about your organization – knowledge, location, culture?
- Always ask how to get more contacts and more contracts
- Sometimes money is more important than time, sometimes time is more important than money
- Under promise and over deliver
- Exceed their standards – especially on safety
- Shell doesn’t want to be 90% of your business
- SQS – Supplier Qualification System
- Level 1 – office work, deliveries to work site – no fee to register
- Level 2 – doing work at site – they need more info and tighter controls – subscription fee
The August 15 community education meeting, hosted by the PRA and attended by Shell representatives offered more information about the current state of the project, expectations for a future timeline, and doing business with Shell.
Ethylene is world-wide commodity and its price is volatile, depending on the supply / demand balance. The Norco plant was shut down for 9 months in 2009 due to excess supply and low ethylene prices. Half of all the ethylene consumers in the US is within 500 miles of this plant site.
View video footage of the meeting and review our meeting notes including Q&A summary on this related post:
Shell Ethane Cracker Public Information Meeting
About EKT Interactive
EKT Interactive, Inc is a leading provider of customized, large-scale, interactive safety and operations training programs for the oil & gas industry. Our web-based e-learning program, accessible at your convenience, saves time away from the job and travel costs. Online learning modules are developed by field-experienced oil and gas instruction experts using proven web learning applications that closely match classroom effectiveness.
Read more about our online oil and gas training courses.
Resources and further reading: