Just 30 miles northwest of Pittsburgh in Potter Township, Beaver County, energy giant Royal Dutch Shell is preparing to build a cracker plant facility, the first in the Marcellus Shale region. Proponents of the new facility are anticipating an economic windfall. Environmentalists are waving red flags, certain that the cracker plant will diminish the quality of life for residents. The question remains whether the two sides can find common ground and solutions that will satisfy each.
When discussions began in 2011 with Shell Chemical Appalachia LLC (Shell), a subsidiary of Royal Dutch Shell, state and local politicians and business interests worked diligently to draw the company’s investment into Pennsylvania before it was lost to competing states, Ohio and West Virginia. The benefits to Shell were clear: logistically, building the cracker plant in southwestern PA would reduce the massive costs of transporting natural gas from its source to Shell’s existing cracker plants, most of which are located along the Gulf Coast. A $1.65 billion tax credit, the largest in PA history, didn’t hurt the deal.
A cracker plant is the first stop on the manufacturing trail from natural gas to plastics, resins and other adhesives. It’s where the molecular bonds of ethane are “cracked,” ethane being the natural gas found in abundance in the Marcellus and Utica Shale. The byproduct is ethylene, the primary ingredient in the plastic products that we use in every day: Saran Wrap, 20-ounce Coca Cola bottles, PVC pipe, diapers, pens and a voluminous range of other consumer and industrial applications.
An appetite for economic prosperity
“The largest construction projects to date in Pittsburgh have been the stadiums, and each of those had a price tag of about $250 million,” says Allegheny County Exec Rich Fitzgerald. “During the construction phase alone, Shell will be investing nearly thirty times that amount.”
Fitzgerald voices an assessment common to cracker plant proponents: the Greater Pittsburgh Region will benefit through business growth, new job opportunities, and regional competitiveness. Most sources estimate that a workforce of 6,000 will be needed at the height of construction, which is scheduled to begin in 2017. When the facility shifts into operational mode, up to 600 employees will be needed to maintain 24-hour operations, a pace that will result in the production of 1.6 million tons of ethylene each year.
For proponents, the post-construction drop in the workforce is not a central theme; their sights are set on the job opportunities and economic infusion that will result from downstream industries. The incentive that will attract new businesses into the region is no different from the one that drew Shell into southwestern PA: proximity to raw materials and a strong manufacturing infrastructure.
Plastics manufacturers would logically be the first to locate in proximity to the cracker plant. Theoretically, the trickle down would then include manufacturers that produce consumer and industrial products, as well as ancillary businesses such as restaurants, hotels and industrial service providers that become necessary to sustain regional growth. Case in point, says Fitzgerald, is the Gulf Coast where downstream industries and spinoffs have settled in proximity to the natural gas facilities. Closer to home, he points to the Pittsburgh International Airport as one entity that is already benefitting from increased revenue as a result of the Shell project.
Petra Mitchell, president and CEO of Catalyst Connection and a respected voice in the regional manufacturing scene, agrees with Fitzgerald’s assessment of growing business opportunities. “We absolutely think that the cracker plant will benefit existing manufacturers and create new downstream opportunities.” The region’s existing manufacturing infrastructure is equipped to absorb a significant amount of new business, she says, citing tool and die, assembly and equipment companies. “One anchor company in the energy and manufacturing industry will drive strong economic growth,” she predicts.
Beaver County Commissioner Sandie Egley anticipates the same. “The capital investment by Shell is about more than just new jobs; it’s about creating a manufacturing base in Pennsylvania like we haven’t seen in generations.”
Cracker plant proponents note that the groundwork is being laid to create a pipeline of adequately trained employees. Catalyst Connection’s Explore the New Manufacturing program is only one of many industry-focused educational initiatives that target students in middle school through college. Beyond the classroom, a number of trade and industry organizations have robust training programs in place, including the iron workers, steam fitters, carpenters, plumbers and others. “These organizations offer very robust and sophisticated training programs,” notes Fitzgerald. He adds that enrollment in these programs is increasing as the population refocuses on the role of trades in the future of the region.
Driving real estate growth and more
Bob Hurley, director of economic development for Allegheny County, adds another dimension to the conversation with an assessment of the commercial real estate market. “The cracker plant has taken a very large piece of land off of the market, and it is likely to drive the sale of other industrial locations up and down the Mon Valley,” he says. The cracker plant is situated on 780 acres of land that, as far back as the 1930s, has been used for industrial purposes.