Pennsylvania Gov. Tom Wolf announced on June 7 that Royal Dutch Shell had finalized its plans to build an ethane cracking plant in the western part of the state. The announcement was made in the form of a statement released to the press and posted online. Gov. Wolf said in the statement that Shell’s announcement came after more than four years of behind-the-scenes planning and negotiations.
Ethane cracking plants use a heating process to covert ethane into ethylene, and political and business leaders in Pennsylvania hope that the Shell plant will help to transform the shale gas industry in the state. Construction of the facility is expected to provide as many as 6,000 much needed jobs to an area of the Keystone State that has struggled in recent years, and plant will employ about 600 workers once the building work has been completed.
Pennsylvania lawmakers began courting Shell in 2012 by offering $1.65 billion in tax credits spread over 25 years. In addition to the announced ethane cracking plant, Shell is expected to build a further three plants to convert the ethylene produced into plastic pellets. While the total anticipated cost of the development has not been revealed, a similar facility in Louisiana cost $11 billion to build.
The length of time it took to get this project off the ground reveals how difficult it can be to negotiate complex real estate agreements even when all of the parties involved seem to share a common goal. Experienced real estate attorneys may understand how ruinously expensive it can be when projects stall due to regulatory issues or challenges from community residents, and they could help developers to anticipate and avoid common pitfalls.
Source: Philly.com, “Shell gives green light to giant Pennsylvania ethane cracker plant”, Andrew Maykuth, June 8, 2016