Pennsylvania General Assembly members representing Warren County are playing things close to the vest when it comes to a proposed ethane "cracker" plant.
Gov. Tom Corbett is still working to craft a plan Pennsylvania legislators will accept in a bid to lure the Royal Dutch Shell PLC plant to the southwestern Pennsylvania town of Monaca. Meanwhile, local legislators have remained relatively silent as to where they stand on the issue.
Under Corbett's plan, the plant would be located in a tax-free "Keystone Opportunity Zone" created specifically for it and Shell could be extended more than $1.65 billion in additional tax breaks. The Corbett plan proposes legislative passage of a special Pennsylvania Resource Manufacturing tax credit for ethane which wouldn't come into play until 2017 and is capped at $66 million annually for 25 years. In it's proposed form, the credit would be tied to ethane purchase and be calculates at a rate of five-cents-per-gallon of the gas purchased. Corbett has also said proposed legislation would require Shell to meet job creation and production benchmarks.
The "cracker" plant would process natural gas into ethylene, which chemical manufacturers can then use to produce a wide range of products. Plan supporters envision Shell using the transferable tax credits as an incentive to lure these manufacturers to the area as the Shell plant is in a tax-free zone. The Shell facility would be the first of its kind on the east coast. National ethane processing and manufacturing, and the accompanying infrastructure, is currently concentrated on the gulf coast.
Estimates vary, but Corbett has cited a figure of up to 20,000 permanent jobs and 10,000 construction jobs being created due to the plant. The majority of the 20,000 job estimate is indirect job creation from associated industries. Shell estimates the "cracker" plant would employ approximately 400 people directly.
These figures represent a state investment of over $55,000 per job created, if temporary construction positions are included, and over $82,000 per permanent job.
Pennsylvania Senate President Pro Tempore Joe Scarnati (R-25) did not return requests for comment on the issue.
However, a June 19 Associated Press article quotes Scarnati as saying, "The House Republicans have thoughts, we have thoughts, the governor's office has thoughts. So this is quite a process to put out a product that is defendable and yet does what it needs to do. It's quite a process we're going through.''
State Senator Mary Jo White (R-21), who is Chair of the Senate Environmental Resource and Energy Committee, referred inquiries to committee Executive Director Adam Pankake.
In an e-mail response, Pankake wrote, "As you know, over the past several years, Pennsylvania has emerged as a world leader in the extraction of natural gas. This gas must be treated to remove a variety of by-products, which are valuable in creating products such as pharmaceuticals and plastics.
"Our neighboring gas producing states, West Virginia and Ohio, are making competing offers to Shell for placement of the plant in their respective states. The plant would create an estimated 10,000 construction jobs and up to 20,000 permanent jobs. Senator White agrees with the Governor that the potential jobs should be in Pennsylvania.
"The tax credit is not a 'taxpayer handout' to Shell because this is money the state doesn't currently receive. For example, if Shell decides to place the plant in another state, Pennsylvania would not receive any revenue from possible taxes, including the income tax from the employment the plant offers. Estimated taxes derived from workers and ancillary businesses would outweigh the state's investment in the long run. Senator White believes this credit offers Pennsylvania a competitive advantage in competing markets and will provide the state a great economic opportunity for the future."
State Representative Kathy Rapp (R-65) returned calls for comment but was unavailable to discuss the issue due to scheduling conflicts. The Pennsylvania House of Representatives is working to finish state budget legislation before the General Assembly's regular summer legislative recess at the end of the week.