January 19, 2017 / 7:27 PM / 3 years ago

Pennsylvania town approves construction of Shell petrochem facility

(Reuters) - The town council of Potter, Pennsylvania unanimously approved a conditional use permit late Wednesday allowing a unit of Royal Dutch Shell PLC to move forward with construction of a multibillion-dollar petrochemical complex near Pittsburgh.

A Shell logo is seen reflected in a car's side mirror at a petrol station in west London, Britain, January 29, 2015. REUTERS/Toby Melville/File Photo

Last June, Shell’s Shell Chemical Appalachia LLC unit made a final investment decision to build the complex, which includes an ethylene cracker.

Ray Fisher, a spokesman at Shell, said on Thursday the company has not disclosed the cost of the project. Local media has reported the project will cost about $6 billion.

The facility will use low-cost ethane from shale gas producers in the Marcellus and Utica basins in Pennsylvania, Ohio and West Virginia to produce 1.6 million tonnes of polyethylene per year.

“We greatly appreciate the Supervisors’ due diligence and their careful consideration throughout the process ... and ... look forward to fulfilling our goal of constructing a world-class polyethylene manufacturing facility in Potter Township,” Shell said in a statement emailed on Thursday.

Polyethylene is a plastic used in many products, from food packaging and containers to automotive components.

Ethane, a natural gas liquid, is the U.S. chemical industry’s main feedstock.

Fisher at Shell said the company was still waiting for a permit from the state of Pennsylvania and was continuing its early work to get the site ready for construction.

The company expects to be able to start construction sometime near the end of 2017, with a target in-service date early in the next decade.

“Thanks to abundant supplies of natural gas, the U.S. chemical industry is investing in new facilities and expanded production capacity, which tends to attract downstream industries that rely on petrochemical products,” Cal Dooley, President and Chief Executive of the American Chemistry Council (ACC), said in a statement on Thursday.

“Shell’s pioneering project – the first of its kind outside the Gulf Coast – could be the cornerstone for regional economic growth for decades to come,” Dooley said.

The project will bring lots of jobs to the region, with up to 6,000 construction workers involved in building the facility, and an expected 600 permanent employees when completed.

A cracker plant breaks down large molecules from oil and gas into smaller ones. An ethylene cracker produces base petrochemical “building blocks” which are the first stage in the chemicals manufacturing chain. Polyethylene is a derivative of ethylene.

Reporting by Scott DiSavino; Editing by Alan Crosby

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