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August 1, 2012

Shell says cracker plant under evaluation

NEW CASTLE — Shell Oil’s proposal to build its petrochemical plant in Beaver County is being evaluated, a company spokesman said Tuesday night.

William Langin, Shell Appalachia’s exploration manager, was one of four speakers to address the Lawrence County Regional Council of Governments about how the Marcellus Shale drilling and regulations will impact local municipalities.

More than 90 local municipal and county officials attended the dinner and heard presentations from representatives of the Pennsylvania Department of Environmental Protection, Penn State, the Public Utility Commission and Shell, representing the shale industry.

The focus was on laws, impact fees and the incidence of drilling in western Pennsylvania.

Locals have hung their hopes on Shell building its petrochemical plant in neighboring Beaver County. In March, the company announced it had entered a land option agreement in Monaca to build the $3.5 billion cracker plant along the Ohio River there. That news brought the hope of jobs and more industry and development to the area.

Langin said Tuesday night the petrochemical separation plant “is still being evaluated as to whether the project will go forward,” and is dependent on the results of Shell’s exploratory drilling in the area.

By the end of this year, Shell will have drilled 20 wells in the Lawrence and northern Butler County area as part of its exploration phase. They will analyze the results over the next 12 to 16 months to decide whether to put in pipelines, Langin said.

However, a bigger focus at Tuesday night’s meeting was the appeal of the PUC and the DEP to the Commonwealth Court’s ruling Thursday, which threw out new limitations on the ability of municipalities to use zoning rules to control natural gas drilling activity.

Matthew Henderson, asset manager of Penn State’s Marcellus Center for Outreach and Research, said the two state agencies have asked the Supreme Court to expedite the appeal.

Should the lower court’s ruling stand, he encouraged municipal officials to look at the comprehensive plans of their counties and municipalities to see how it addresses natural gas drilling.

He noted that in Lycoming County, which has the biggest boom right now for shale operations, the comprehensive plan has no mention of natural gas and “needs to be updated.”

Craig Lobins, DEP oil and gas manager, noted the Marcellus Shale “footprint” covers about two-thirds of Pennsylvania, and the deeper vein of Utica Shale covers all of Pennsylvania and some peripheral states.

The first Marcellus Shale well was drilled in 2004, he said. Five were drilled in 2005, and this year there are 1,556 in the state so far.

“It’s estimated that we are sitting on the second largest gas field in the world.”

Robert Gramola, PUC’s director of administration, advised municipal officials about how impact fees will be distributed to their communities, and said they will receive their first payments as of July 1 next year.


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