Dan Carlson, Shell's General Manager of New Business Development, said Thursday that the company signed a land option agreement with Horsehead Corp. to evaluate a site near Monaca, about 35 miles northwest of Pittsburgh.
Ohio, West Virginia and Pennsylvania had all sought the plant and offered Shell major tax incentives. Monaca is just 20 miles from both the Ohio and West Virginia borders, so workers in all three states are likely to benefit.
But Shell said the Monaca site, currently home to Horsehead's zinc factory, had the mix of resource and transportation attributes "to accommodate facilities for a world scale petrochemical complex and potential future expansions."
The so-called ethylene cracker plant would convert natural gas liquids into other, more profitable chemicals, which then go into everything from plastics to tires to antifreeze.
Shell has said that it could spend several billion dollars to build the plant, and that the complex would attract a wide range of industry and suppliers to nearby locations. But actual construction is still years away. The company said the next steps are environmental and design studies and further economic analysis, then permitting.
Shell's choice may ultimately represent an indication of just how strongly the industry feels about the vast gas reserves in nearby underground shale rock formations. Carlson told The Associated Press that any plant must be economically competitive with existing plants in Louisiana and Texas, and even with international plants.
The Marcellus Shale, which lies thousands of feet underground, has attracted a rush of major oil companies, who have drilled almost 5,000 new wells in the last five years. The Marcellus covers large parts of Pennsylvania, New York, Ohio and West Virginia, and drillers have also started to tap the adjacent Utica Shale formation.
It's also an unexpected turn for the Horsehead zinc smelter, the largest in the country. In September the company announced plans to shut the Monaca smelter plant by 2013, and relocate to North Carolina, along with most of its 600 workers.
Ohio and West Virginia officials had made all-out efforts to attract the plant. Last year West Virginia Commerce Secretary Keith Burdette said, "We intend to compete with the last breath in our body to attract one or more crackers," and Ohio's governor reportedly flew to Houston to meet with Shell officials.