Pennsylvania and West Virginia Move Tax-Break Bills to Lure Petrochemical Plant, Hundreds of Jobs
By Stephen L. Teichler, Seth v.d.H. Cooley and Lou Crocco
February 29, 2012
Marcellus Shale Law and Policy Update
A legislative proposal that would expand Pennsylvania's tax-incentive zones is one of the lures the state is using to convince Shell Oil Company to locate a petrochemical plant there. Pennsylvania is competing with West Virginia and Ohio for the cracker plant, which will extract ethane from the Shale gas. Ethane is one of the key building blocks needed to make plastics and other synthetics.
Pennsylvania Senate Bill 1237 would allow for 15 new zone expansions statewide. Investors could get an extra five years of no taxes. Manufacturing and processing businesses, moreover, would get new breaks on state corporate income and capital stock franchise taxes.
Steve Kratz, spokesperson for Pennsylvania Gov. Corbett's Department of Community and Economic Development, said he preferred not to go into details regarding the legislation or negotiations with Shell, but said that the state was making a strong case and was still very much in the game.
"We expect to hear sometime in the first quarter," Kratz said.
Meanwhile, West Virginia Gov. Earl Ray Tomblin recently signed legislation that would effectively slash property taxes for a cracker plant for 25 years. Tomblin said more incentives might be necessary to win the plant after he returned from a January 30 trip to Houston where he met with Shell officials.
The industry estimates the plant will create 10,000 construction jobs, hundreds of full-time plant jobs and thousands of additional spin-off jobs to the winner.
"The chemical industry association ACC (American Chemistry Council) has done studies that estimate a 'multiplier effect' of 5.5 for induced and indirect jobs," wrote Kayla Macke, media relations coordinator for Shell.
Shell's interest in building the plant brings other good news as well, according to Geoffrey Styles, a well-respected consultant to the oil and gas industries.
"Shell is very meticulous in its planning," Styles said, "and wouldn't be considering this magnitude of a plant unless [it] really believed supplies would be there for the long term."
Stephen L. Teichler practices in the areas of energy law and litigation at Duane Morris LLP. Mr. Teichler has represented major international energy companies in the full spectrum of their legal activities, ranging from appellate proceedings involving administrative rulemaking and adjudications to civil litigation in federal and state district courts. He is currently in the forefront of the restructuring of the electric service industry, representing Regional Transmission Organizations, Independent System Operators and major utilities.
Seth v.d.H. Cooley is chair of Duane Morris LLP's Environmental Law Practice Group. Mr. Cooley represents clients in environmental matters arising under an array of federal and state programs including the federal Clean Air Act, Superfund, Clean Water Act, and Resource Conservation, Recovery Act and Oil and Gas programs. For more than 20 years Mr. Cooley has handled major matters for clients in the manufacturing, service, and financial sectors in environmental litigation, regulatory, and transactional matters.
Lou Crocco, Esq., is a Senior Director of Duane Morris Government Strategies. Mr. Crocco has more than seven years of experience as a lobbyist-consultant and advises clients on environmental, energy and business development issues. He resides in Western Pennsylvania in the heart of the Marcellus Shale Play.
Disclaimer: This article is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this article are those of the authors and do not necessarily reflect the views of the authors' law firm or its individual partners.