Shell extends option for Monaca site

Horsehead Corp. has signed another six-month extension with Royal Dutch Shell as the energy and chemical company considers using a Monaca facility as a site for an ethane cracker.

Ali Alavi, a senior vice president at Horsehead, which owns a metal plant currently occupying the 300-acre site in Beaver County, said Shell didn't commit to making a final decision within the next six months, but he added that the time period "seemed to be a reasonable number between the parties."

The extension isn't a surprise, as Shell has been saying for months that its decision would not be bound by the Sunday expiration of its latest land option agreement with Horse-head.

That six-month contract was an extension of the first land option deal announced in March 2012.

Shell is looking at both the feasibility of that particular site and evaluating the overall market for an ethane cracker in the Northeast. The plant would process ethane extracted from the Marcellus Shale natural gas formation underlying the region.

Shell spokeswoman Kimberly Windon said that process is continuing. "The reason that we would announce that we wanted a specific site so early is it allows us to open communication with potential neighbors" and stakeholders, she said.

"Even though we have not decided whether we'll go ahead and build the facility, it's important for us that we listen to their feedback."

Horsehead's plans to transfer its zinc metal and zinc oxide production from Monaca to a new facility being built in North Carolina would not be impacted by the extension, Mr. Alavi said. The company plans to start production in North Carolina in the third quarter, which will begin the transition from Monaca.

Horsehead's remediation activities at the site also would not be affected by the land option extension, he said.

The Pittsburgh Regional Alliance tried to dispel any concerns over the delay, issuing a statement that said: "Extending the term of a land option agreement is a routine aspect of this kind of ongoing evaluation."

Gov. Tom Corbett issued a similar statement, declaring that the "announcement is good news for Pennsylvania." The governor estimates the plant could create thousands of construction jobs, as well as 400 direct jobs.

"My administration, local officials and economic groups continue to work in support of Shell Chemical as it continues a deliberate evaluation of this project," Mr. Corbett said. "We are all dedicated to ensuring, once built, that this facility is successful."