Falling natural gas prices and campaigns from Pennsylvania lawmakers have revved up the next step of the Marcellus Shale drilling boom: the petrochemical chapter, a development phase that could promise the kind of construction and job creation not seen in the region since steel's heyday.
Numerous energy firms and chemical companies are eyeing the tri-state region for locations to build plants that can take gas and other compounds extracted from the ground and process them for use in everyday products such as clothing or carpeting.
Western Pennsylvania's ready supply of high-value natural gas liquids has hastened the development. It's even started an interstate battle, with legislators courting multinational companies such as Royal Dutch Shell with come-hither tax incentives.
But the Shell "cracker" plant -- which has governors flying to Texas to personally woo executives -- is only one petrochemical project of many signaling a new trend in Pennsylvania's gas industry. A West Virginia company also is scouting potential sites for its own plant.
Basically, cracker plants break down gas compounds into other elements. The facilities can cover hundreds of acres and bring thousands of new jobs.
This kind of development, referred to as petrochemical development, typically comes as the third phase of a drilling boom after extraction and processing, and it is sure to raise the same environmental and zoning concerns that have followed the industry since Marcellus drilling began here in 2006.
"It's going to be quite a boon to this area for the unions," said Lou D'Amico, president and executive director of the Pennsylvania Independent Oil and Gas Association. "The pipe fitters and construction folks like that will find work."
The prospect of bringing jobs to regions hit hard by the shuttering of steel mills has prompted bidding wars between lawmakers in Pennsylvania, West Virginia and Ohio.
In the case of the Shell plant, all three states have been aggressively but mostly quietly lobbying company officials to locate a plant within their borders. Some of those efforts have been in person, with governors of West Virginia and Ohio flying to Houston to talk, while the teams back home craft lucrative incentive packages.
Shell is expected to invest more than $1 billion in the plant. Similar ethane plants have created more than 10,000 permanent jobs elsewhere. A location announcement has been pushed back numerous times but is expected soon.
Pennsylvania's new regulatory and impact fee law on shale drilling earmarks $20 million over the next three years to encourage oil and gas refinery projects.
State lawmakers also recently approved a measure to expand the number of tax-incentive zones, as well as award a $490,000 grant for rail improvements at an Aliquippa site said to be a top contender for hosting the Shell plant.
Meanwhile, West Virginia approved property tax breaks for any company spending at least $2 billion to locate an ethane plant there. Ohio reportedly also has offered tax incentives, though officials from all the states have declined to confirm specifics of their private offers.
One company, Aither Chemicals LLC of South Charleston, W.Va., is scouting locations in the tri-state region for an ethane cracker plant that it says would create more than 2,000 construction jobs and 200 permanent direct jobs.
Aither's proposed plant would be cheaper than other cracker facilities, with an expected investment of $750 million over the next five years. Downtown-based business advisory nonprofit Renewable Manufacturing Gateway is helping secure that money from investors.
Aither is scouting locations that have access to ethane; that are accessible by boat, rail and road; and sit on enough acreage to house such a plant.
In Western Pennsylvania, acreage left over from steel plant activity can be particularly good for a site, said Len Dolhert, the company's chief executive officer.
"With brownfields, there's a history of manufacturing and people are comfortable with it," he said.
Aither expects the plant to generate $463 million in annual sales by 2016.
Aither hasn't generated as much attention as Shell has over the past several months, but Mr. Dolhert said his firm eventually plans to build multiple sites across the Northeast.
Erich Schwartzel: email@example.com or 412-263-1455.