HARRISBURG -- A proposal from Gov. Tom Corbett would make up to $1.675 billion in tax credits available over the next 25 years for Shell Oil Co. and others that locate an ethane facility in the commonwealth.
Details of those incentives, first reported by the online news service Capitolwire this morning, remain under discussion, say administration and legislative staffers. The proposed $67 million in annual tax credits would begin around 2017, which is when the Shell cracker plant is expected to begin operating.
The Shell petrochemical facility will process natural gas liquids, commonly found in the shale gas extracted in southwestern Pennsylvania, and transform the liquids into plastics and other materials. Construction of the plant is projected to employ up to 10,000 people, and several hundred full-time employees will eventually operate the facility.
The ethane tax credit will be aimed at attracting more facilities that process gas liquids, said Steve Kratz, a spokesman for the Department of Community and Economic Development. Those companies would be eligible for a credit of 5 cents per gallon of ethane purchased in Pennsylvania, for up to 20 percent of their eligible tax liability.
Companies also would be able to sell those credits to others involved in the ethane supply chain, he said.
Mr. Kratz declined to comment on whether the tax credit was part of the administration's incentive package to Shell, saying only that the details of that deal are still in the works.
"It's all part of a push to develop natural gas uses in the commonwealth," Mr. Kratz said. "If we passively sit and hope the market develops, we could have our natural resources piped out of state."
The tax credits would need to be approved by the Legislature, and are expected to be part of a bill to be introduced in the state Senate this week.
Drew Crompton, chief of staff to Senate President Pro Tem Joe Scarnati, R-Jefferson, said more information is needed about how to ensure the company will locate in Pennsylvania and what happens if its job projections are not met.
"There's a lot of questions to be asked and answered: the amount, the jobs, the timing," Mr. Crompton said.
Specifics of the financial incentives that the Corbett administration offered Shell, which chose a Beaver County site near Monaca over competing sites in West Virginia and Ohio, have remained mostly secret even after the chosen location was made public in March.
Officials and staffers pointed to a measure expanding the Keystone Opportunity Zones, which offer 15 years of tax breaks to companies locating in a particular area, and to certain provisions in the recent shale drilling law as key in helping win over the company.
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Harrisburg Bureau Chief Laura Olson: email@example.com or 717-787-4254. First Published June 4, 2012 1:30 PM