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State House, Senate introduce bills for tax breaks for cracker plant
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HARRISBURG -- Two Beaver County lawmakers have released similar versions of a proposed ethane tax credit for Shell Oil Co., which the governor has urged for inclusion in the pending state budget package.
One from Republican state Rep. Jim Christiana would offer $1.65 billion over the next 25 years to Shell and other companies that locate ethane-processing facilities in Pennsylvania and buy ethane from local natural gas wells.
The other from Republican Sen. Elder Vogel enacts a nearly identical tax credit based on the amount of ethane purchased by Pennsylvania-based processing facilities, but removes the cap on the value of credits being offered and the quarter-century time period crafted by the Corbett administration.
"We didn't put numbers in on the amount and the number of years because I think that's still up in the air," Mr. Vogel said in an interview. "We want to make sure we do the best we can to protect the taxpayers."
Mr. Vogel said he would prefer to review the numbers further, while continuing to enact the tax credit so that the incentive is in place before Shell's next decision point this fall.
"There's no rush," he said. "Put the bill in, get the vehicle in place. We can put numbers in three years from now, but we need the bill in place."
Both tax-credit plans, each described as a "Resource Manufacturing Tax Credit" in the legislation, would begin in 2017. The Shell plant proposed for Potter Township, Beaver County, is expected to begin operating that year.
That 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 are expected to operate it.
Both of the new tax-credit plans would offer a credit of 5 cents per gallon, or $2.10 per barrel, on ethane purchased here, up to 20 percent of the company's qualified tax liabilities. That formula also was proposed by the Corbett administration.
Proponents say the tax credit would incentivize companies to locate in Pennsylvania, as well as ensure that businesses that use the ethylene produced will have a reliable supply here, encouraging further development.
The administration's push for the $1.65 billion ethane tax credit over the next 25 years was first reported last week, and has been described by the governor and others since as part of an effort to "reindustrialize" Pennsylvania.
While Shell announced in March that they had reached a deal regarding a Beaver County site currently home to a zinc smelter, Gov. Tom Corbett has emphasized that process is far from final, and that Ohio and West Virginia are continuing efforts to woo the company away from Pennsylvania.
The governor's office did not immediately return a request for comment on the two tax-credit bills.
Mr. Vogel said he doesn't know if Shell would reverse course on locating in Pennsylvania if the tax credit proposal is not approved, but did say he believes it will be an important factor at the company's next decision point in November or December.
"If they build the cracker plant in our area, it would be the only one north of Louisiana," Mr. Vogel said. "It's a big investment, a big move for them. ... We haven't had an opportunity like this since the steel mills went away, and we might never get another one again if this doesn't happen."
Top Republican lawmakers have said the tax credit has been a part of budget discussions. Either of the proposals could be amended into one of the budget-related measures that will be approved later this month.
First Published June 13, 2012 2:40 pm
