Corbett administration defends proposed tax credit for Shell facility
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HARRISBURG -- After some raised eyebrows toward its proposed $66 million annual tax credit for ethane facilities, the Corbett administration on Tuesday defended that incentive as a job-creation tool.
Lt. Gov. Jim Cawley said the tax credit -- valued at $1.65 billion over 25 years -- is related to the administration's ongoing talks with Shell Oil Co., which is looking to Beaver County to locate a petrochemical facility.
Mr. Cawley said administration officials agreed not to talk about its discussions with Shell, except for subjects such as the tax credit, which requires legislative approval.
"I think that every signal we can send to Shell that we are serious about siting their location in Beaver County as quickly as we can do so is obviously going to aid in making sure that they are breaking ground here in Pennsylvania soon," Mr. Cawley said.
He declined to speculate on whether the tax credits are a make-or-break portion of those talks.
Shell, a subsidiary of Netherlands-based oil and gas corporation Royal Dutch Shell, said in a statement on Monday that it "continues to evaluate our proposed project over a range of potential market conditions."
The proposed facility would process natural gas liquids, commonly found in the shale gas extracted in southwestern Pennsylvania, and transform the liquids into materials used to make plastics and other products.
Mr. Cawley said the March announcement that Shell was considering a site near Monaca for an ethane-processing facility was to indicate that the company "would stop their due diligence in Ohio and West Virginia and focus exclusively on the Beaver County site."
He said no final package of financial incentives or other agreements had been offered at that time.
Democrats have raised concerns about fiscal impacts of the proposed tax credits. Senate Minority Leader Jay Costa, D-Forest Hills, and others wrote a letter to the governor on Monday expressing support for the petrochemical plant, but also seeking a meeting to discuss the plan.
"We've been cutting programs, cutting jobs," said Sen. John Yudichak, D-Luzerne. "Can Pennsylvania taxpayers afford to subsidize the oil, gas and chemical industry? That's the question we have to answer."
State Revenue Secretary Dan Meuser told reporters on Tuesday that the tax breaks will have "an excellent return on investment."
The incentives will be tied to the plant's production, he said, adding that if it doesn't produce sufficiently, "there are no tax credits."
First Published June 6, 2012 12:00 am