Economic Development

Cracker Construction Spurs Demand for Industrial Land

YOUNGSTOWN, Ohio — Demand for new housing and apartment complexes, hotels and acres of industrial land is rising in western Pennsylvania, driven by Royal Dutch Shell’s $6 billion ethane cracker plant under construction near Monaca, Pa., officials say.

“We hope this sends a signal to the rest of the petrochemicals industry,” said David Ruppersberger, president of the Pittsburgh Regional Alliance. “We’re getting a fair number of inquiries.”

The Pittsburgh Regional Alliance is an economic development agency that represents 10 counties in southwestern Pennsylvania.

Site preparation for the massive project has been underway nearly two years, but it wasn’t until last June that Shell announced it would commit to building the $6 billion cracker plant. The plant will convert ethane liquid gas from the Utica and Marcellus shale regions in Ohio and Pennsylvania and manufacture polyethylene, a base ingredient for plastics.

Construction of the plant is slated to begin sometime this year, Ruppersberger said, but already the prep activity has generated a significant boost to the local economy. “The pipes, conduits and cooling systems are all underground and a lot of the infrastructure is in place,” he said. Starting this year, 2,000 workers on average will be at the site until the plant is commissioned in the early 2020s. During peak construction, the number of workers should number about 6,000, he said.

Shell acquired more than 400 acres along the Ohio River near Monaca two years ago as it studied moving forward with the plant and has since acquired much more. Today, workers operating heavy cranes, earthmovers, front-loaders and utility trucks fill the site while hundreds of others perform additional preparation work.

Development officials see this as just a hint of what’s to come. Along with the more than 6,000 construction jobs and the 600 permanent positions the project will create, it has potential to attract suppliers, maintenance companies, service-oriented businesses, logistics firms and — most important — manufacturers within driving distance of the plant.

Among the first of these spinoff industries are logistics services, Ruppersberger said. “This plant will produce 3.5 billion pounds of plastic pellets per year and you’re going to need rail service,” he said. As a result, a whole logistics cluster has begun to take shape, even before construction on the physical plant begins.

“We’ll also see companies supplying industrial gases coming in soon,” Ruppersberger said. “This should happen in 2017 or 2018.” In the course of construction and operation, machine shops, engineering firms and other related businesses should prosper. “I know of one company that already has a multimillion contract,” he said.

Enhancing the prospect of building a large-scale petrochemicals cluster in the region also hinges on whether PTT Global Chemicals moves forward with its proposed ethane cracker project in Belmont County, Ohio, Ruppersberger said. PTT has said it would make a final decision before the end of March.

“If there’s a second cracker, it just reinforces what we have here,” he said. “We’re missing some infrastructure, but that’s being addressed. If you see investment in those things, then you’ll see a significant buildup in the cluster.”

Earlier this month, after several public hearings, Potter Township supervisors approved a conditional use permit for the $6 billion project, essentially giving the green light to proceed with construction. Since Shell began site work on the property, it has demolished and cleaned what remained of the Horsehead Zinc Corp.’s sprawling plant, relocated a portion of state Route 18, constructed two bridges over that throughway and laid down new rail tracks that will be used to transport the plastic pellets.

Meanwhile, private developers are betting that the Monaca cracker will re-energize the economy of Beaver County and the entire Interstate 376 corridor, which includes southern Lawrence County.

“There’s a ton of property for sale of five acres or more, especially along I-376,” says Jack Manning, president of the Beaver County Chamber of Commerce. “We’re getting a lot of inquiries.”

Developers such as C.J. Betters have marketed industrial properties near the cracker site, while Washington County-based Millcraft Investments is building two new hotels in Center Township near the Beaver Valley Mall. In January, Pennsylvania Real Estate Investment Trust sold the Beaver mall to Nadmar Realty Group of Great Neck, N.J., for $24.2 million. The Nadmar Group has said it wants to continue operating the complex as a retail center.

And, there are plans to redevelop small downtowns along the Ohio River to accommodate this growth, especially in Monaca. The borough has advertised a request for qualifications for its Downtown Monaca Gateway Transportation Project, which includes a comprehensive redevelopment of brownfield sites, a pedestrian and bike path along the river and improved infrastructure downtown.

This project, according to the borough’s RFQ, is now more important today because of “the significant growth in traffic and development anticipated as a result of the Royal Shell Ethanol Cracker on Pa. 18 adjacent to the borough. The Gateway project is critical as massive industrial development is expected to take place on both sides of the borough, as the community attempts to foster redevelopment of significant brownfields along its Ohio River waterfront.”

There is also evidence of new housing and residential development that this part of western Pennsylvania hasn’t seen in 40 years, Manning said. “There’s a big development in Chippewa [Township] that includes new housing starts, between 180 and 200 new homes. We haven’t seen this in quite some time,” he said.

Heartening for many is the impact that this project could have on communities as far as an hour’s drive, added Linda Nitch, executive director of the Lawrence County Economic Development Corp.

“We’ve identified 13 sites – more than 1,000 acres – along the I-376 corridor” that could accommodate industrial or commercial growth, Nitch said. “I’ve had a lot more people kicking tires.” These sites are mostly in Neshannock, Union, and North Beaver townships, she added.

Smaller motels along state Route 18 have enjoyed increases in business, she said, but most is related to lodging for pipeline workers.

“There’s a lot of things ready to happen,” Nitch said, citing a western Pennsylvania housing group that is marketing rental properties in anticipation of construction workers’ housing needs.

“We’ve also started talking to some plastics users and identify how they’re going to use the pellets manufactured there,” Nitch said.” This plant will have massive repercussions on how plastics are used and produced.”

Pictured: Royal Dutch Shell’s rendering of the plant under construction in Beaver County, Pa.

Published by The Business Journal, Youngstown, Ohio.