Horsehead plant site on Ohio River

Beaver County firms place wager on Shell building petrochemical plant

From an Article by Timothy Puko and David Conti, Pittsburgh Tribune-Review,  March 18, 2014

After eight years of up and down business, Ed Vescovi is hoping the best is yet to come for the dormant biodiesel plant he oversees on the banks of the Ohio River in Beaver County. There are plans to revive the site with as many as 85 new workers, including a new river dock and wastewater treatment plant for Marcellus shale gas drillers. The ultimate bet is even bigger, that a multibillion-dollar petrochemical plant Royal Dutch Shell may build just down the road could help turn the largely wooded and hilly site into a booming industrial park.

The chance to get an early position on spin-off business from what would be a largely new industry in Western Pennsylvania was a big motivator for the site’s new owner, Weavertown Transport Leasing Inc. It paid more than $2 million to buy the 125 acres in October.

All around Beaver County leaders are seeing a similar push: Industrial parks are beefing up, engineering companies are moving in, and new offices, hotels and housing are on the way. While many Pittsburgh businesses are still hanging back until Shell decides, it’s clear that some are already moving fast to try and make it big.

Shell leaders have never committed to building during two years of deliberating since they picked Pennsylvania as the potential host. It has an option to buy the Horsehead Holding Corp. zinc smelter site, and, after three extensions, its final deadline to buy is coming next month, County Commissioner Joe Spanik said.

Shell leaders will be updating a working group of local and state officials in Hopewell, Spanik and Commissioner Dennis Nichols said. The parent company has been facing sagging profits and last week its global leaders said they will cut capital spending by a fifth and pull back from some shale development in the United States.

Shell has, however, continued to invest millions into Beaver County. It spent $1.87 million in December to buy the 5.5 acres home of Cubbyhole Self Storage on Frankfort Road to help reroute Route 18 along the Horsehead site. Shell talked to other property owners in the area, the seller said. Shell is also paying for ongoing demolition work to help clear part of the Horsehead site, both companies have said.

At Ambridge Regional Distribution & Manufacturing Center, 11 miles up the Ohio River from the Shell site, they’re planning for a 25 to 30 mile zone for spin-off businesses, said Gene Pash, president of site owner Value Ambridge Properties Inc. Its new plan maps out the addition of as many as six new buildings to provide top-class office and workspace for expanding industry, Pash said.  “We’re moving forward at warp speed,” he said..

The region’s drilling boom has helped give business a foundation to build on. The Weavertown corporation is moving up emergency spill response equipment and some of its stone business into a satellite operation to serve the drillers increasingly working north of Pittsburgh. That type of business is growing enough to justify a somewhat speculative investment, fostering belief that it will turn a profit even if Shell never builds, Weavertown’s CEO Fuchs said.

The company is planning $15 million to $20 million more to develop the whole site, according to county commissioners who helped Weavertown apply for state grants. “With any growth strategy, you have to be in early because then you’ll get short-listed more quickly.” Fuchs said. “We’re opportunistic.”

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Shell’s newly completed analysis of its second half of 2013 performance in Pennsylvania’s Marcellus shale gas operation, acquired in 2010 for a reported $4.7 billion, showed that the “vast majority” of its 630 wells are underperforming compared to its peers. In one county, its wells were producing at half the rate of competitors. An independent energy analyst, who estimated that Shell’s wells are likely to be uneconomic even with a recent rise in US gas prices, has meanwhile predicted that the international oil and petrochemicals group will not proceed with its proposed ethane cracker in Pennsylvania, according to www.Plasteurope.com

Shell studies ethane cracker site on Ohio River in western PA
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Article by Paul J. Gough, Pittsburgh Business Times, Nov. 5, 2013

Shell continues to have what Horsehead Holding Corp. calls an “extremely active” presence at the soon-to-be-closed Horsehead zinc plant in Beaver County as the conglomerate decides whether to build a petrochemical plant there.

Shell had “70 people crawling over the facility in the last week,” Horsehead CEO Jim Hensler told analysts on a conference call Tuesday reporting Horsehead’s third-quarter earnings. “They’re still actively involved.”

Shell announced in 2012 that it was looking to locate an ethane cracker at the Horsehead factory on the Ohio River in Potter Township near Monaca. While Shell has yet to make a final decision on the petrochemical plant, it has extended the option with Horsehead (Nasdaq: ZINC) until early January.

Hensler didn’t have much else to say about Shell. “We haven’t really had much news to report on it,” he told analysts when asked about it.

One thing is for certain: Horsehead won’t be producing zinc at the Potter Township plant after the end of the year or early next year. It’s set to open a state-of-the-art plant in North Carolina and close the zinc smelters in Beaver County. It sent a 60-day notice to workers there that the plant would be closing the six furnaces at Monaca.

“Some employees have decided to take jobs elsewhere” in anticipation of the plant’s closing, Hensler said. The North Carolina plant should begin operation by the end of the year.

But Horsehead also said it might continue zinc smelting at the facility for up to eight weeks on a few furnaces into 2014 for an overlap with the new plant to consume any remaining material.

“We may end up having a workforce of 30 to 40 people we may keep on site for several weeks, six weeks, eight weeks, to help with that decommissioning process,” Hensler said.

 Shell opened the bidding process for companies to supply ethane and took bids through October 4, or beyond. The company has deals with Consol Energy Inc., Hilcorp Energy Co., Noble Energy Inc. and Seneca Resources Corp., among others.