Report: Cracker plant hasn’t delivered for Beaver Co. | Tuesday Morning Coffee

The plant was supposed to be an economic engine. It’s stalled, according to new research

By: - June 27, 2023 7:26 am

(Image via the Ohio River Valley Institute)

When it was first announced in 2012, Shell’s ethane cracker plant in Beaver County was sold as an engine that would help revitalize western Pennsylvania’s economy.

But a new report indicates that the plant, which launched in November 2022, has yet to deliver on that promised prosperity, and that Beaver County “has lagged the state and nation in nearly every measure of economic activity,” according to the Ohio River Valley Institutewhich conducted the research.

The report found that, since 2012, Beaver County has:

  • “Lost GDP as the state and the country experienced strong, consistent growth;
  • “Lost population while Pennsylvania maintained residents and the U.S. grew steadily;
  • “Trailed the state and the nation in job growth, even when factoring in all the temporary construction workers at the Shell site
  • “Saw [its] poverty fall at a slower rate than state and national averages;
  • “Saw its child poverty rate surpass the state’s and the country’s,” and
  • “Grew income at the same rate as the state and the country,” the report’s authors, Eric de Place and Julia Stone, wrote.
(Source: Ohio River Valley Institute)

The project was the beneficiary of one of the largest-ever tax breaks in state history — a reported $1.65 billion — under the administration of former Republican Gov. Tom Corbett.

In 2014, the Beaver County Times reported that the plant would “employ 400 permanent workers and as many as 10,000 construction workers.”

“While developing the industry, we have to work to protect the environment,” Corbett told the newspaper at the time.”This is a path to energy independence with Pennsylvania leading the way.”

Corbett’s Democratic successor, Gov. Tom Wolf, told the Pittsburgh Post-Gazette that while it was unclear how much money that Shell and other companies would pull from the state “he’s confident the investment will more than pay for itself,” the report’s authors noted.

The plant was intended “to be just one part of a larger petrochemical buildout in the region,” according to the report.

“Boosters of these plans claimed that the abundant hydrocarbons extracted during the process of fracking for natural gas would unleash a ‘renaissance’ of development in Appalachia, including as many as five ethane cracker plants designed to manufacture plastic resin products, a nearly 500-mile network of pipelines, and two underground storage hubs for natural gas liquids like ethane,” the report’s authors noted.

But neither that hub, nor the promised economic development, have so far materialized, the report’s authors wrote.

“The long-term outlook for Beaver County may be even worse than these indicators suggest, as the county’s recent performance may represent something of a high-water mark,” the report’s authors wrote. “When Shell completed construction in November 2022, employment at the facility declined by thousands of jobs, a loss not yet fully reflected in the data.”

(Getty Images)

The new findings conflict with a 2021 Robert Morris University study showing the project as a money-maker for the region. Shell commissioned the study, but did not participate in the research, according to a summary of its findings.

That study, concluded, among other things, that:

  • “In Beaver County alone, the complex produce[s] $260 million to $846 million in annual economic activity – the net value of wages, benefits, and related spending — depending on the number of county residents who are employed at the plant. Local wage tax receipts would tally between $550,297 and $902,254 each year;
  • “The annual economic impact in the 10-county region would be approximately $3.3 billion. In addition to Beaver, those counties are Allegheny, Armstrong, Butler, Fayette, Greene, Indiana, Lawrence, Washington, and Westmoreland,” and
  • “In addition to the $3.7 billion in economic activity generated each year statewide, the commonwealth of Pennsylvania would collect an additional $23 million each year in state income tax. Over 40 years, the ethane cracker would produce $81.7 billion in economic activity statewide, with the commonwealth taking in an additional $515.4 million in income tax receipts.”

The study’s authors acknowledged that the study did not take into account the impact of the state’s tax credits. But they nonetheless concluded that there would be significant economic impact from the project.

“That is money that Pennsylvania wouldn’t have had otherwise that policymakers can use for social programs or other benefits to the public good,” Marcel Minutolo, a professor of strategic management at Robert Morris University, and one of the study’s co-authors, said in a statement at the time.

In that same statement, Shell officials thanked the university for its research, adding that the company was “proud of the positive impact we are having on the local, regional and state economies, and we look forward to remaining a valued neighbor and employer of choice in the region for decades to come.”


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John L. Micek

A three-decade veteran of the news business, John L. Micek is the Pennsylvania Capital-Star's former Editor-in-Chief.