Pa. Offers Shell Oil Tax Incentives for Multi-Billion Dollar Plant

Monday, 19 Mar 2012 04:50 AM

By Sandy Fitzgerald

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Shell Oil will not pay any state or local taxes for the next 15 years if it builds its multibillion-dollar petrochemical plant in Western Pennsylvania, but economic development experts and local officials said the jobs that would come along with the plant are more than worth the trade-off.
 
The new plant, if local officials agree to the tax breaks, could mean 8,000 to 10,000 construction jobs, reports the Pittsburgh Tribune-Review. Republican Gov. Tom Corbett is continuing negotiations with Shell about what else the state can offer the company in addition to the tax breaks.
 
While Shell announced this past week it picked Pennsylvania for the ethane cracker plant, a final decision on whether to build the facility, which could cost up to $4 billion, will not actually occur for a few more years.
 
At that time, county, township, and school district officials will need to decide whether to grant Shell a Keystone Opportunity Zone designation, under a program that would eliminate the plant's property taxes along with its corporate net income; capital stock and franchise; and sales and use taxes for 15 years.
 
The Pennsylvania Legislature in February expanded the Keystone program to include the site, which now houses a zinc smelter. It also streamlined local land-use rules that limit municipal zoning over oil and gas site locations.
 
Pennsylvania also does not charge an extraction tax on natural gas the company would take from its wells and feed into the plant, which could also have lured Shell away from neighboring Ohio and West Virginia.
 
Taxpayers might view the tax exemptions as a high price, but the large plant will boost the local economy, state officials say. The plant could employ hundreds of skilled workers who would earn average salaries of $70,000 a year, and the supply chain for the plant will employ thousands more.

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