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By DAN JOLING
Associated Press

Published: February 5th, 2012 08:59 AM
Last Modified: February 5th, 2012 09:04 AM

Published February 01, 2012| Associated Press

PITTSBURGH –  Pennsylvania, Ohio and West Virginia are trying to top each other with the sweetest package of tax breaks for Shell Oil Co., which plans to build a huge new petrochemical refinery in the region.

But some are questioning why there’s been so little public discussion over exactly what’s being offered, and how the deals would impact communities and the region.

“Who’s going to be paying for the roads?” asked Robert P. Strauss, a professor of economics and public policy at Carnegie Mellon University. “You have to think through very carefully what the additional costs will be.”

The proposed plant, called a cracker in the industry, would take ethane out of natural gas and convert it into the basic materials for literally hundreds of consumer and industrial materials, including plastics, fertilizers and antifreeze.

Strauss, who worked on tax policy at the U.S. Treasury and on Congressional committees before he began teaching in the 1970s, said there’s a history of politicians and the media exaggerating the long-term benefits that may come from a large industrial plant.

He said there’s no question a petrochemical plant would create jobs, but perhaps not as many as people hope.

The American Chemistry Council, a Washington, D.C.-based industry lobbying group, estimates that the plant would employ 2,484 people directly in the chemical industry and 6,262 in related businesses.

Shell, part of Royal Dutch Shell PLC, has previously said that the core plant could employ 10,000 workers short-term, and several hundred long-term.

Shell has said that the basic plant could cost $2 billion to $3 billion just to build, and would attract a range of smaller plants nearby.

The company hasn’t commented on specific possible locations, but government and industry officials agree on several: A former steel mill in Aliquippa, Pa., about 35 miles north of Pittsburgh, and industrial parks along the Ohio River in New Martinsville and Institute, W. Va. Ohio also has industrial land on its side of the river in that region.

Dan Carlson, Shell Chemical’s general manager of new business development, said in a statement that the three states “have shown great interest in having us build our petrochemical plant in their states. We will make an official announcement when the site selection is confirmed.”

Some are disturbed that states haven’t released a more detailed economic analysis of the proposed tax breaks.

“We have no idea how much the state is losing in revenue each year. Nobody knows,” added Ted Boettner, director of the West Virginia Center on Budget and Policy. “It’s about transparency and accountability. Is it clear to county officials, school boards, how much revenue is being foregone?”

West Virginia has offered a 25-year property tax break, Pennsylvania 15 years, and Ohio has reportedly offered major incentives.

West Virginia officials estimate that without incentives a $2 billion plant would pay about $29 million in property taxes each year, compared to about $11 million in Ohio.

But new legislation passed by West Virginia lawmakers last week would cut the bill to just $1.6 million each year there.

Steven Kratz, a spokesman for the Pennsylvania Department of Community & Economic Development, didn’t have dollar figures for what the proposed 15-year tax break might be worth to Shell.

Strauss doesn’t question the basic concept behind Shell’s plan: to build an ethane refinery close to both the booming supply of shale gas and to huge numbers of consumers in the Northeast.

But Strauss noted that when German automaker Volkswagen AG opened a major manufacturing plant south of Pittsburgh in the late 1970s, there were huge tax incentives and projections for large numbers of long-term jobs. Ten years later the plant closed, never coming close to the rosy job estimates.

Others said that isn’t likely to happen if Shell builds an ethane refinery.

“I think that a petrochemical plant is likely to be far more stable,” said Ehud Ronn, a professor of energy studies at the University of Texas in Austin.

Ronn noted that if Shell doesn’t build a plant in the Appalachians, it will have to transport raw gas down to Gulf Coast refineries for processing, and then ship the ethane product back up to the northeast.

“It makes certainly a lot of sense to build it near both the input and the output,” Ronn said of Shell’s plans.

Boettner said his group isn’t against a cracker plant coming to the region, but it wants to make clear that someone has to pay for local infrastructure costs.

“It’s a classic race to the bottom, to pit states against each other,” he said. “We have leverage. We don’t have to give away the candy store,” given the vast reserves of shale gas in the region.

In both Pennsylvania and West Virginia the tax breaks are targeted towards businesses that invest over $1 billion.

“Small businesses sort of get the shaft,” Boettner said. “Somebody is going to have to make up the difference.”

But Shell isn’t the only company looking at building in the region.

Leonard Dolhert, CEO of Aither Chemical in South Charlestown, W. Va., said the demand for ethane is so great that more than one plant is needed.

“An idea situation would be to build a plant in each state,” he said, adding that ultimately there could be billions of pounds of products made from ethane in the region each year.

“In the long run, once the first plant is built, it should create economic development in all three states,” he said.

Brian Iams, spokesman for Bayer Corp., which owns the West Virginia industrial parks along the Ohio river, said his company has had discussions with more than one company that’s interested in building a plant.

Shell has only spoken generally about its criteria for a site, mentioning river and rail access.

But Strauss said Shell and other major multi-national corporations take great care to examine such huge investments, looking at other intangibles such as the quality of education, infrastructure, and even government.

Strauss said he suspects that the biggest question for Shell may be which site has the best reputation for reasonable local and state government, given their long-term investment.

___

Associated Press writer Kantele Franko in Columbus, Ohio, contributed to this report.

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A Shell Oil Co. refinery dumped wastewater into the bayou for more than 60 years, lacing the mucky bottom with toxic chemicals and heavy metals.

DEQ says Bayou Trepagnier, one of state’s most polluted waterways, has been cleaned up

NORCO, La. — The state Department of Environmental Quality says one of Louisiana‘s most polluted waterways has been cleaned up. It’s Bayou Trepagnier (trep-AN’-yay) in Norco.

A Shell Oil Co. refinery dumped wastewater into the bayou for more than 60 years, lacing the mucky bottom with toxic chemicals and heavy metals.

The current owner, Motiva Enterprises LLC, agreed in 2008 to a $10 million cleanup plan.

DEQ says contaminated soil at the end nearest the refinery was removed as an 800-foot-wide “clean zone.”

It says that for another 6,000 feet of the bayou, sediments were solidified and stabilized, then capped with heavy clay. DEQ says about 43,000 yards of clay were used for that and to build access roads.

The bayou is a state scenic waterway.

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DEQ: cleanup completed at Bayou Trepagnier 21 Jan 2012 09:24 GMT Daily Comet Online

Cleanup of Bayou Trepagnier in Norco is complete, DEQ says 21 Jan 2012 02:33 GMT NOLA.com

By DAN JOLING, Associated Press 13 January 2012

ANCHORAGE, Alaska (AP) — Royal Dutch Shell’s quest to drill exploratory wells in Arctic waters has received a boost with the affirmation that its federal air permits for the Chukchi Sea were properly granted.

The EPA Appeals Board on Thursday rejected challenges to the air permits brought by Alaska Native and conservation groups.

Shell Alaska spokesman Curtis Smith said in a formal announcement that the decision means Shell, for the first time, has usable air permits that will allow its drill ship, the Noble Discoverer, to work in the outer continental shelf off Alaska’s northwest coast in 2012.

“Achieving usable permits from the EPA is a very important step for Shell and one of the strongest indicators to date that we will be exploring our Beaufort and Chukchi leases in July,” Smith said.

Drilling is strongly opposed by conservation groups that contend oil companies cannot clean up a spill in ice-choked waters, and that the remote Chukchi and Beaufort seas are too far from ports, major airports and other infrastructure for an effective cleanup if there’s a blowout.

Earthjustice attorney Colin O’Brien, who represented groups that filed one of four air permit appeals, said it an email response to questions that the decision could be appealed in federal court, but that it was too early to speculate about potential next steps.

He said EPA took shortcuts when it issued the permits and failed to fully protect Arctic air quality as required by the Clean Air Act.

“These permits pave the way for Shell to emit thousands of tons of harmful air pollution into the pristine Arctic environment, at levels that may be harmful to nearby communities and the environment for years to come,” he said. “We are disappointed that the Environmental Appeals Board decided against us and allowed EPA’s permit decisions to stand.

A Shell subsidiary has applied to drill up to three exploratory wells in the Chukchi during the open water season this year and additional exploratory wells in 2013. The company hopes to use a second drill for exploratory wells in the Beaufort Sea off Alaska’s north coast, and awaits a decision on the appeal of its air permit.

The Bureau of Ocean Energy Management in December approved Shell’s Chukchi drilling plan with one important stipulation. The agency said Shell must still drilling into hydrocarbon zones 38 days before sea ice is projected to engulf the drill site to make sure it has time cope with a spill or a wellhead blowout. That would cut the drilling window by about one-third.

A successful appeal of previous air permits played a part of Shell’s decision to cancel drilling for 2011. In that case, the appeals board concluded that analysis of the impact of nitrogen dioxide emissions on Alaska Native communities was too limited. The board remanded the permits to allow the agency to fix permit problems.

The appeal filed by Earthjustice contended that Shell’s new permit was based on pollution estimates that were inherently unreliable because they are based on equipment that Shell did not identify and that the EPA never intends to test.

Shell faces other hurdles before it can send its drill ships and support vessels north. The Bureau of Safety and Environmental Enforcement must approve Shell’s oil spill response plan for the Chukchi.

Copyright © 2012 The Associated Press. All rights reserved.

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JANUARY 11, 2012

Associated Press

HARRISBURG, Pa. — U.S. Sen. Bob Casey on Wednesday wrote to a Shell executive in hopes of persuading the oil and gas giant to choose a Pennsylvania site to build a huge new chemical plant that could mean thousands of new jobs and millions of tax dollars for the state.

The company has said it will decide early this year where to build the plant from among sites in Pennsylvania, Ohio and West Virginia, and those states’ officials have lobbied Shell or offered incentives for what could be a massive investment that rivals the region’s largest industrial plants.

“Pennsylvania has everything needed to make it a top choice for Shell’s facilities,” Casey wrote in his letter to Shell executive Mark Quartermain. “We have a proven work force, access to water, communities with a long history of working cooperatively with industry, an extensive rail transportation network and appropriate real estate. Pennsylvania also has an exceptional higher education network which will mesh well with Shell’s commitment to innovation.”

A spokeswoman for Pennsylvania’s other U.S. senator, Pat Toomey, said Wednesday that Toomey has been in close contact with state economic development officials who are leading Pennsylvania’s effort to land the plant, and members of his staff have met with Shell officials.

“We stressed the unbelievable workforce in the region, particularly Pittsburgh’s great universities that produce world class engineers and highly skilled workers, the easy access to the inland waterway system in the region, and our strong commitment to the continued development of the shale,” spokeswoman Nachama Soloveichik said.

Ohio’s governor, John Kasich, reportedly flew to Houston in late November to pitch his state to Shell, which is a subsidiary of Netherlands-based Royal Dutch Shell PLC.

Shell’s plans are driven by the vast natural gas reserves in the Marcellus Shale, a formation that lies primarily beneath New York, Pennsylvania, Ohio and West Virginia. The Marcellus Shale is thought of as the nation’s largest-known natural gas reservoir, and has attracted the attention of some of the world’s largest energy companies and billions of dollars in investment already.

The main product at the proposed Shell plant would be ethylene, which is used to produce chemicals that go into everything from plastics to tires to antifreeze. Workers would break apart the molecules of the raw gas so it can be turned into various products.

The industrial complex would then likely attract many smaller, specialized chemical plants, the American Chemistry Council has said.

Royal Dutch Shell in 2010 bought a Pennsylvania-based drilling company, East Resources Inc., for $4.7 billion in an effort to expand and improve its land holdings in shale gas territories in North America.

—Copyright 2012 Associated Press

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The Associated Press January 9, 2012, 2:45PM ET

AMSTERDAM

A joint venture between Shell and Exxon says it has successfully drilled a significant new onshore natural gas field in the Netherlands.

Nederlandse Aardolie Maatschappij BV says in a statement the field contains 4 billion cubic meters of gas, about enough to supply 2.5 million households for a year. Production is due to begin this summer, the company says.

The Metslawier-zuid well, 3,900 meters (12,800 feet) deep, is located near the city of Dokkum, 130 kilometers (80 miles) northeast of Amsterdam.

Most Dutch natural gas reserves are stored in a single field in the province of Groningen. But 40 percent comes from smaller fields on land and offshore, such as the field announced Monday.

The Dutch state owns a 40 percent stake in Metslawier-zuid.

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By JONATHAN FAHEY, AP Energy Writer: 30 December 2011

ALAMINOS CANYON BLOCK 857, GULF OF MEXICO (AP) — Two hundred miles off the coast of Texas, ribbons of pipe are reaching for oil and natural gas deeper below the ocean’s surface than ever before.

These pipes, which run nearly two miles deep, are connected to a floating Shell platform that is so remote they named it Perdido, which means “lost” in Spanish. What attracted Shell to this location is a geologic formation found throughout the Gulf of Mexico that may contain enough oil to satisfy U.S. demand for two years.

While Perdido is isolated, it isn’t alone. Across the Gulf, energy companies are probing dozens of new deepwater fields thanks to high oil prices and technological advances that finally make it possible to tap them.

The newfound oil will not do much to lower global oil prices. But together with increased production from onshore U.S. fields and slowing domestic demand for gasoline, it could help reduce U.S. oil imports by more than half over the next decade.

Eighteen months ago, such a flurry of activity in the Gulf seemed unlikely. The Obama administration halted drilling and stopped issuing new permits after the explosion of a BP well killed 11 workers and caused the largest oil spill in U.S. history.

But the drilling moratorium was eventually lifted and the Obama administration issued the first new drilling permit in March. Now the Gulf is humming again and oil executives describe it as the world’s best place to drill.

“In the short term and the medium term, it’s clearly the Gulf of Mexico,” says Matthais Bichsel, a Royal Dutch Shell PLC board member who is in charge of all of the company’s new projects and technology.

By early 2012 there will be more rigs in the Gulf designed to drill in its “deep water” — defined as 2,000 feet or deeper — than before the spill.

In November, Perdido began pumping oil from a field called Tobago; the well begins 9,627 feet below the surface of the Gulf. No other well on the globe produces oil in deeper water and that’s about as deep as the Gulf gets. For drillers, that means the entire Gulf is now within reach.

“We are at the point where … depth is not the primary issue anymore,” says Marvin Odum, the head of Royal Dutch Shell’s drilling unit in the Americas. “I do not worry that there is something in the Gulf that we cannot develop … if we can find it.”

From a distance, Perdido looks like an erector set perched on an aluminum can. This can, or “spar,” is a 500-foot-tall steel cylinder that sits mostly underwater, serving as a base for the equipment and living quarters above. It is stuffed with iron ore to lower its center of gravity, keeping the whole operation from bobbing in the water like a cork. The spar is tethered to the sea floor 8,000 feet below with ropes and chains.

Oil and natural gas are pumped to Perdido from nearby wells drilled by an onboard rig and from faraway wells drilled by satellite rigs. Water and other impurities are then removed from the oil and gas, which gets sent hundreds of miles through an undersea pipeline to terminals and refineries along the Gulf coast.

Perdido, which pumps the equivalent of 60,000 barrels of oil and natural gas a day, will eventually yield 100,000 barrels per day from 35 wells in a 30-mile radius, according to Shell. It will likely produce oil for decades — in all, as much as 360 million barrels of oil and 750 billion cubic feet of natural gas, according to Wood Mackenzie.

As global oil demand climbs past 89 million barrels a day and traditional onshore and shallow water fields are depleted, the deep waters of the Gulf and off the coasts of South America, West Africa and Australia are playing an increasingly important role.

In 2000, 1.5 million barrels of oil per day were produced from deepwater fields around the globe, or 2 percent of global production. In 2011, that number grew to 5.5 million barrels, or 6 percent of global production. By 2020, deepwater oil will account for 9 percent, according to IHS CERA.

The Gulf is attractive for many reasons. Its oil fields are enormous; it straddles the world’s biggest consumer of oil; it’s in a politically stable part of the world; and drillers can easily tap into a vast network of pipelines and refineries. Also, despite industry complaints, the cost of royalties, taxes and regulation in the U.S. are among the lowest in the world.

“Everybody wants to be there,” says Mohammad Rahman, the lead Gulf analyst for Wood Mackenzie.

By early 2012, there will be 40 deepwater rigs in the Gulf, up from 37 before the BP spill, according to Cinnamon Odell of ODS-Petrodata. BP received its first permit to drill in late October.

The Gulf produces an average of 1.5 million barrels of oil per day, according to Wood Mackenzie. That’s 27 percent of U.S. output and 8 percent of U.S. demand.

Thanks to more accurate imaging technologies, drillers are able to see under geologic formations that used to confound geologists. In June, ExxonMobil Corp. said it found 700 million barrels of oil — one of the biggest discoveries in the Gulf in last decade. In September, Chevron and BP also announced major finds, thought to be in the hundreds of millions of barrels of oil.

Many of the Gulf’s recent discoveries are in a geologic formation known as the Lower Tertiary, formed between 23 million and 65 million years ago. Perdido, which is operated by Shell and owned jointly by Shell, Chevron and BP, is the first to produce oil from this formation. Analysts say it could hold 15 billion barrels of oil.

As the BP disaster made clear, drilling in deep water presents difficulties and dangers. Last month a Chevron well in the deep waters off of Brazil ruptured and spilled 2,400 barrels of oil into the Atlantic after Chevron underestimated the pressure of the oil field it was tapping.

Perdido only recently reached its monthly production target after a year of operation because of difficulties getting oil and gas from the seabed to the platform. New devices designed to separate oil and gas on the sea floor have not performed as well as Shell hoped. It has taken months of adjustments made by underwater robots and other equipment on the platform to fix the problems.

Challenges like this have helped push the average cost of producing oil in the deepwater Gulf to $60 a barrel, according to IHS CERA, near the highest level ever. But with oil close to $100 a barrel, the expense is well worth it.

After all 35 wells are drilled for Perdido, its owners will likely have spent $6.2 billion on the project, according to Wood Mackenzie. But along with the risks, the Gulf offers great rewards: Perdido could ultimately generate $39 billion in revenue and $16 billion in profits.

Jonathan Fahey can be reached at http://www.facebook.com/Fahey.Jonathan .

Copyright © 2011 The Associated Press. All rights reserved.

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By JON GAMBRELL, Associated Press 26 December 2011

ABOARD THE BONGA FLOATING OIL VESSEL (AP) — The worst Nigeria offshore oil spill in more than a decade has been contained before reaching the West African nation’s coast, officials with Royal Dutch Shell PLC said Monday, less than a week after one of its lines bled crude into the Atlantic Ocean.

An investigation into how the spill of less than 40,000 barrels — or 1.68 million gallons — happened remains ongoing, though company officials acknowledged workers only discovered the leak after seeing a sheen of crude in water surrounding its Bonga offshore oil field.

Meanwhile, Shell officials say the company will clean up another spill it discovered while containing its own — highlighting how prevalent pollution remains in oil-stained Nigeria after more than 50 years of production.

“We can undeniably say we traced our oil … and stopped it,” said Cliff Pain, who manages the Bonga operation for a Shell subsidiary.

Shell organized a helicopter flight Monday for journalists to see the Bonga field — controlled from a large ship as opposed to a stationary rig — about 75 miles (120 kilometers) off Nigeria’s coast. There, waters appeared free of the oil sheen as ships continued to patrol along the underwater lines linking the vessel to oil fields and transfer buoys for filling tankers.

The leak discovered Dec. 20 came from a break in a flexible line about 360 meters out from the vessel that sends oil to tankers, Pain said. While the vessel has a variety of gauges to check pressure on the line, it wasn’t until daylight broke that workers noticed a sheen surrounding the Bonga vessel, he said.

It takes about 25 hours to fill a waiting tanker with 1 million barrels of oil from the vessel, Pain said. That means the leak could have spewed for hours before being noticed.

At its height, Shell statistics show the sheen spread across about 350 square miles (900 square kilometers), matching an estimate earlier issued by an independent watchdog group called SkyTruth. Nigerian government officials previously said the spill only affected an area a third that size

Using ships and aircraft, workers spread chemical dispersants to break up the oil, which also evaporated in the region’s warm water and air, said Steve Keedwell, a Shell employee who helped oversee the cleanup operation. Shell ultimately stopped the sheen about 11 miles (18 kilometers) before it made landfall, Pain said.

However, workers then discovered a separate oil spill around the mouth of a river in Delta state, said Mutiu Sunmonu, Shell’s Nigeria country chairman. Sunmonu said samples of the oil showed it came from a different source, though the company would clean it up as well.

“When I sighted it myself, my initial reaction was anger, but I told myself: ‘You know, you just cannot afford to be angry, just deal with it,’” Sunmonu said.

The Nigerian group Environmental Rights Action, which monitors spills around Nigeria’s oil-rich southern delta, has blamed Shell for the new spill. Nnimmo Bassey, the group’s executive director, could not be immediately reached for comment Monday night.

Shell operates the Bonga field in partnership with Italy’s Eni SpA, Exxon Mobil Corp., France’s Total SA and the state-run Nigerian National Petroleum Corp. It produces about 200,000 barrels of oil a day — around 10 percent of production in Africa’s most populous nation. The field remains shut down and Shell officials offered no estimate Monday of when production could resume at a field vital to Nigeria’s government finances.

Nigeria, an OPEC member nation producing about 2.4 million barrels of crude oil a day, is a top supplier to the United States. However, pollution from spilled oil stains its Niger Delta region, with crude lapping against beaches and leaving a black ring around creeks in an area about the size of Portugal.

Some environmentalists say as much as 550 million gallons of oil poured into the delta during Shell’s roughly 50 years of production in Nigeria — a rate roughly comparable to one Exxon Valdez disaster per year. Many blame Shell and foreign companies working in Nigeria for the pollution. However, Shell in recent years has blamed most of its spills on militant attacks or thieves tapping into pipelines to steal crude oil, which ends up sold on the black market or cooked into a crude diesel or kerosene.

Talking with journalists, Sunmonu acknowledged that the limited spill, open ocean and favorable weather had helped Shell quickly contain the spill. If it had been on land, the oil could have sunk into the soil, remaining there for years, he said.

It also would have pushed Shell into negotiations with village elders to clean up the spill, something it often contracts other companies to handle. Many view the company with hostility after its years in the delta, and its employees remain targets of kidnap gangs and militants.

“You don’t have communities to contend with” on the ocean, Sunmonu said.

• Royal Dutch Shell PLC: http://www.shell.com
• Shell’s Nigeria spill website: http://bit.ly/rqfnxi

Copyright © 2011 The Associated Press. All rights reserved.

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December 24, 2011

By Associated Press, Updated: Friday, December 23, 4:20 PM