Louisiana parish's story shows costs, time don’t indicate Shell's intent

Royal Dutch Shell chose the location after an exhaustive, yearslong search. It secured millions of dollars in incentives, promised 10,000 construction jobs if the multibillion-dollar plant were built and held a series of public forums to tell the community what to expect.

Then, on Dec. 5, Shell pulled the plug.

It happened in Ascension Parish, La., where Shell Chemical Co. was evaluating building a $20 billion gas-to-liquids plant.

“It was at a very similar stage” to Shell’s Marcellus cracker evaluation of a potential building site in Beaver County, said Barbara Blakely, director of external affairs on the gas-to-liquids project who learned about the corporate decision just hours before she had to deliver the news to the rest of the team and the community.

“I was talking to everybody to tell them we [won’t build], and the president of the parish stood up and said, ‘Barbara, we are disappointed you’re not coming, but you’ve always told us where we stood.’ ”

For months before the final decision, Ms. Blakely and the rest of the Shell team said the same thing in Ascension as they’re now saying in Pittsburgh: The evaluation process is moving well; the final decision has not been made.

That isn’t just a company talking point.

Shell has done many things in the Pittsburgh area that could be construed as having a pro-build mindset.

It has extended its land option agreement with Horsehead Corp. three times, paying $3.9 million for the last two extensions and an unknown amount for the initial agreement. It bought a warehouse across the street from the potential cracker site for $1.87 million and signed options with other landowners to buy if the project is realized. It’s paying for Horsehead to demolish part of its existing site and getting ready to move Route 18 for better access from the parkway.

Inevitably, when Shell files for an air permit with the Department of Environmental Protection later this year, the move will be heralded by stakeholders and the media as a step toward “yes.”

But Shell — a company that makes $50 million an hour, according to its 2013 revenue report — operates on a different scale. It can sink millions, even a billion dollars, into a project and then choose not to pursue it.

Mike Eades, president and CEO of Ascension Economic Development Corp., was gravely disappointed in Shell’s decision to abandon the gas-to-liquids plant idea there, but he wasn’t caught off guard.

“They were very clear to us from the beginning that this was a decision point out somewhere,” Mr. Eades said. “Everybody understood that clearly, but nonetheless they were preparing as much as they could to move forward.”

The Louisiana site was announced in September 2013 and the company pulled the plug just three months later, which gave the community enough time to get acquainted with the idea but kept the guessing game at bay.

“I think it would have been worse if it had extended out to a year, because then you would have seen the speculation taking place,” he said.

Mr. Eades has already heard of such speculation in southwestern Pennsylvania, where people have been guessing announcement dates and results since Shell announced the cracker project in 2011.

Time is not an indication of Shell’s intent, as evidenced by the company’s 31 years of research in oil shale extraction at its Mahogany exploration project in Colorado, which came to a close with a no-go decision last year.

Shell spent decades and millions of dollars in Colorado building pipelines, a $2 million office building and a $30 million freeze wall to hold shale oil when it's heated. In September 2013, the company decided it wouldn’t fund the actual extraction and disbanded the nearly 1,000-person team.

The decision-makers for Shell’s projects aren’t the team on the ground scoping and prepping the site. It's not Dan Carlson, who calls himself “employee 001” on the Shell cracker project and whose job it is to get everything shovel-ready in case executives in Amsterdam decide to build the plant.

That won’t happen until Shell has major environmental permits in place, none being more important than the air permit. The first part of that, called a plan approval, typically takes between eight months and a year, according to DEP spokesman John Poister.

The permit process could be dragged out by citizen input, which likely will show up en masse given the size of the project.

“One thing I’ve learned — maybe the hard way — is the community gets to decide,” said Randy Armstrong, environmental manager for the cracker project and another transfer from the Louisiana team. “If you don’t want one of our facilities next door, we’re not going to be here.”

Mr. Armstrong has been through Shell’s project evaluation process many times and understands that nothing is a sure thing, including community support.

“The goal is to say, before we’re here, is it OK?”

Anya Litvak: alitvak@post-gazette.com, 412-263-1455.

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