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Jobs Impact of Cracker Facility Likely Exaggerated

This past January, when Ohio was still in the midst of the bidding war for the proposed cracker facility, Toledoans saw the following blurb in their paper, the Toledo Blade:

Gov. John Kasich is pursuing the multibillion-dollar ethane-cracker facility that Shell Chemicals LP plans to build in Ohio, West Virginia, or Pennsylvania to capitalize on the increasing harvest of natural gas from Marcellus shale. The American Chemistry Council estimates that the plant would generate 17,000 jobs in chemistry and other industries as well as $1 billion in wages and $169 million in tax revenue.

That’s some financial impact, right?  And now we are hearing the same figure coming out of Harrisburg via the Post-Gazette:

Estimates from the American Chemical Council have projected that a $3.2 billion ethane-processing facility, similar to the one that Shell is considering for Beaver County, would create more than 17,000 new jobs at the plant itself and among spinoff businesses along the supply chain.

Too bad it is isn’t very realistic.

Although the planned Monaca plant is one of several new cracker facilities planned in North America, currently, there are just a handful on the continent. In January, I posted about one of them, a Shell facility in Norco, Louisiana.  On their website, the multinational giant proudly proclaims the following, in bold type:

Shell Chemicals’ Norco facility is located in St. Charles Parish. The facility has over 600 full-time employees, more than 160 contractors, and generates an annual payroll of $50 million. The company pays more than $16 million in state and local taxes and $6M is property taxes that help fund public education as well as police and fire departments.

As I mentioned five months ago, those are significant contributions, to be sure. But it is a far cry from the projections of the American Chemistry Counsel (ACC) state above.  Shell also operates another cracker in Deer Park, Texas, which claims:

Shell Deer Park is a 1,500-acre complex located in Deer Park, Texas, approximately 20 miles east of downtown Houston along the Houston Ship Channel. Founded in 1929, Shell Deer Park is now home to 1,700 employees who operate a fully integrated refinery and petrochemical facility 24 hours a day.

That’s a lot of jobs, but as an integrated facility, it already accounts for some of the “spinoff businesses along the supply chain”.

Nova Chemicals operates another cracker in Sarnia, Onterio, which according to their website employs about 900 people who earn an estimated $86 million in wages and benefits each year.

So how silly is the claim of 17,000 jobs and $1 billion in wages? Consider that with all of its existing crackers and other facilities,

Shell chemicals companies staff total 8,500 worldwide. The majority of these support our manufacturing operations.  This does not include joint venture employees.”

Even with the JV employees not being counted, we are talking about major petrochemical plants in nine locations around the world, plus three technology centers.  So just who are these experts at the ACC who keep getting quoted for the 17,000 job figure? According to website:

The American Chemistry Council’s (ACC’s) mission is to deliver business value through exceptional advocacy using best-in-class member performance, political engagement, communications and scientific research.

Well played, ACC.  You have put on a best-in-class performance with your exceptional advocacy.  But for the rest of us, it is time to start considering more realistic jobs numbers when talking about the proposed ethylene producing facility.

Ethylene Cracker Would Contribute Jobs, Air Pollution

Last year, Shell Chemicals announced its intentions to build a multi-billion dollar ethylene cracker “in Appalachia”, effectively setting the stage for a bidding war between Ohio, West Virginia, and Pennsylvania. There have been numerous other plans for such plants in the area, including a recent partnership trying to get Aither Chemicals catalytic cracking process up in running, once again, “in Appalachia.”  The interest in the region is mostly due to the Marcellus and Utica shale gas produced in the region, which contains mostly methane (so-called natural gas used for heating, cooking, etc.), as well as other hydrocarbons that must be removed from the methane before the gas is put into pipelines.  These other hydrocarbons are mostly ethane, propane, and butane, which are converted into ethylene, propylene, and butadiene, respectively, through a process called cracking, and are then used for the creation of plastics, synthetic rubber, and other petrochemicals.

Whichever state lands these massive facilities stands to gain several thousand temporary construction jobs and several hundred permanent positions at the facility.  It seems reasonable to take a look at other similar facilities in the country, not only to get a reasonable idea of the economic contribution, but also to gain insight on the facility’s contribution to air pollution in the region.

I have chosen to look at the cracker in Norco, Loisiana, also run by Shell Chemicals. Norco is the ultimate company town, named for the now defunct New Orleans Refining Company, it contains not only the Shell plant, but also major petrochemical facilities owned by Dow, Hexion, and Valero. There is also a presence by Motiva, but all indications are that this is functionally part of the Shell plant that is simply owned by a different company.


Norco, LA as seen from Google Earth

According to the Shell page linked above, the facility employs 600 full time workers and 160 contractors for an annual payroll of $50 million. It also contributes $22 million in state, local, and property taxes to the community. That’s all very significant, albeit a far cry from the 17,000 jobs, $1 billion in wages, and $169 million in tax revenues that the good people of Ohio are being promised–perhaps those figures are over the estimated life of the facility, who knows? I’m guessing the proposed facility in Appalachia won’t be 22 times larger than the one in Norco, Louisiana though.

In terms of air emissions, it is hard to know what to expect. Emissions may wind up being quite different from Norco’s due to a different chemical composition of the feedstock, for example.  However, to get the conversation started, I have compiled the EPA’s 2008 National Emissions Inventory (NEI) estimated emissions for Norco, as well as a well known polluter that’s already in the area, Clairton Coke Works. I should mention that based on my experience, I don’t have a lot of faith of the validity of NEI data, especially for data in Pennsylvania (see this discussion about Clairton, for example), but it is what’s available.  Also, I need to mention that the data for Shell is aggregated between the Norco East, Norco West, and Motiva facilities, because from looking at the the websites for Shell and Motiva, the whole operation seems to be focused around cracking.  Let’s take a look:


2008 USEPA National Emissions Inventory for the Coke Works in Clairton, PA and the Shell ethylene cracker in Norco, LA

Now before you go to the EPA site to research these 84 pollutants, I didn’t put these up for direct comparison, since the facilities are obviously quite different. The point is that in an area that still largely in nonattainment for fine particulate matter and just recently re-entering attainment for ozone, the prospect of adding another major emitter of particulates and ozone and particulate precursors (as well as a whole host of other junk) isn’t going to help.