Malia SpencerReporter- Pittsburgh Business Times
It’s about two weeks ahead of the land option agreement deadline between Horsehead Holding Corp. and Shell Chemical LP- and both sides are staying mum about the whole thing.
Back in March 2012 Shell announced that its preferred site for a potential Appalachian ethane cracker is the site of Horsehead’s zinc facility in Beaver County. The two companies entered an options agreement that would require the zinc maker leave the site by April 30, 2014 (the company had already planned to move and is building anew zinc factory in North Carolina). That agreement was extended in December 2012 until June 30, 2013.
Here’s how Horsehead puts it in its quarterly filings with the SEC:
“On March 15, 2012, we announced that we had entered into an option agreement with Shell Chemical LP. (“Shell”), which if exercised, would require us to vacate our facility in Monaca by April 30, 2014. On December 28, 2012, Shell extended its option to June 30, 2013. In the event that Shell does not exercise its option to purchase our Monaca facility, we still intend to shut down the smelting operations when the new zinc facility becomes operational…”
Shell had no updates on whether another extension on the option is in the works and gave its same comment on where the company stands in terms of its final decision making.
“As you know, there are many hurdles to clear before we can even take an investment decision to build the proposed petrochemical complex. We need to confirm the suitability of the site, secure ethane feedstock supply, complete the engineering and design work, confirm the support of customers for our products, receive all the necessary permits and confirm that the project is economically robust and competitive,” said Kimberly Windon, US Media Relations with Shell Oil Co., in an email.
Horsehead did not respond to a call or email for comment.
Earlier this year during an editorial board meeting here at the Pittsburgh Business Times Gov. Tom Corbett said he didn’t expect any decision out of Shell one way or the other until 2014.
Part of Shell’s due diligence is meeting with officials from the Pennsylvania Department of Environmental Protection over the state of the Monaca site, which has been home to zinc smelting since 1931, when the plant opened under the St. Joseph Lead Co.
Those DEP meetings are continuing, said spokesman John Poister. He noted it’s a lengthy process and there is a lot of due diligence involved. No permits have been filed or pulled, he added.
UPDATE: 6/28/13: Shell extends option for Monaca site
Horsehead Corp. has signed another six-month extension with Royal Dutch Shell as the energy company considers using a Monaca facility as a site for an ethane cracker.
Ali Alavi, a senior vice president at Horsehead, which owns a metal plant currently occupying the 300-acre site in Monaca, said Shell didn’t commit to making a decision within the next six months, but added that the time period “seemed to be a reasonable number between the parties.”
The extension isn’t a surprise as Shell has been saying for months that its decision would not be bound by the June 30 expiration of its latest land option agreement with Horsehead.
That six-month contract was an extension of the first land option deal announced in March 2012.
Shell is looking at both the feasibility of that particular site and evaluating the overall market for an ethane cracker in the northeast.
Shell spokeswoman Kimberly Windon said that process is continuing.
“The reason that we would announce that we wanted a specific site so early is it allows us to open communication with potential neighbors” and stakeholders, she said.
“Even though we have not decided whether we’ll go ahead and build the facility, it’s important for us that we listen to their feedback.”
The Pittsburgh Regional Alliance tried to dispel alarm over the delay saying: “Extending the term of a land option agreement is a routine aspect of this kind of ongoing evaluation.”