Tuesday, February 13, 2024

PA Taxpayers To Give $130.9 Million In Tax Credits To Subsidize Shell Petrochemical Plant In Beaver County; Total Expected To Be $1.17 Billion Thru 2042; No Regard For Environmental Compliance Record

So far, the Shell Petrochemical Plant in Beaver County is scheduled to receive a total of $130.9 million in tax subsidies from the
PA Resource Manufacturing Tax Credit, according to the Governor’s FY 2024-25 Budget proposal. [page D-6]

The Big Budget Book says in  FY 2022-23 Shell received $5 million in tax subsidies; in FY 2023-24 Shell will get $60.9 million; and in FY 2024-25 Shell will get another $65 million-- the maximum amount available by law.

The Budget Book also anticipates Shell will receive the maximum $65 million annually for the foreseeable future.  

State law authorizes the tax credit for the next 16 years through December 31, 2042 when the tax credit expires.  If Shell continues to qualify, it will receive a total of $1.17 billion in taxpayer subsidies. 

The Shell Petrochemical Plant is the only facility that has qualified for this tax credit.

Summary Of Tax Credit

The PA Resource Manufacturing Tax Credit was originally established by Act 85 of 2012 and is available to business entities purchasing ethane for use in manufacturing ethylene at a facility in the Commonwealth that has made a capital investment of at least $1 billion and created at least 2,500 full-time equivalent jobs during the construction phase.

[Note: A PA Senate Republican fact sheet on the Shell Petrochemical Plant estimated construction costs at $4 billion. Recently, the CEO of Shell said the plant cost $14 billion to build and would not be fully operational until 2025 or 2026.  Read more here.]

The PRM tax credit is equal to $0.05 per gallon of ethane purchased ($2.10/barrel) for the period from January 1, 2017 to December 31, 2042. 

The credit may be used to offset a taxpayer’s liabilities for Personal Income tax, Corporate Net Income Tax, Capital Stock and Foreign Franchise Tax, Bank Shares Tax, Title insurance Company Shares Tax, Insurance Premiums Tax, and Mutual Thrift Institutions Tax.

A taxpayer may use this credit to reduce their tax liability by a maximum of 20 percent for any tax year in which it is awarded. 

Within one year after the PRM credit is approved, a taxpayer can apply to DCED for approval to assign or sell eligible credits to another taxpayer. 

The eligible buyer of the credit may use the purchased credits to offset up to 50 percent of its Pennsylvania tax liabilities. The credit can be assigned to related entities.

Click Here for a Department of Revenue fact sheet.

No Environmental Compliance Requirement

The PA Resource Manufacturing Tax Credit is awarded without regard to whether a facility receiving the tax credit is complying with the state’s environmental laws and regulations.

So far, the Department of Environmental Protection has imposed penalties totalling over $10.6  million on the Shell Petrochemical Plant and associated pipeline for repeated air pollution and construction violations. 

On May 24, 2023, DEP entered into a consent order and agreement with Shell Chemicals Appalachia, LLC, in which Shell formally acknowledged that the company exceeded total emission limitations for air contaminants, agreed to make repairs to reduce future exceedances, and agreed to pay nearly $10 million to DEP and the local community.  Read more here.

Under the COA, Shell will pay a civil penalty of $4,935,023 – and as required by Act 57 of 2011, 25 percent of this penalty will be directed to local communities.

Additionally, Shell will spend another $5 million for environmental projects to benefit the local communities.

In total, communities in Western Pennsylvania will directly receive $6.2 million for projects to benefit the environment, heath, and quality of life of the community near the facility because of the COA. 

Shell will also pay additional monthly civil penalties for the rest of 2023 for any further exceedances.  DEP has not released any information on these follow-up penalties, even though violations have continued.  Read more here.

Visit DEP’s Shell Petrochemical Complex webpage for more information on reports and actions taken related to the plant.

On October 13, 2022, DEP announced it  executed a $670,000 consent assessment of civil penalty with Shell Pipeline Company LP and its contractor, Minnesota Limited LLC, for violations of its permit and Pennsylvania laws and regulations that occurred in 2019 and 2020 during construction of the company’s Falcon pipeline project.  Read more here.

Visit DEP’s Shell Falcon Ethane Pipeline webpage for more information.


Matt Walker, Advocacy Director for the Clean Air Council, said, "Pennsylvania taxpayers should not continue to subsidize Shell’s petrochemical plant to make plastics from fossil gas byproducts, and repeatedly violate air quality rules. Elected officials must put an end to subsidizing this environmental rulebreaker.”

Tax Credits Gone Wrong

This isn’t the first time a Pennsylvania tax credit has gone wrong.  Take for example when a $5.7 million in taxpayer Film Development Tax Credits were awarded to make the movie Zack and Miri Make A PornoRead more here.


-- TribLive Editorial: State Fines Should Be Higher Than Tax Cuts To Penalize Environmental Leaks [PaEN]

-- York Dispatch Editorial: Energy Companies Are Reporting Record Profits, PA Lawmakers Don’t Need To Give Them More Tax Breaks

-- Republican Herald Editorial: State Lawmakers Should Adopt Rules That Preclude State Taxpayers From Subsidizing Pollution From Oil & Gas Industry  [PaEN]

-- Citizens Voice Editorial: State Insists On Paying Polluters

-- Post-Gazette - Anya Litvak: Shell’s Rocky First Year Of Commercial Operations In Beaver County

-- Marcellus Drilling News: Shell CEO Says PA Cracker Plant Not Fully Online Until 2025/26, Cost $14 Billion

-- Pittsburgh Business Times: Shell Plant’s Costs Much Higher Than Previously Disclosed

-- Beaver County Times: Shell CEO Puts Beaver County Petrochemical Plant Price Tag At $14 Billion

-- Institute for Energy Economics And Financial Analysis: Shell Acknowledges $14 Billion Price Tag For Petrochemical Plant, More Than Double Street Estimates

-- Ohio River Valley Institute: Pennsylvania’s Bad Bet On Shell Petrochemical Plant

Related Articles - Shell Petrochemical:

-- DEP Signs Consent Order Including $10 Million In Penalties, Local Payments With Shell Petrochemical Plant In Beaver County To Resolve Air Quality Violations; Plant To Restart May 24  [PaEN]

-- DEP: Shell, Pipeline Contractor Assessed $670,000 Penalty For Falcon Ethane Pipeline Construction Violations In Allegheny, Beaver, Washington Counties  [PaEN]

-- DEP Accepting Project Applications For $5 Million Shell Petrochemical Plant Beaver County Environmental Mitigation Community Fund  [PaEN]

-- Beaver County Residents Call For Accountability, Emergency Preparedness After Dozens Of Malfunctions, Pollution From Shell Petrochemical Plant  [PaEN]

-- DEP Secretary Negrin To Citizen Activists: ‘We Don’t Represent Chevron, We Don’t Represent Shell And I’ve Made That Absolutely Clear-- We’re Holding Those Leaders Accountable’  [PaEN]

-- Eyes On Shell Reports Shell Petrochemical Plant Fenceline Monitors Found Benzene Emissions Above Toxic Substances Limits; No Timeline For Restarting Plant; DEP Issued Another NOV For Air Violations  [PaEN]

-- DEP Issues Three More Air Quality Violations To Shell Petrochemical Plant In Beaver County Related To Emergency Flaring, Exceeding 12-Month Air Pollution Limits  [PaEN]

-- Guest Essay: Shell Petrochemical Plant Off To A Bad- And Dangerous- Start In Beaver County  [PaEN]

-- DEP Reviewing Final Act 2 Land Recycling Cleanup Report For Dozens Of Chemicals At Shell Petrochemical Plant In Beaver County  [PaEN]

-- Intense, Bright White Light From The Shell Plastics Plant Turns Night Into Day For Many Neighbors Of The Beaver County Plant  [PaEN]

PA Oil & Gas Industry Public Notice Dashboards:

-- PA Oil & Gas Weekly Compliance Dashboard - Feb. 10 to 16 - 31 More Conventional Abandoned Well NOVs - 103 For Year; Pipeline Land Slips; Water Supply, Stray Gas Complaints  [PaEN] 

-- PA Oil & Gas Industrial Facilities: Permit Notices, Opportunities To Comment - February 17 [PaEN]

-- DEP Approves PennEnergy Resources 1.5 Million Gallon/Day Water Withdrawal For Shale Gas Drilling From Big Sewickley Creek In Beaver County  [PaEN]  

-- DEP Sets March 20 Hearing [If Requested] On Air Quality Permit Change For The Eastern Gas Transmission Punxsutawney Compressor Station In Jefferson County  [PaEN]

-- DEP Invites Comments On Mariner East II Natural Gas Liquids Pipeline Chapter 102 Permit Amendment For An Area In West Goshen Twp., Chester County  [PaEN] 

-- DEP Invites Comments On MarkWest Project To Expose 4 Natural Gas Pipelines For 5,500+ Feet Ahead Of Longwall Mining In Donegal Twp., Washington County  [PaEN] 

-- Public Comments Invited On State Air Quality Plan Amendment For PEI Power Corp Natural Gas-fired Power Plant In Lackawanna County  [PaEN]

-- PUC Invites Comments On Williams Natural Gas Pipeline Co. Proposal To Construct 2 Solar Energy Facilities To Provide Electricity To Compressor Stations In Columbia, Wyoming Counties  [PaEN] 

-- DEP Posted 109 Pages Of Permit-Related Notices In February 17 PA Bulletin  [PaEN]  

-- PUC Now Accepting Comments On $250,000 Penalty Settlement With Peoples Gas On Natural Gas Over-Pressurization Incident In Indiana County  [PaEN] 

-- PUC Public Hearings In Early March For Proposed $156 Million Peoples Natural Gas Rate Increase 

Related Articles - Gas:

-- DEP Approves PennEnergy Resources 1.5 Million Gallon/Day Water Withdrawal For Shale Gas Drilling From Big Sewickley Creek In Beaver County; Citizens Group Opposes DEP Decision  [PaEN]  

-- Susquehanna River Basin Commission March 14 Meeting On Rulemakings, Water Withdrawal Requests, Including 8 Related To Shale Gas Development; And On Cooperative Fish Nursery General Permit  [PaEN] 

-- PA Taxpayers To Give $130.9 Million In Tax Credits To Subsidize Shell Petrochemical Plant In Beaver County; Total Expected To Be $1.17 Billion Thru 2042; No Regard For Environmental Compliance Record  [PaEN]

-- Ohio River Basin Alliance, National Wildlife Federation Report Identifies Community Concerns, Priorities For Local Waters In Ohio River Watershed [Road-Dumping Drilling Wastewater]  [PaEN] 

-- Marcellus Drilling News: National Fuel Gas Lawsuit Alleges Fraud, Counterfeit Parts Used At Natural Gas Compressor Stations  [PaEN]

-- Natural Gas Intelligence: 76% Increase In LNG Natural Gas Export Capacity Already Under Construction; US Group Fears Buildout Will Hurt American Businesses Urge ‘US Consumers First’ Policy  [PaEN]

-- Bloomberg TV: Canada’s Energy Minister: Period Of Using Natural Gas As Transition Fuel Should Be Short; Gas Should Not Replace Renewables; Canada Has Adopted Controls On LNG Exports The US Has Not  [PaEN]

-- Penn State Extension Energy Essentials: Unraveling Hydrogen Rainbow; Renewable Energy On The Farm; Carbon Markets, Climate-Smart Forestry  [PaEN]

-- Penn State Extension March 14 Webinar On Oil & Gas Wastewater Management - Project PARETO  [PaEN]

NewsClips - Gas:

-- TribLive: Beaver County Man Sues Shell Petrochemical Plant, Claims Plant Spews Pollution 

-- The Energy Age Blog: Resident Files Lawsuit Against Shell Petrochemical Plant, Claims Plant Spews Pollution

-- Beaver County Times: Shell CEO Puts Beaver County Petrochemical Plant Price Tag At $14 Billion

-- Post-Gazette - Anya Litvak: A Political Battle Brews Over Natural Gas Exports Over Impacts To Gas Prices, Climate, Demand For Gas

-- Reuters: European Union Says Biden’s Pause On Approvals Of New LNG Natural Gas Export Facilities Will Have No Effect On US LNG Supplies To Europe Over Next 2 or 3 Years  [LNG Exports Are Expected To Double By 2030 On Already-Approved Projects] 

-- TribLive Guest Essay: A Fossil Fuel Export Economy Is Wrong For America - By Tyson Slocum, Public Citizen

-- Utility Dive: Federal Energy Regulatory Commission OKs Cold Weather Reliability Standards [Driven In Large Part By Natural Gas Infrastructure Failures In 2021]

-- Reuters: US Regulators To Review Power System Performance During Recent Winter Storms

-- Pittsburgh Business Times: Pittsburgh-Based EQT Could Curtail Some Natural Gas Production As Gas Prices Fade

-- Reuters: Pittsburgh-Based EQT Drilling Misses Profit Estimates On Lower Natural Gas Prices

-- Reuters: US Natural Gas Drillers Cut Spending, Reduce Activity Amid Price Crash

-- Natural Gas Intelligence: Global Natural Gas Prices Continue Freefall Amid Weak Demand, Warm Weather

-- PUC Public Hearings In Early March For Proposed $156 Million Peoples Natural Gas Rate Increase 

-- Post-Gazette - Anya Litvak: Peoples’ Gas Proposed 7.6% to 21.4% Rate Hikes Will Get Their Time In The Court Of Public Opinion Next Month

-- TribLive Guest Essay: Record Oil And Gas Production Means Energy And Economic Security - By Independent Petroleum Association Of America

-- Yale360 - Jon Hurdle: How A Legal Clean Air Law Loophole Allows Natural Gas Leaks To Keep Flowing  [Aggregation Of Air Emissions Issue]  

-- Marcellus Drilling News: Is Coterra Energy Headed For Buyout And Split As Forbes Article Speculates? 

-- Post-Gazette - Anya Litvak: Carbon Dioxide Storage Hub Landmen Seek 80,000 Acres Across Western PA, Ohio, WV 

-- Marcellus Drilling News: NAPE Speakers Say Carbon Capture & Sequestration A Risky Business

-- Williamsport Sun Guest Essay: Carbon Capture And Storage Can Keep Rural Economies Strong - By Erick Coolidge, Fmr Tioga County Commissioner

-- The Energy Age Blog: Dangerous Workplaces - US Drilling, Fracking Operations - 1,566 Workers Have Died In US

-- Financial Times: Geologists Signal Start Of Hydrogen Energy ‘Gold Rush’

[Posted: February 13, 2024]  PA Environment Digest

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