Pennsylvania passes ethane tax credit to attract petchems

02 July 2012 20:47  [Source: ICIS news]

HOUSTON (ICIS)--An ethane tax credit was signed into law in Pennsylvania in an attempt to attract petrochemical plants to the state, a legislator said on Monday.

The tax credit was included in the 2012-2013 state budget package, signed by Pennsylvania Governor Tom Corbett on Saturday.

The state would provide tax credits to any company that purchases ethane for use in making ethylene at a facility in Pennsylvania. The company has to invest $1bn (€790m) in construction for the facility and create at least 2,500 full-time jobs during the construction phase.

Shell Chemical announced in March that it was evaluating a site for a cracker in Pennsylvania.

The tax credit is performance-based, with the company receiving $2.10 for each barrel of natural gas containing ethane, said Jim Christiana, Pennsylvania state representative.

Christiana said the credit is primarily to offset taxes for the petrochemical company. He said the manufacturer receiving the tax credit could sell the tax credits upstream to entice natural gas producers to commit ethane production to the facility as well.

Spokesman Steve Kratz for the Department of Community and Economic Development said this method is intended to keep ethane and petrochemical production in the state.

The tax credit will not go into effect until 2017, but Kratz said it was important to pass the measure now to curtail producers from making long-term commitments for sending their ethane production out of state by pipeline.

Enterprise Products announced its Appalachia-Texas (ATEX) pipeline to carry ethane to the US Gulf. In addition, the Mariner West project will transfer ethane from the east coast to Sarnia’s petrochemical complexes in Canada.

“[Our aim is to] keep the entire petrochemical feedstock in Pennsylvania, which will result in significant economic investment and significant job creation,” said Kratz.

Christiana and Kratz said there are no current discussions with other petrochemical companies to build in Pennsylvania.

Christiana said once the supply chain is in place and more infrastructures have been set up, usually a petrochemical hub takes form. Pennsylvania has enough ethane for three crackers, Christiana said.

By: Sheena Martin
+1 713 525 2653

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