Robert Morris University

RMU Study: Shell Ethane Cracker Will Add Nearly $4 Billion Each Year to the Pennsylvania Economy

The Shell petrochemical facility in Beaver County will generate nearly $3.7 billion annually in statewide economic activity, according to a study by professors at Robert Morris University.

RMU Study: Shell Ethane Cracker Will Add Nearly $4 Billion Each Year to the Pennsylvania Economy

Royal Dutch Shell began construction in 2014 on a petrochemical complex that will convert ethane into ethylene and ultimately polyethylene for use in manufacturing. The site occupies 800 acres in Potter and Center Townships, and is expected to be completed and operational by 2022. During the peak of construction, approximately 8,000 workers have been employed on the project, and the facility will have 600 workers once it is operational.

The RMU economic impact analysis was performed by Steve Clinton, professor of marketing; Marcel Minutolo, professor of strategic management; and Brian O’Roark, university professor of economics. The study is a follow up to the university’s 2014 analysis of the economic benefits likely to accrue from the facility’s construction. 

In this most recent report, the authors used a popular economic impact software application called IMPLAN to forecast the total economic activity generated by operations of the facility over 40 years, as measured in 2020 dollars. (Forty years is a typical lifespan for a petrochemical facility of this type.) 

The authors estimated the economic activity likely to be generated in Beaver County; in a 10-county region in southwestern Pennsylvania; and in Pennsylvania as a whole. Among their findings:

  • In Beaver County alone, the complex produce $260 million to $846 million in annual economic activity – the net value of wages, benefits, and related spending -- depending on the number of county residents who are employed at the plant. Local wage tax receipts would tally between $550,297 and $902,254 each year. 
  • The annual economic impact in the 10-county region would be approximately $3.3 billion. In addition to Beaver, those counties are Allegheny, Armstrong, Butler, Fayette, Greene, Indiana, Lawrence, Washington, and Westmoreland. 
  • In addition to the $3.7 billion in economic activity generated each year statewide, the commonwealth of Pennsylvania would collect an additional $23 million each year in state income tax. Over 40 years, the ethane cracker would produce $81.7 billion in economic activity statewide, with the commonwealth taking in an additional $515.4 million in income tax receipts. 

The economic impact analysis did not take into account the cost of the state corporate tax credits that Shell is receiving, which totals approximately $1.7 billion. The RMU study demonstrates that the state’s return on that investment is substantial, according to Minutolo.  

“That is money that Pennsylvania wouldn’t have had otherwise that policymakers can use for social programs or other benefits to the public good,” said Minutolo. 

Shell commissioned RMU to perform the economic impact analysis but did not participate in the research. Minutolo noted that the analysis was performed entirely with publicly available information and could be replicated by others. 

“We thank Robert Morris University for their thorough work in demonstrating Shell’s value to Beaver County, the greater Pittsburgh region, and the state of Pennsylvania,” said Shell Senior Vice President Hilary Mercer. “We are proud of the positive impact we are having on the local, regional and state economies, and we look forward to remaining a valued neighbor and employer of choice in the region for decades to come.”

Click here for the complete study.