Proposed Shell tax break in Pa. worth $66M a year

Associated Press Modified: June 4, 2012 at 5:45 pm •  Published: June 4, 2012

HARRISBURG, Pa. (AP) — Gov. Tom Corbett, who has been criticized for cutting state spending for schools and social services, is advocating future tax credits worth as much as $66 million a year for a petrochemical refinery planned by Shell Oil Co. in western Pennsylvania to capitalize on booming natural-gas drilling in the Marcellus Shale region.

The Corbett administration is seeking legislative approval now to demonstrate its willingness to share the costs of the multibillion-dollar project, even though the credits would not become available until 2017. The credit would be worth nearly $1.7 billion over the 25 years they would remain in place.

"It's a competitive climate out there," said Steve Kratz, a spokesman for the Department of Community and Economic Development. "This is about reindustrializing the state."

Corbett has not publicly discussed the proposed tax break. But Kratz on Monday confirmed information first reported by the online news service Capitolwire and provided new details.

A top aide to Senate President Pro Tempore Joe Scarnati said lawmakers will demand assurances that the plant will be built in Pennsylvania and that promises of 10,000 to 20,000 related jobs will materialize. The bill is expected to be introduced in the Senate this week, the aide said.

"The Corbett administration needs to sell this and, if they can make a compelling case that the amount of jobs proposed is accurate, I think some people (in the Senate) are going to be sympathetic to the credit," said Drew Crompton, who is chief of staff for Scarnati, R-Jefferson.

Shell already stands to receive 15 years of tax cuts and exemptions under a bill Corbett signed earlier this year to designate the cracker-plant site as an expanded Keystone Opportunity Zone.

Kratz said the amount of tax credits available to Shell will be calculated annually based on its Pennsylvania tax liability. It could sell all or the unused portion of the credit to suppliers of natural gas containing ethane or manufacturers of products that use ethane or ethane derivatives, he said.

The proposed credit is designed to "keep ethane in Pennsylvania to be used in manufacturing and other industries that use ethane and its byproducts," Kratz said.

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