West Virginia lost out in the battle to attract Shell's multibillion-dollar chemical plant because of the costs involved with relocating a casino that occupies the site, sources told The Associated Press on Thursday.
Shell announced plans Thursday to build the so-called "cracker" plant in Monaca, Pa., about 12 miles from the West Virginia border. Two individuals with direct knowledge of the negotiations with Shell, but who were unauthorized to speak publically about them, said the company's preferred West Virginia location encroached on Mountaineer Casino, Racetrack and Resort.
Houston-based Shell, the U.S. subsidiary of Royal Dutch Shell PLC, is planning a facility that can convert or crack a byproduct of nearby Marcellus shale natural gas drilling into a widely used chemical compound
The Mountaineer complex sits along the Ohio River in nearby Hancock County and includes a large, flat oval racetrack. Besides the costs of building a new facility, Mountaineer would face a countywide vote on whether to permit its video slot machines and table games if it were required to relocate outside of Hancock County. A new location may have also pushed Mountaineer into competition with one of the state's three other racetrack casinos in Kanawha, Jefferson and nearby Ohio counties.
Officials from Mountaineer and Shell did not immediately comment when contacted Thursday. West Virginia Gov. Earl Ray Tomblin and Commerce Secretary Keith Burdette both declined to comment on any specific locations that Shell had considered in West Virginia.
AP had previously reported that Shell was looking at parcels near Mountaineer. Tomblin did say Thursday that a company owned Shell's preferred West Virginia site, while Burdette said securing that site for Shell would have required relocating its current occupant.
"At the end of the day, it was all about the site," Burdette told The Associated Press.
Tomblin and Burdette both said they were disappointed with Shell's decision, but the nearby location of its announced site means West Virginians will likely help build and operate the facility.
Perhaps more importantly, West Virginia also is well-positioned for the much-touted "downstream opportunities" that include jobs supplying the plant and making products from what it processes, they said.
"I believe West Virginia will benefit greatly, given the close proximity," Tomblin told reporters during a Capitol press conference Thursday.
Bill Maloney, Tomblin's likely Republican opponent in this year's gubernatorial election, blasted Thursday's outcome.
"For months, Earl Ray Tomblin has said that this was his number one priority as Governor. Well, he failed," the Morgantown businessman said in a statement. "This administration has done nothing to fix the fundamental problems that job creators face in West Virginia."
Hancock County Administrator Chuck Svokas said he was "extremely disappointed" by Thursday's announcement. He noted that the region's steel industry has declined over the last 20 years.
"We're somewhat deflated now," he said, "and we have to figure out ... what do we do next?"
The state also remains in the running for at least one additional cracker plant, Tomblin said. Administration officials have been negotiating with an as-yet-unidentified company that's considered sites along the Kanawha River and in the Parkersburg area.
Aither Chemical, meanwhile, has lobbied West Virginia officials for help building a smaller-scale cracker facility in the state. The South Charleston company is developing an alternative, less costly technology for cracking ethane molecules into ethylene.
A spokesman for Bayer Corp., which owns the West Virginia industrial parks along the Ohio River, has also said his company has had discussions with more than one company that's interested in building a plant.
"There are other companies that are still looking to locate a cracker," said Karen Price, president of the West Virginia Manufacturers' Association. "West Virginia has good sites, and the state is in good shape ... The downstream opportunities will be there for West Virginia to grow our manufacturing base in the Northern Panhandle."
But West Virginia aggressively sought to land Shell's cracker. The first bill to pass during this year's legislative session was Tomblin's proposal to slash property tax rates for 25 years in exchange for at least $2 billion worth of investment toward a cracker facility.
Pennsylvania offered 15 years of tax breaks, while Ohio also reportedly courted Shell with major incentives. Ohio Gov. John Kasich flew down to Houston late last year. Tomblin traveled there in February after the Legislature approved West Virginia's tax incentive.
"We worked very hard. We put together a very competitive package," Tomblin said.
Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, agreed that "all is not lost." Burd pointed to a Toyota plant in Georgetown, Ky., as an example of how ancillary businesses have sprung up within a 200-mile radius of a factory, bringing jobs and prosperity.
"But the absolute reality is that the entire region — 100 miles in any direction — is going to directly benefit from the location of those plants," Burd said.
Mike Dotson is a city councilman in Chester, W.Va., about 20 miles west of Monaca. He said his area is already seeing benefits from the booming gas drilling industry.
"It might be good for us being on the edge," he said. That way, residents won't have to deal with congestion, but could still benefit from new jobs and new customers for their local businesses. "And maybe people can still walk on the sidewalks."
Rob Alsop, Tomblin's chief of staff, said the administration's goal remains harnessing interest in Marcellus shale to revive the region's chemical manufacturing industry and spur other economic development. He cited the legislation passed late last year setting regulations for drilling and operating wells in West Virginia's share of this huge natural gas reserve.
"We want to see the petrochemical industry rebuild, and it's going to take all three states to do that," Alsop said Thursday. "We're a step closer to that reality, and West Virginia is going to benefit from it."
Associated Press Staff Writer Vicki Smith in Morgantown contributed to this article.