Pennsylvania Lured Shell to the State With a $1.65 Billion Tax Break. Now the Company Wants to Sell Its Plant – Inside Climate News

In 2020, the Department of Energy predicted that Appalachia was “on the cusp of an energy and petrochemical renaissance” fueled by abundant shale gas. The agency saw the ethane cracker plant Shell was building outside Pittsburgh as “the first of what could be multiple facilities” in Ohio, West Virginia and Pennsylvania. 

Five years later, Shell stands alone, the only one of a fleet of proposed projects that was actually built. Now, the company would like to sell it. 

“The issue is it’s our only one, our only major facility” that makes this kind of plastic, Shell CEO Wael Sawan told analysts in a recent earnings call. “And that’s why we’ve said we’re not the natural owner of that asset.” He acknowledged that a deal may not happen quickly but said the company is having “discussions” about a sale or partnership. 

For people in Beaver County who have watched the planning, construction and opening of the plant drag out over the past 13 years, that possibility—first suggested in a Wall Street Journal story in March about Shell “exploring a potential sale” of its American chemical facilities—was surprising. Marcellus Drilling News, a fracking industry trade publication, called the news a “shocker.” Residents wondered if this meant the facility, which began operating in Monaca just three years ago, could be shut down or its workforce laid off. 

In a statement to Inside Climate News, Shell spokesperson Krista Edwards said the company “has not announced any sale of its Monaca facility.” Shell is “exploring strategic and partnership opportunities” for its chemical facilities in the U.S., including Monaca, she said. 

Shell’s CEO said that the company wants to go “back to what we call the brilliant basics”: oil and gas, not petrochemicals. The Monaca plant—which ended up costing $14 billion to build, $8 billion more than initial estimates—is a small part of its global portfolio. Shell was enticed to build in Pennsylvania when the state government granted the company a record-breaking $1.65 billion tax break that could last 25 years.

Financial experts said Shell Monaca’s location is one reason that a sale makes sense. “Shell is about as isolated in Pennsylvania as you can get,” said Rob Stier, a global petrochemicals expert at S&P Global Commodity Insights.

“Anything that goes wrong in Pennsylvania, the Shell Pennsylvania facility has to shut down,” he said. “If it’s running, it makes money. But if it’s not running, they’re in trouble.”

What he means is that Shell loses out whenever the plant falters because it has no other way to fulfill orders. In contrast, on the Gulf Coast, the home of a massive, interconnected petrochemical hub, companies can make up for losses by producing more at another facility. “Shell doesn’t have that luxury because they have Pennsylvania as their only polyethylene manufacturing site in the world,” Stier said. Polyethylene is the type of single-use plastic produced in Monaca. Shell uses ethane, a byproduct of natural gas, to make the plastic. 

As of July 2025, Shell had submitted 80 malfunction reports to the state Department of Environmental Protection, according to the nonprofit FracTracker Alliance. It paid $10 million in civil penalties for air quality violations in 2023. Residents living nearby have complained about light, noise and air pollution and say the plant is disruptive to their daily lives, with some people choosing to move away to escape it. The Shell plant has an anticipated lifespan of least 25 years.

Stier said the market for polyethylene changed in 2022, the same year the Pennsylvania facility came online. Responding to increased demand for plastics domestically, China built more petrochemical plants. But in the last few years, demand there hasn’t kept up with all the new production, and the country is over capacity. That means fewer opportunities for American companies to sell in China, and it creates more competition for Shell in the U.S. market. 

Shell Monaca still enjoys a competitive advantage because its feedstock costs less than the oil-based feedstock used in China. 

“This is a valuable asset,” said Stier. The site is also likely to retain the huge tax subsidies it received from the state, even with a new owner, according to financial experts. 

Shell’s Tax “Windfall” in Pennsylvania

Shell’s tax breaks from the state are behind its decision to push forward with the project even as other companies walked away from the “renaissance” for economic reasons, said Anne Keller, managing director at Midstream Energy Group, an energy consultancy. Keller has worked in the energy and petrochemical industry for more than 30 years. Compared to Ohio and West Virginia, Pennsylvania “far and away shelled out more money,” she said. 

In 2016, then-vice president of Shell’s Appalachia Petrochemicals Division, Ate Visser, acknowledged the role the subsidies played in its decision-making. “I can tell you, hand to my heart, that without the fiscal incentives, we would not have taken this investment decision,” he said. 

Those incentives help to explain how Shell ended up stranded in a region that turned out not to make sense for petrochemical buildout in the current market.

Keller said Pennsylvania’s gift to Shell is unprecedented in the industry. “I’ve literally never heard of anything like that. It was just stunning,” she said. “The state got dealt.” 

While there was some greater economic advantage to the region during construction, when more than 9,000 workers were needed, once the plant became operational and the workforce shrank to 500, “the state might as well have just put people in an office and written them a check,” Keller said. Essentially, she said, the financial benefit to the company is so large that the state is effectively off-setting the cost of all full-time employees at Monaca with the tax break. 

Edwards, the company spokesperson, said Shell currently employs about 500 people in Monaca and “regularly averages” approximately 400 contractors at the site. Four hundred is the minimum number of permanent jobs required by the state’s tax agreement with Shell. 

In 2012, the year the state legislature passed the $1.65 billion tax credit, Republican Gov. Tom Corbett’s industry and labor secretary, Julia Hearthway, said she was convinced that the Shell plant would “kickstart a chemical manufacturing boom.” 

“And with it comes jobs. Not a few hun­dred jobs. Not one com­pany hir­ing 300 or 400 jobs. But thou­sands and thou­sands of jobs to Pennsylvania,” she told StateImpact Pennsylvania. 

“There was a lot of happy talk about how, once you build petrochemical facilities in Appalachia, then all these other businesses will relocate next to them, which is not a thing that happens and hasn’t happened.”

— Eric de Place, energy policy consultant

At one point, the Corbett administration claimed the Shell plant would spawn 20,000 permanent jobs directly and indirectly, because it would draw so many people to move to Beaver County. The administration said Shell would build its plant in another state if Pennsylvania didn’t offer enough incentives.

That same year, the Pennsylvania Budget and Policy Center called the tax breaks “a windfall” for Shell and said the deal was expensive for taxpayers while creating few permanent jobs. That warning now appears prescient. 

The economic boom and thousands of new jobs that were supposed to follow in Shell’s wake have failed to materialize, according to research conducted by the Ohio River Valley Institute. 

“There was a lot of happy talk about how, once you build petrochemical facilities in Appalachia, then all these other businesses will relocate next to them, which is not a thing that happens and hasn’t happened,” said Eric de Place, an energy policy consultant who has researched Shell Monaca for ORVI. De Place’s analysis found that Beaver County’s population has declined since 2012, and it has not seen growth in jobs, GDP or businesses. 

“There’s simply no way to look at economic performance and say, ‘Beaver County got this petrochemical plant and it flourished.’ In fact, it is declining relative to the U.S. and Pennsylvania, and it has not outperformed the counties around it,” he said. “I think you look at the scoreboard and you say, this was a terrible investment of taxpayer money.”

Stier said of Shell’s change of course, “The real driver of this is corporate strategy. Fifteen years ago, Shell was going in a different direction.

“It just goes to show you how big global companies can change their strategies pretty quickly. Companies can make some big, multibillion-dollar mistakes at times, and market conditions change,” Stier said. For Shell, “this asset no longer fits.”