By Ernest Scheyder
HOUSTON, June 7 (Reuters) - Royal Dutch Shell Plc said on Tuesday it will build a chemical plant in Pennsylvania,planning to use an inexpensive and abundant supply of naturalgas to make plastics for the northern United States.
The multibillion-dollar plant's construction will bring aninfusion of cash and jobs to northern Appalachia, an areahard-hit by the collapse in the coal and steel industries.Personal and small business income in the region is roughly 25percent lower than the rest of the United States.
The plant will help Shell capture a larger share of the U.S.market for polyethylene, more than half of which is concentratedin northern states from Maine to Minnesota. Polyethylene is used to make packaging, cushions and clothing.
The plant, which is being built on the site of a former zincfactory about 30 miles (48 km) north of Pittsburgh, will turnethane from natural gas into at least 1.6 million tonnes ofpolyethylene per year.
Nearby Ohio and West Virginia had lobbied hard for theplant, but Pennsylvania offered tax incentives and the site isclose to 700,000 acres of Shell's leased and owned MarcellusShale land.
Shell labored over the decision for more than five years,worried about oversupply in the market at a time when many peershad announced similar chemical plants. Most of those projectswere aimed at the U.S. Gulf Coast.
Shipping plastics to market in the northern United Statesadds transportation costs, but they will be less for Shell.
The announcement comes a day after rival BASF postponed plans to build a Texas propylene plant, citing"volatile" commodity prices..
At the same time as Shell announced the Pennsylvania plant,it also said it will exit operations in 10 countries to savecash.
Construction of the Shell plant will take at least fouryears and is expected to start by 2018.
As many as 6,000 temporary jobs should be created byconstruction with about 600 permanent jobs once the plant isonline, Shell said.
Pennsylvania residents praised the decision, saying itshould help guarantee a solid tax base for at least the nexthalf century.
"The success of this project is part of a much-needed,longer-term plan to translate our abundant resources to makePennsylvania a leader in downstream production," Governor TomWolf said in a statement. (Editing by Terry Wade and Jeffrey Benkoe)
