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DEP delays could hamstring Wolf's hope of renaissance

Only five months ago and 10 miles west of Butler County, Gov. Tom Wolf toured the site where Royal Dutch Shell will build most significant industrial plant in recent Pennsylvania history.

When completed some six or seven years from now, the ethane cracker plant will turn natural gas into the hottest commodity in the plastics market — ethylene.

The $6 billion cracker will make 1.5 million metric tons of ethylene a year. One of the most versatile and widely used chemicals, ethylene can be converted into the plastic polyethylene, a component in everything from tires to lawn furniture to disposable diapers.

The governor compared Shell’s plan to the dawn of Pittsburgh’s steel industry. It’s an accurate comparison in the merger of key resources that uniquely enrich our region:

- With steel, it was the combination of coal, rivers and rail for transportation, availability of iron ore and plentiful, capable labor.

- With the ethane cracker, it’s the abundance of natural gas in the Marcellus Shale formation; a highway system and airport along with the rail and rivers; and labor bolstered by top-notch schools and health care.

Spinoff businesses are not far from the imagination. There will be far more jobs across the region than the 600 people the cracker plant will employ.

Of course, no $6 billion business decision can be made that lightly or explained so simply. Other factors had to considered, including profitability. Shell announced its intentions in June, in the midst of a petroleum glut and a downturn in oil prices — and a plunge in prices for chemicals including ethylene. Undeterred, Shell pointed out that 70 percent of polyethylene customers in North America are within a 700-mile radius of its Beaver plant, and their current ethylene supply from Texas is made from naphtha, a byproduct of refining crude oil into gasoline.

From the perspective of the region’s ethylene customers, Shell’s gamble boils down to whether it can make a profit while providing a product as good or better than Texas naphtha ethylene, at a competitive price and in reliable quantities.

Like it or not, Shell’s gamble is now Pennsylvania’s gamble too.

Let’s not lose sight of this point, particularly as the state Department of Environmental Protection struggles to keep up with applications for new Marcellus gas well permits.

Approval times are lagging for a key permit at two of DEP’s three regional offices charged with reviewing the applications, according to a study by the industry-funded Marcellus Shale Coalition.

The regulatory logjam is hurting Pennsylvania’s competitiveness with other shale states like West Virginia, Ohio and Louisiana, said David Spigelmyer, president of the Pittsburgh-based trade group.

“We continue to have no certainty in this industry,” Spigelmyer said during a visit this week with the Butler Eagle’s editorial board.

The Associated Press reported recently that DEP’s regional office in Pittsburgh takes more than 200 days to process an erosion control permit, up from an average of 139 days in 2015, according to an industry analysis of government data. The north-central regional office in Williamsport takes only 40 to 45 days, even though it handles roughly the same number of permits. The third regional office, in Erie County, also has seen a dramatic increase in permitting time.

DEP spokesman Neil Shader blamed the increasing delays, in part, on enhanced scrutiny of permit applications. He said the agency is working to “enhance permit review consistency across its district offices” and also wants to improve the “quality” of the drillers’ permit submissions, which he said would help staff work more efficiently.

We’re not buying it. These applications are being prepared by highly trained, experienced engineers. Many have been submitting applications to the DEP for a decade or longer. The delays are more likely political and local than they are regulatory routine.

Gov. Wolf seems more than happy to take a share of the credit for massive industry being birthed here in Western Pennsylvania. Wolf, a former business owner/operator, campaigned on the experience of knowing how to run a business, so he knows that delays sow uncertainty, complicate scheduling and budgeting, and curb competitiveness.

As state chief executive, Wolf must ensure that the DEP gets its regulatory responsibilities handled in a timely manner. The next industrial boom is riding on the outcome.

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