McDonald site may go midstream

Considered for cracker plant

November 2, 2012
By BRENDA J. LINERT , Shale Play

McDONALD, Ohio - Hundreds of available acres, miles of rail line, a convergence of 200 miles of pipeline rights of way, a water supply, a web of highways and what is believed to be vast amounts of natural gas deep below the earth's surface have local developers and political leaders thinking big thoughts about the tiny river town of McDonald.

"They are speculating it would be a great spot for a petroleum chemical plant," McDonald Mayor Glenn Holmes said recently. "The way it's strategically located on (state) Route 11, they could bring pipeline right into the site."

The 210-acre property owned by U.S. Steel and LaFarge North America is being marketed by Routh-Hurlbert Real Estate brokers Dan Crouse and Chuck Joseph as land available for a "Gas Processor/ Cracker."

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Most of the land lies along the eastern edge of McDonald Village abutting the Mahoning River with about 10 acres in neighboring Girard.

An ethane cracking, or cracker, plant would convert ethane from bountiful Utica and Marcellus Shale natural gas liquids into more profitable chemicals such as ethylene, which are then used to produce everything from plastics to tires to antifreeze.

"We have had inquiries from a few different folks very discretely inquiring about it. We are not there yet, but people have inquired about the property," Holmes said. "We were blessed here, I think, because of our geology and state Route 11. With the U.S. Steel property there's pipes that are already in place. You have the right of way."

"There clearly has been interest from qualified companies, but the discussion with us has not gone beyond that," Crouse said.

"They are satisfied that the business and political climate is attractive to them. Everybody is reaching out to see what the opportunities are, and I have been very, very pleased with everyone from the commissioners and as far as up in the state as you can get down to Mayor Holmes."

Marketing information provided by Crouse and Joseph indicates the owners and controllers of the rights of way for pipeline development along Ohio Department of Transportation highways and private property in five Northeast Ohio counties have been contacted and have agreed to make the land available for midstream development.

The rights of way converge at the 210-acre McDonald parcel, which also is adjacent to V&M Star, a new state-of-the-art plant that manufactures seamless steel pipe for use in the natural gas drilling industry.

McDonald's forward-thinking mayor is convinced industrial development will follow the drilling into the Utica and Marcellus Shale and he plans to be ready.

"Plastics (manufacturing) are going to come back from overseas. Manufacturing is going to come back, and if the projections are right, you have to prepare yourself up front. It's extremely important," Holmes said.

In past years the village has tried, with the help of other agencies like the Trumbull County Planning Commission, but has been unsuccessful in luring state and federal appropriations to make the land more marketable, including development of access roads.

But with no concrete business plan for the land, Holmes points out it's hard to get money without solid vows for job creation.

Now new visions for possible development of a midstream processing plant for the fledgling natural gas industry locally might be the answer. Western Reserve Port Authority Executive Director Rose Ann DeLeon has met with area officials in an attempt to develop a plan to make the 210-acre parcel more marketable and user ready.

She sees a lot of potential for the parcel, she said recently. "We need to make it marketable so if inquiries come in, that the infrastructure is already there that they are going to need," DeLeon said.

Possibly foremost is paving up to a mile of roadway, which Holmes estimates would cost more than $1 million.

"Access is a gravel road now. If the right company came in, my job is to position us to capitalize on private investment," Holmes said last week.

Along with help from the port authority, Holmes spoke highly of plans brought together through the Mahoning River Corridor Initiative to redevelop usable land in more than a dozen Mahoning Valley communities, including McDonald, along the Mahoning River.

While development of any midstream plant would translate into job creation and economic growth, the question remains about whether it would mean an economic boost for the local school district's budget.

McDonald Schools treasurer William Johnson was intrigued with the possibility, but said school officials should be brought into discussions early on.

"You really have to be careful when you sit down and negotiate. You really shouldn't proceed without involving the school district," Johnson said.

The state and municipalities often benefit from additional income tax, but tax abatements used to lure new businesses into a community generally mean no financial gain for the school district. Businesses who want to be good corporate citizens sometimes are willing to make financial donations to local schools, a system known as payment in lieu of taxes.

Bill Phillis, executive director of the Ohio Coalition for Equity and Adequacy of School Funding in Columbus, pointed out that new industrial development could increase the total valuation of the district, which could lead to reduced millage for other property owners, but not necessarily more money for the school district.

The mayor is well aware of those concerns and is eager to ensure such development is a win-win for everybody involved.

"Hopefully we have a mutually advantageous property for everyone," Holmes said.



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