Tax Breaks For Oil Companies Operating in the Marcellus -- Nothing To Do With The Bakken

Link to a huge story at SeekingAlpha.com.

As millions of Americans brace for a slew of new potential taxes next year, Shell – the U.S. subsidiary of Royal Dutch Shell – is contemplating which state it wants its next big tax break from.

West Virginia passed legislation in January that would give Shell a 25-year property tax break if it sets up a new $2-billion operation there. And according to the Associated Press, “Pennsylvania offered 15 years, and Ohio has reportedly offered major incentives.”

It should be no surprise these states are competing to win Shell over. After all, they’re located in the heart of the Marcellus Shale region, the largest shale gas deposit in the world. And as CBS News reports, Shell “would create 12,000 jobs, both direct and indirect” and “provide $600 million in wages annually.”

The story is about "cracking" but that's not the reason the story is so big.

You think these states are going to let the EPA shut down fracking? That's the BIG story. 

For those interesting in the cracking story:

... cheap natural gas is creating a number of opportunities to profit in the plastics industry. As I explained, ethane is a natural component of natural gas. And through various cooling and heating procedures, can be turned into ethylene, one of the primary building blocks for producing plastics.

Facilities that specialize in turning ethane into ethylene are called cracking plants. For Shell, its newest cracking facility will be the fifth plant it will have set up in the United States. And the best part…. it’s just one of many plants about to be built.

The ONEOK cryo plants in the Bakken are doing the same thing: adding value to natural gas. Over at the Bakken shale discussion board, a royalty owner mentioned that he/she was getting $8 for natural gas by-products compared to $2.00 for natural gas.