Shell plc (SHEL) agreed to pay $10 million to Pennsylvania in order to make amends for breaching state air quality laws following the opening of its Beaver County ethane facility.
According to regulators, Shell admitted that the plant, which is close to the Ohio River and located about 30 miles (48 km) west of Pittsburgh, violated air pollution standards. The facility started operating in November. Since the beginning of 2022, it has reported 43 problems and accrued over a dozen air violations, many of which are due to flaring. Shell was granted a $1.65 billion tax credit, the highest in the state’s history, for the construction of the facility that would convert natural gas into plastic.
Per the provisions of a consent agreement with the state, Shell will fix the flaring equipment to stop unlawful pollution. The company will also pay a $4.9 million civil penalty, 25% of which will go to local communities. SHEL will deploy an additional $5 million in community-based environmental programs. Communities will receive a total of $6.2 million across Western Pennsylvania.
If Shell continues to breach its authorized air pollution limitations, it will have to face further monthly civil penalties for the rest of the year. Earlier last month, the Clean Air Council filed a suit against SHEL. However, the penalty declared is not likely to have a significant impact on the company’s bottom line.
According to Wael Sawan, the CEO of Shell, the launch of the plant had taken longer than anticipated. He added that the team was doing a great job at overcoming some of the obvious technological challenges that startups typically have.
Shell is attempting to reduce air pollution following a difficult start and a two-month halt for repairs and maintenance at the Potter Township ethane plant. It is doing so by adopting the finest technology at its disposal.
Zacks Rank & Key Picks
Currently, Shell carries a Zack Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Sunoco LP SUN, Murphy USA Inc. MUSA and Dril-Quip, Inc. DRQ. While Sunoco sports a Zacks Rank #1 (Strong Buy), both Dril-Quip and Murphy USA carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model with sustainable and predictable cash flows. For this year, SUN has witnessed an upward earnings estimate revision in the past seven days.
Murphy USA, a leading retailer of gasoline, operates stations close to Walmart supercenters and sells low-cost, high-volume fuel. MUSA, with more than 1,700 stores, witnessed an upward earnings estimate revision for 2023 and 2024 in the past seven days.
Dril-Quip is a leading provider of highly engineered equipment, service and innovative technologies that are being employed in the energy sector. DRQ’s balance sheet has zero debt, highlighting a sound financial position.
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