Shell Extends Option But Plans Demolition

At the same time she cautioned that the company was still evaluating a final decision to proceed with its ethane cracker, Shell spokesperson Kimberly Windon announced yesterday that the oil & gas producer had extended its option to buy the 300-acre-plus zinc plant site from Horseheads again (as expected) with one unexpected provision. Shell has included the right to demolish buildings on the site & Windon confirmed that the company plans to do so in early 2014.

Aerial view of the Horseheads zinc plant
Aerial view of the Horseheads zinc plant

Multi-national Bechtel will be the project’s EPC contractor but no announcements have been made to formalize that or any of the other agreements. Rumors have linked Fluor to the project, as well as Jacobs Engineering, which is supposed to be managing the demo & decommissioning of the Horseheads plant.

If those reports are true, look for contractors with past relationships with Jacobs & Bechtel to be involved in the competition for packages of the multi-billion cracker.

Forward movement of the cracker, along with continued surprising growth of the U. S. economy are two factors that would push construction in 2014 from a flat line to upward trajectory.

Former Saks Site Out fo Bid

Developers McKnight Realty and Millcraft Investments have invited contractors Mascaro Construction, Massaro Corp., Mosites Construction, PJ Dick Inc. and Turner Construction to bid on their new development for the former Saks Fifth Avenue site on Smithfield St. at Oliver. The new $14 million project is called 350 Oliver and it includes 25,000 sq. ft. of ground floor retail plus a 590-car garage. Bids are due Jan. 13.

Millcraft is staying busy in downtown. Their $73 million Gardens at Market Square project is finally ready to get underway. Closing on the deal is expected before year’s end and work on the mid-rise should be visible in January.

Out With a Bang

As 2013 comes to a grinding end there were a few projects of interest that had selections made at the end of last week or today.

After a few weeks of deliberation, Gilbane Building Co. was chosen as the CM for the exterior remediation of Westinghouse’s headquarters building in Cranberry.

WVU announced the results for its new $11 million baseball stadium and the team of Mascaro/DLA+ Architecture/Populous scored the highest in the design/build proposals. Mascaro also hit one out of the park at the University of Pittsburgh, where their $7.3 million design/build proposal scored the highest with the Dept. of General Services for the Cathedral of Learning’s elevator modernization program.

The Butler Eagle reported late last week that Oxford Development had purchased the land that is the VA’s preferred site for its $60 million outpatient center from Westar Development. Westar was awarded the build-to-suit project late last year but was unable to get the project started. Oxford would seem to be in the driver’s seat to put the project back on track, assuming the VA agrees.

Parting Shots for the Week

PJ Dick was selected by Central Catholic High School as the CM at Risk for their new $8 million STEM building on Neville Street. For the week before Thanksgiving, that would be the big news in most years but the construction market has become more active as the holidays approach than it was a month ago.

Most contractors are reporting higher bidding activity over the next couple of weeks. Among the highlights are the guest room renovations are the Sheraton Station Square, about 30,000 sq. ft. of additional retail strip space at McCandless Crossing and a new $53 million Lichfield elementary/learning center in Akron (on the PBX at Massaro has the $4 million ER expansion at Armstrong Co. Memorial Hospital out to bid. Martini is doing preconstruction on the $8 million Blind & Vision Services offices and a new $15+ million outpatient center for Excela Health in Greensburg. Interviews took place for the short list of contractors working on the Westinghouse HQ project.

Infrastructure Relief

After a disappointing Monday night defeat, proponents of the proposed $2.3 billion House transportation funding bill persuaded eight representatives to change ‘no’ votes to ‘yes’ on Tuesday.

The bill passed by a 104-95 margin that included strange bedfellows because of the amendment that accompanied the legislation which raised the minimum project cost for prevailing wage rates to $100,000. That amendment sent pro-labor Democrats to the Republican side of the aisle while moderate Republicans in southeastern PA stood with Dems to support the funding injection to Philadelphia’s troubled SEPTA mass transit system.

It appears that Monday’s vote allowed conservatives the political cover they needed from ‘no tax increase’ pledges. One House leader was quoted as saying that the switched votes came from Reps. who thought that the measure would pass without their votes but were persuaded otherwise on Wednesday.

The bill went back to the Senate Wednesday – where the prevailing wage modification may be struck down – before coming back to the House for a final approval later in the week. Gov. Corbett and House leaders believe the new-found majority in the House will hold.

In project news, DGS is requesting CM-Agency proposals for the University of Pittsburgh’s $10 million Hillman Library renovation. No word as yet on which firm was successful in the Cathedral of Learning Elevator Modernization project. Crown Castle International should be putting out to bid a $20 million expansion and renovation to their headquarters in Southpointe. Crown is acquiring the former Mylan HQ and will renovate that building and add a connection between the Mylan building and their existing office. Astorino is doing the design. Burns & Scalo Real Estate Services is the owner’s rep for Crown Castle.

Rays of Sunshine for Public Work

Construction in the public sector has been a tougher place to make a living for the past couple of years. While adequate funding for transportation projects still seems like a coin toss at this point, there is some activity in higher ed and K-12 that offers hope. Pitt is taking Predetermination of Responsibility submissions for two of its projects on Nov. 25. These are essentially pre-qualification forms to be approved to bid the $23 million Clapp-Langley complex and the $3.5 million Chevron Science Center jobs that DGS will put out to bid, probably in December. The projects will bid as separate prime contract offerings and won’t be from Pitt’s invited list of contractors but the PDR process keeps the projects from bidding to unqualified contractors. You can find the PDR at

For those with a longer horizon, two major new school projects are moving ahead in the early stages of planning. West Jefferson Hills selected Turner Construction as CM for their $70 million new high school. Selection of an architect will come after the holidays and bidding is not likely until 2015. On a similar timetable, Montour School District is reviewing architectural proposals for its new $55 million elementary school.

In private sector news, Mike Coates Construction was selected for the general construction package on Duquesne Light’s new $5 million warehouse in McKeesport. And James Construction started construction on the $15 million expansion of the Westmoreland Museum of American Art in downtown Greensburg. PMC Management has started work on the conversion of the upper floors of the Clark Building into 144 apartments.

Ag Sciences Results

WVU’s new agricultural sciences building bid earlier this afternoon and PJ Dick submitted the low bid, edging out Mascaro by $502,000 or 0.6% on $77 million. The published budget for the project was about 10% lower than the bids but the spread tells you that the budget – if it was indeed that low – was off. Here are the base bids:

PJ Dick – $76,898,000
Mascaro Construction – $77,400,000
Walsh – $80,477,000

Catching Up on Some Project News

While the local (yawn) elections were taking place and the pitched battle over highway funding rages in Harrisburg, a variety of interesting projects are being priced or otherwise in competition.

Chuck Hammel was in the news with a small but expensive conversion of 2500 Smallman Street into what he calls ‘city houses’ but there was progress of sorts on a much bigger project that Hammel is planning. Along with Oxford Development and Lincoln Properties, Hammel is proposing 300+ units of apartments just east of the Cork Factory. The project should be $40 million or more. Massaro Corp. has been involved helping with preconstruction for a couple of years. Both they and Mascaro had interviews with the development team last week to move forward in 2014.

Massaro, Mascaro, PJ Dick and Martini are submitting proposals on the 18th for the CM-at-Risk for Central Catholic’s $15 million STEM building. Massaro, Mascaro, PJ Dick, along with Jendoco and Gilbane are putting in proposals on the 14th for a significant ($25 million or more) renovation/remediation at Westinghouse’s headquarters in Cranberry Twp. Both those projects are still being designed by Stantec.

In news from West Virginia, WVU is taking design/build proposals from Astorino, Gilbane, Mascaro & PJ Dick for their new $13 million baseball stadium. Mosites Construction was the apparent low bidder on several packages for general trades, demolition & concrete on Ruby Hospital’s second phase of the $140 million South Tower expansion being construction managed by Yates Construction. A few exits south in Bridgeport, Dominion is taking proposals from development teams for a new 100,000 square foot office in the White Oaks Business Park. They are working with six teams including Clayco, March Westin, Alter Group, Regency, thrasher & WYK.

Following up several of the smaller projects that bid in September/October, Volpatt Construction is underway with St. Clair Hospital’s $1.2 million urgent care facility at 2000 Oxford Drive in Bethel; St. Clair also chose Massaro for their $2 million interventional radiology suite at their main hospital; A. Martini was awarded a contract for Blind & Vision Rehabilitation Services’ $4 million-plus tenant improvement in their new building on the Boulevard of Allies. Rycon is working on the $3.5 million build-out of the former Dick’s space in South Hills Village. The space will become an Ulta and DWS store.

Cracker Speculation

Today’s Pittsburgh Business Times had the front page dedicated to a story suggesting that the pipeline infrastructure investment underway was making the cracker plant in western PA unnecessary. Last weekend the Wall Street Journal published a small story suggesting the same thing (coincidence PBT?). Expect a bunch of piling on from other local and business media.

The essence of both stories is that so much pipeline capacity is being built that it makes more sense to just pipe the ethane to the Gulf to the existing cracker infrastructure. It’s important to remember that no sources with direct knowledge are quoted or anonymously cited and the use of the word “may” (as in may happen) is rampant in the writing.

I can’t argue the logic of the articles nor do I possess the experience in the petrochemical industry to comment on the feasibility. I do, however, talk to people involved with the project behind the scenes and a few things are worth noting:

1) The infrastructure being referenced was needed for the output that is coming, regardless of where the ethane goes. Moreover, the infrastructure isn’t going to the Gulf; it’s connecting to the existing infrastructure outside the region that goes to the Gulf, meaning it can easily serve the petrochemical industry in PA.

2) Engineering for the project is going on as we speak. While no contracts for EPC for the plant or the decommissioning of the Horseheads plant have been announced, preliminary pricing and sourcing is going on. Those involved say that the activity has accelerated in recent months rather than slowed.

3) The secondary pipeline infrastructure that is being built at the same time seems to be telling a different story. It’s pointing to Monaca. Tony Rosenberger from Chapman Properties was flying over a Washington Co. site recently and was stunned to see the amount of green pipe being laid out (a similar story is taking place in Beaver Co.), all going to the same spot on the Ohio River.

Shell may indeed be delaying the decision because they see less justification for the $2 billion investment. Remember that the reason that the cracker was proposed here in the first place was not just because the gas was here but more importantly because the consumers of the products made downstream were within 500 miles of here. There’s a cost associated with sending ethane 1,500 miles southwest and then shipping 60% of what is made with the ethylene that is cracked back to this region.

My bet is still for a thumbs up from Shell and sooner rather than later.

The Shutdown and other thoughts

Wednesday’s deal to re-open the government and raise the debt ceiling provided some needed relief to investors but the end result (and the shutdown itself) produced more yawns than anything else.

First some thoughts on the shutdown: the 16-day furlough saved the government little money (workers will be paid retroactively) but did cost lots in lost revenues. It will also probably shave about half percent from the fourth quarter GDP – a number that is already expected to be low. Some of that will bounce back in early 2014 but some is just output lost. In the end the high cards were in the president’s and Democrats’ hands. There was no movement on Obamacare or the budget. Very little of substance was done except to kick the problem down the road three months. Congress won’t get a raise. The sequestration cuts remain in place.

The sad part is that the shutdown refreshed the memories of business people that our government is bleeding money and doing nothing to stop it. The big casualty of the shutdown is that uncertainty came back into the picture. With most major projects running into budget problems (Chevron, Industrial Scientific, etc.), the last thing we needed was uncertainty about the economy going forward.

On the bright side, there are some projects moving ahead. Bakery Village Apartments are blowing and going and there are reports that the office buildings that are part of Bakery Square 2.0 are attracting hot interest and may start sooner in 2014. Prominent Fluid Controls selected BRIDGES to do its 21,000 sq. ft. expansion in RIDC Park. PJ Dick should be starting Seton Hill’s $14 million Natural Health Sciences building.

Washington Co. Chamber of Commerce threw a party to celebrate the erection of the two buildings at Zenith Ridge in Southpointe II, which is the Ansys campus that Burns & Scalo is developing as partner in Quattro LLC. Design builder Clayco Construction has cast five-story exterior walls on site – with brick embedded in the pour – and lifted them in a matter of a few weeks. The steel floor joists are following rapidly on the first building already. An aerial photo of the progress is below.








At the party, Jim Scalo mentioned that his company was ready to build a spec office he calls the Conchord near the airport in the RIDC West property. As planned originally, the one-story building will be 60,000 sq. ft.