WV Governor and Feds Focus on Petrochemical Development

Gov. Jim Justice in August signed an executive order creating a Downstream Job Task Force, which will work to bring manufacturing jobs to the state in anticipation of expansion of the petrochemical industry.

“The petrochemical industry is right on the verge of coming and landing in West Virginia,” Justice said in a press release. “When this wave hits, absolutely, West Virginia will really go. We’re on the launching pad to take off.

“From there, downstream manufacturing could absolutely come along with it, and we need a task force that is ready for that.”

Several high-ranking U.S. Department of Energy officials have made the trek to West Virginia in recent months to push for the state to be a hub in the Appalachian Basin shale gas area.

A top U.S. Department of Energy official testified this summer before a joint committee of the West Virginia Legislature that development of shale gas and petrochemical industry in the Appalachian basin is a priority of the federal government.

Steve Winberg, the DOE assistant secretary for fossil fuel energy, gave a presentation to the Joint Committee on Natural Gas Development and said that developing the industry in West Virginia and the Ohio Valley could lead to a petrochemical renaissance, according to published reports.

The so called “Shale Crescent” that extends through West Virginia, Ohio, and Pennsylvania, hold vast amounts of natural gas, including large reserves of “wet gas”, which is used to produce ethane and other natural gas liquids (NGLs) that are used in manufacturing of plastics and many other products.

The Appalachian region could support five large cracker plants that “crack” the gas into its byproducts, he said. One is being constructed in Beaver County, Pa., and a Taiwan-based company is close to a final decision on building a second one in Belmont County, Ohio. He suggested that another such plant could be developed in West Virginia.

The DOE presentation estimated building such a petrochemical hub could result in 100,000 new area jobs and attract more than $30 billion in private investment.

Winberg noted that presently most of the Appalachian natural gas used for NGLs is transported by pipelines to plants on the Gulf Coast for processing, resulting in lost opportunity.

One key to growing the industry is this area in developing an underground storage hub for NGLs, using salt and hard rock caverns. Storage hubs are needed to balance seasonal supply and demand fluctuations and ensure a steady stream for cracker plants. West Virginia leaders have supported a plan to build a large storage facility, and Winberg said it is also a priority for DOE.

If enough storage was available, it would encourage manufacturers using NGLs in production of their products to locate in a 300-mile radius of Pittsburgh, attracting an estimated $300 billion in revenue and 900,000 workers.

The Senate Energy and Natural Resources Committee in July approved a bill requiring a study on the benefits of building such a hub. A 2018 DOE report notes that production of NGLs is expected to nearly double by 2050, with much of it coming from the Marcellus and Utica basins. This presents “any opportunity for industry to establish an ethane storage and distribution hub in proximity to the production.”