China Deal Hailed as a Major Step Forward
WHEELING –The $83.7 billion a Chinese firm plans to spend developing West Virginia’s shale natural gas resources exceeds the total value of all goods and services produced in the state each year.
That investment also would be more than double the approximately $35 billion total that West Virginia University Energy Institute Director Brian Anderson estimates drillers, frackers, processors and pipeliners have spent in the Mountain State since the Marcellus and Utica shale boom began several years ago.
John Deskins, director of Bureau of Business and Economic Research at WVU, said Thursday the state’s annual gross domestic product is about $75 billion.
“West Virginia has actively sought direct foreign investment to strengthen and diversify our economy,” Woody Thrasher, the state’s secretary of commerce, said. “The massive size of this energy undertaking and level of collaboration between our two countries is unprecedented.”
While in the presence of President Donald Trump and China’s President Xi Jinping in Beijing early Thursday, Thrasher signed a memorandum of understanding with China Energy Investment Corp. that calls for the company to invest $83.7 billion in West Virginia during a 20-year span. The investment could lead to ethane crackers, storage areas, pipelines, processing plants, electricity plants and other such facilities.
“It could be one big ethane cracker, or it could be a couple of smaller ethane crackers,” Anderson said. “They are looking at several different projects.”
Anderson said the firm known as China Energy is both the largest electricity producer and the largest coal company in the world.
“This is a way for them to enter the U.S. domestic market,” Anderson said.
Recently, Anderson discussed the results of a study to determine the best locations for underground storage caverns to create the Appalachian Storage Hub. This alone could lead to 100,000 permanent jobs in the Marcellus Shale region, according to the American Chemistry Council.
Several of the areas the study lists as “top-rated” for storing ethane, propane, butane or other natural gas liquids are in the Upper Ohio Valley. Mountaineer NGL Storage is already working on such a project along the Ohio River in Clarington that will connect to West Virginia by pipeline.
“The prime zone stretches from Hancock all the way down to Putnam County,” Anderson said. “We have very good geology for it.”
Anderson said among the Marcellus, Utica and Rogersville shale formations, West Virginia has “several decades worth” of natural gas reserves.
“The best thing about China Energy is that they are not going to extract our resources and export them,” Anderson said. “We are going to be able to add value to the products before they leave the region because of these downstream projects.”
R. Dennis Xander is past president of the Independent Oil and Gas Association of West Virginia. Now the president of Buckhannon-based Denex Petroleum, he’s worked in Mountain State natural gas fields since 1974.
“This is a wonderful day for West Virginia,” Xander said. “How can you be anything but optimistic about this?”
Xander said the industry has come along way in 43 years, as he said a driller could go an average of about 1,400 feet in a typical day at that time.
“Now, these horizontal drillers can go 40,000 feet in a day,” he said. “It’s simply amazing how far the industry has come.
“There will probably be jobs coming out of this that we can’t even dream about yet,” Xander added. “Schools need to be preparing to get our kids ready to work in these industries.”
Marc Monteleone serves as the active IOGA president. He said the spending plans will allow West Virginia to redevelop its once-prominent chemical industry.
“Our natural resources are of great value, and this is going to significantly impact West Virginia’s energy future, as well as the national and global energy outlook,” Monteleone said.
Officials said the Chinese officials made several trips to the Mountain State to evaluate the prospects. The China Energy expenditure in West Virginia is the largest investment in a series of projects in U.S. companies and other states totaling a reported $250 billion of investment in America.
“We implore state and federal officials to pass policies and initiatives that promote more of this type of investment in our natural gas resources to make a brighter economy for everyone,” West Virginia Oil and Natural Gas Executive Director Anne Blankenship said. “West Virginia must support legislation and rules that make development as possible as it is in surrounding states, while avoiding any possibility of hampering natural gas power production, if we are to see the true value of this investment.”
All members of the Mountain State’s congressional delegation issued statements of support for the project, as did Gov. Jim Justice.
“We have had a complete turnaround in West Virginia in 2017. Just think, we started with a $500 million dollar deficit and now the jobs are coming back and where there was despair there is now real hope,” Justice said. “All of these things have created a momentum to bring prosperity and goodness to the people of our state. While this is a great day for West Virginia, we truly believe there are thousands of more great days to come.”