For the past century, West Virginia has mined the coal that has built America and provided low-cost electricity for our region. In more recent years, that same coal has also powered the developing world where, until recently, people did not have the benefit of flipping on a light switch, let alone a television or computer. Car parts manufactured in West Virginia end up on assembly lines across America and in auto parts stores around the world.
All told, West Virginia's export economy has grown to more than 16 percent of the state's economy in recent years - a testament to West Virginia's elected leaders' drive toward diversification.
And, while the story of West Virginia is unquestionably one of rich and abundant resources, it's increasingly a state that is venturing into new territory.
West Virginia will always be synonymous with coal production. But, the state is also home to the most prolific natural gas field in the United States - what some consider the second largest in the world - in the Marcellus Shale.
To be clear, this chapter of West Virginia's history is being written as we speak - jump-started just a handful of years ago, the region's natural gas industry has the makings of long-term success for landowners who lease their land; the state government that collects taxes off this development; and the communities where this activity takes place through new and expanding economic opportunities.
As a 150-year-old company with deep roots across Appalachia, CONSOL Energy's commitment to West Virginia remains steadfast. Specifically, we are planning to invest $14 billion over the next 10 years to develop the Marcellus Shale right here in West Virginia. With this increased development comes increased opportunity and responsibility. That responsibility is something we have and always will take very seriously at CONSOL Energy, and why I am writing today.
CONSOL Energy recently signed an agreement with a petrochemical company to ship ethane, a byproduct of Marcellus Shale development, to facilities in Europe. This ethane will then be refined and used to manufacture plastics and other everyday consumer products.
In the Northern Panhandle, ethane is produced in what is called the "wet" or "rich" gas window of the Marcellus Shale formation. It is produced alongside propane, butane, isobutane, natural gasoline and other heavier hydrocarbons that are removed from the gas stream and then sold separately as individual products. Each one of these hydrocarbons has its own unique market.
By signing this agreement, CONSOL has secured long-term access to a pipeline that can transport this product to market. This also provides us with the certainty and ability to reinvest right here at home in additional development.
Importantly, without take-away options for ethane, we, along with our leaseholders, are not realizing the full benefit of the natural gas we develop.
The good news for West Virginia, and the region, is that we have an abundant supply of ethane in Appalachia which most certainly can support new local opportunities. Clearly, local feedstock for these opportunities will not be a limiting factor.
The proposed Odebrecht cracker facility in Wood County is one potential option, and CONSOL Energy is hopeful that we will have the opportunity to supply them ethane as they take steps to advance the project.
According to a recent study by Simmons & Co. International, the ethane market in the United States is currently oversupplied and will remain that way for the next few years. As many as 200,000 barrels of ethane were rejected each day in 2013, with that figure expected to grow to 449,000 barrels a day this year. When ethane is "rejected," it is left in the natural gas stream and sold for its heat content rather than extracting it to sell as a separate product. With this projected increase in supply, producers may hit a threshold for ethane rejection due to pipeline specification limits. This would result in natural gas curtailments and shut-ins, unless ethane is extracted and sold separately.
With historic levels of ethane production and limited demand and take-away opportunities currently available in the United States, CONSOL Energy is proud to be working with our friends here at home, across the Atlantic and elsewhere who are in need of this product. All while directly investing in the region and tapping the local workforce, vendors and suppliers to responsibly develop this important resource.
We look forward to building out this exciting new segment of the regional economy in the months and years ahead - and capitalizing on a tremendous opportunity to begin a new legacy - one that will sustain West Virginia and CONSOL Energy for another 150 years.
J. Brett Harvey is chairman and chief executive officer of CONSOL Energy.