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China gas deal with WV generates more questions than answers


Charleston Gazette-Mail

CHARLESTON, W.Va. — Gov. Jim Justice said it’s proof that the “tides are turning” in West Virginia. Commerce Secretary Woody Thrasher called it “unprecedented.” Rep. David McKinley said it will “spur tremendous economic growth in our communities.”

Presidents Donald Trump and Xi Jinping affirm a business deal Thursday in Beijing.
(AP photo)

But concrete details about exactly what the 20-year, $83.7 billion in Chinese investment in West Virginia’s natural gas industry would bring to the state remained, at best, a bit sketchy Thursday.

Political leaders rushed to praise the announcement and their own roles in making it happen. They were less quick to really explain to West Virginians how what the governor described as “the largest investment in our state’s history” might actually materialize.

“The news is certainly encouraging, and we would welcome any investment that brings jobs for our local economy,” said Steve White, director of the Affiliated Construction Trades Foundation, a coalition of construction worker unions. “And we would love to have any details to better understand what is at stake.”

What kinds of natural gas processing plants, pipelines or cracker plants will China Energy Investment Corp. Ltd. build? Where? How many jobs will be provided and how many of them will go to West Virginians? Is the state’s environmental regulatory system up to the task of protecting residents? What about the long-term climate effects of the drive to burn more fossil fuels? Will this kind of investment in natural gas spell an even faster decline for West Virginia’s already struggling coal industry?

The early morning announcement from Beijing didn’t answer such questions.

A news release from the Department of Commerce said China Energy plans to invest its money in “shale gas development and chemical manufacturing projects” in West Virginia. By way of explanation, the release added that “the projects will focus on power generation, chemical manufacturing, and underground storage of natural gas liquids and derivatives.” Planning for the projects “is underway,” the release said, and “will proceed in phases over the course of 20 years.”

The release noted that President Donald Trump and Chinese President Xi Jinping witnessed Thrasher and China Energy President Ling Wen sign a “memorandum of understanding” about the investment. State officials did not respond to requests for a copy of the that signed document.

Industry groups joined West Virginia’s political leaders in praising the announcement, despite the lack of public details.

“By creating additional uses for the enormous amount of natural gas that we are sitting on in West Virginia, and using those resources here, we not only grow our natural gas industry, we grow the manufacturing industry, jobs and state revenue,” said Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association. “West Virginia is primed for this development. We have one of the largest natural gas fields in the world, a strong work-force, proximity to a large portion of the nation’s population, and a rich history in manufacturing. We are ready.”

Other groups that follow the state’s economy and the natural gas industry’s impact on the state, however, are not so sure and want to know more.

Ted Boettner, executive director of the West Virginia Center for Budget & Policy, acknowledged that the size of the investment is huge, noting the total over 20 years is more than one year’s gross domestic product in the state. But Boettner said he wonders if the deal includes a commitment to hire local workers, and if the investment also will result in a stronger push for some controversial state policy changes, such as “forced pooling” for natural gas drilling companies or modifications in the state’s tax system. Boettner also wondered about the state continuing to so closely tie its economic success to the boom-and-bust nature of fossil fuels.

“How will the investment impact other industries in West Virginia and their potential to grow?” Boettner asked. “It seems like we are repeating history in West Virginia and, 30 years from now, we will have little to nothing to show for it.”

Thrasher told West Virginia MetroNews that the first two projects from the China deal are expected to be two new natural gas power plants, likely in Harrison and Brooke counties. Curtis Wilkerson, a spokesman for Energy Solutions Consortium, said later that the two plants being considered for the Chinese investment were existing proposals that Energy Solutions has in Harrison and Brooke counties.

“It’s going in the right direction, but they haven’t signed [the investment deals] yet,” Wilkerson said Thursday afternoon.

The Harrison County plant already has approval from the West Virginia Public Service Commission, while the Brooke facility is still under PSC review, Wilkerson noted.

Phil Smith, spokesman for the United Mine Workers union, wondered about the impact the Chinese investment in natural gas plants would have on the state’s coal industry, which has been in a major downward spiral largely because of competition from cheap natural gas.

“We understand that West Virginia is also a gas state,” Smith said. “This could also spur manufacturing, which will help with a resurgence in electricity generation. But it would be interesting to hear from state leaders how this will not accelerate an eventual turn away from coal-fired utility generation in West Virginia.”

Jeremy Richardson, senior energy analyst with the Union of Concerned Scientists, also wondered about the impact on coal generation, but he also said the continued focus on transitioning to natural gas — rather than renewable energy — could have serious implications for climate change.

“This is very nuanced,” Richardson said. “On the one hand, it does represent economic diversification and building on existing assets, like the chemical industry. On the other hand, we are really worried about an over-reliance on natural gas. From a climate perspective, we won’t meet our goals if we simply replace all of our coal generation with natural gas.”

Angie Rosser, executive director of the West Virginia Rivers Coalition, said she is concerned about the state’s ability to properly regulate the existing natural gas industry, let alone a dramatic increase in that industry. Just last week, for example, the state Department of Environmental Protection decided to waive its authority under the federal Clean Water Act, to determine if the Mountain Valley Pipeline will violate West Virginia’s water quality standards.

“This is signaling more rapid industrial development … that I don’t think the state or the region is prepared for,” Rosser said. “What sounds like a quick fix for the economy and jobs has long-term implications written all over it that we are not prepared to handle. It feels like something spinning out of control.”

Reach Ken Ward Jr. at [email protected], 304-348-1702 or follow @kenwardjr on Twitter.

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