Chinese investment could begin to pay off within a year, Thrasher: ‘”We’re going full steam ahead, immediately’

CHARLESTON, W.Va.  — After news broke that state officials had brokered an $83.7 billion deal with China Energy Investment Corporation to invest in West Virginia’s shale gas and chemical industries, one of the first questions to come up was how soon the Mountain State might see the fruits of the agreement.

“We’re going full steam ahead, immediately,” state Commerce Secretary Woody Thrasher said in a telephone call from China, made at 5:30 a.m. local time Nov. 9.

According to U.S. Sen. Shelley Moore Capito, R-W.Va., Thrasher and others familiar with the memorandum of understanding, ground could be broken within six to eight months on two gas-fired power stations to take advantage of the state’s vast Marcellus Shale gas reserves.

But that all could change under the memorandum of understanding signed Nov. 9 in front of U.S. President Donald Trump and Chinese President Xi Jinping.

Under the agreement, signed by Thrasher and China Energy President Ling Wen, the Chinese company intends to invest more than $80 billion in West Virginia in the next 20 years, including in development of an ethane storage hub for the region, chemical manufacturing and industries related to the extraction and transportation of natural gas.

“West Virginia has actively sought direct foreign investment to strengthen and diversify our economy,” Thrasher said. “Toyota Motor Manufacturing, Hino Motors, Gestamp, Sogefi and other solid corporate citizens with international parent companies create jobs, generate incomes and support communities in West Virginia. In that same spirit, we welcome China Energy and the mutual benefits our energy collaboration will bring.”

Thrasher said the agreement is a methodical, 20-year-plan to develop the gas and petrochemical industry in West Virginia.

“It’s not one shot here, one shot there,” he said. “It’s a sequential … with one step and a second step and so on.”

Brian Anderson, director of the WVU Energy Institute, said university officials have been working with the state Department of Commerce and officials with China Energy for the past two years on ideas to take advantage of West Virginia’s natural gas reserves. WVU entered into a memorandum of understanding with China Energy in 2016, and details of the larger memorandum of understanding with the state were hammered out over the past few months, he said.

“It’s a really exciting opportunity,” said Anderson.

He said the idea behind a regional ethane hub is not just to extract natural gas and ship it out of state, as happened with West Virginia’s coal reserves for the past 150 years, but to create natural gas and spin-off industries within the state and region.

While natural gas extraction and storage will create jobs in West Virginia, state officials believe the spin-off industries associated with the industry will be the real job creators. A study conducted by WVU estimates the shale gas industry in the state could lead to 100,000 jobs.

“This is all downstream (development),” agreed Jack Harrison of the West Virginia Petroleum Council, the state component of the American Petroleum Institute.

Others within the state’s oil and natural gas industry were quick to embrace the announcement of the memorandum of understanding.

Although she said “a lot has to happen” before the terms of the agreement come to fruition, West Virginia Oil and Natural Gas Association Executive Director Anne Blankenship was happy with the news.

“The investment will support the growth and development of natural gas end uses for which we have been advocating for many years,” Blankenship said. “Natural-gas-powered electric generation facilities, natural gas liquid storage and the petrochemical manufacturing industry have all been part of our policy initiatives, and we are excited to hear that a huge investment is planned to further those developments.

“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,” she said.

“This also will help revitalize our state’s downstream industries, such as chemical manufacturing, which is dependent on our industry for feedstock materials,” Monteleone said. “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.”

State officials have yet to determine what the overall economic impact of the investment might mean to West Virginia.

“It’s larger than the entire GDP of our state,” said Capito.

“It has major impacts for our state,” she said. “At this point, I’d say it’s almost incalculable.”

Some have cautioned that the memorandum of understanding is not a binding agreement and that the Chinese might not follow through with all the components of the deal.

“I’m very optimistic that we’re going to get this across the finish line with this announcement,” Capito said. “The agreement was signed before the president of the United States and the Chinese president.”

Anderson conceded that not all the promises made in the agreement may come to fruition. But he said every one of the projects discussed so far is viable.

“I’m very confident a significant fraction of them will move forward,” he said.

Anderson also believes the agreement will eventually lead to an ethane cracker being built in the Mountain State.