WV-China shale, chemical deal is a ‘game-changer’

West Virginia commerce officials said project planning is already underway and will focus on power generation, chemical manufacturing and underground storage of natural gas liquids and derivatives.

“The memorandum of understanding marks the first step in a series of commitments the company expects to make in West Virginia,” he said.

Thrasher has revealed that early projects are two natural gas-fired power plants, likely in Harrison and Brooke counties, in a deal valued at more than $1.3 billion, with construction starting in the next six to eight months. However, he added that those two sites have tentatively been identified and the site selection process is still ongoing.

West Virginia University since 2002 has been jointly researching coal liquefaction with mining company Shenhua Group, which merged with energy company Guodian Group to form China Energy.

The university said it will work closely with state officials to help coordinate the investment, with funding focused on developing the proposed Appalachia storage and trading hub.

In August, the university released a study by researchers from the geological surveys in West Virginia, Pennsylvania and Ohio of geologic formations that could be used by developers to build underground facilities to store natural gas liquids from gas wells.

Thrasher told MetroNews’ Hoppy Kercheval “the raw products are from West Virginia, and they’re going to stay in West Virginia.”

“The power generation projects are gas-to-power that will be power generation facilities located within West Virginia, constructed by contractors and with West Virginia employees,” he said in the interview.

Thrasher also said the power plants would have United States-based owners.

“Every project they’re doing is a combination of investors,” Thrasher said in the interview. “In the case of the power plants, they’re going to be United States-based owners, so they’ll be joint ventures.”

Thrasher claimed the deal would build out the full chain of the petrochemical industry within West Virginia.

“These projects will take place over 20 years, but significant money will be spent immediately and there will be a steady progression of in-flow to generate these projects,” he said.

West Virginia already has a relationship with China Energy, including ongoing research initiatives with West Virginia University. WVU and then-Shenhua Group began their relationship in 2002 with joint research on direct coal liquefaction technology.

China Energy is the recent creation of a merger between China’s state-owned coal mining company Shenhua Group and energy producer Guodian Group. The merger positions China Energy as the world’s largest power company with more than 200,000 employees.

The investment by China Energy is the culmination of years of relationship-building, said WVU President Gordon Gee on Thursday.

“It is also an excellent example of the possibilities that we have been discussing within the West Virginia Forward initiative with our partners at the state Department of Commerce and Marshall University,” he added.

“As I have traveled the state talking about West Virginia Forward, I have frequently said we need a ‘quick win.’ In the economic development world, this is a nearly unprecedented big win. The agreement, and the ramifications from it, will help move West Virginia forward for years to come.”

Brian Anderson, director of WVU’s Energy Institute, called the announcement “a game-changer.”

“Instead of sending jobs offshore, we are bringing hundreds of thousands of jobs stateside and directly into the state,” Anderson said. “By collaborating with global companies like China Energy to invest in our state through joint research, business development and demonstration opportunities, we begin to move West Virginia forward by expanding and diversifying our state into newfound prosperity and success.”

“I could not be more excited about this development and what it means for our state and for Marshall University,” Gilbert said. “One of my priorities as president is economic development for West Virginia and ensuring Marshall is a full partner with the Department of Commerce. Our faculty has the expertise and, through our College of Information Technology and Engineering and our College of Science, is equipping our students with the necessary skill sets to be leaders in this global economy, providing top-notch researchers to develop new technologies. We also are helping our state workforce train for the jobs of tomorrow through RCBI, our center of excellence in advanced manufacturing.”

Gilbert says Marshall has the knowledge, engineers, researchers, tech specialists and professionals to help this endeavor come into reality.

“We stand ready to partner with the state to provide this workforce,” he said. “Put simply, Marshall University is ready to get to work.”

The size of the proposed investment is larger than the state’s gross domestic product last year of $73.4 billion. West Virginia’s gross domestic product declined 0.9 percent in 2016, reversing growth seen in 2015, according to the Bureau of Economic Analysis at the U.S. Department of Commerce.

Nine natural gas pipelines are proposed to come through the Huntington/Tri-State region. They include the Leach Xpress, Mountaineer Xpress, Buckeye Xpress and the Appalachian Storage Hub, which would consist of six pipelines originating in Pennsylvania and running adjacent to the Ohio River along West Virginia’s Ohio River border before crossing under the Ohio River and then passing by Marathon’s refinery in Catlettsburg, Kentucky, and going toward the Gulf Coast.

The hub would also include a new pipeline connecting Charleston-area petrochemical plants to the hub pipelines near Point Pleasant, West Virginia. The storage hub is one of the projects that developers are working on under the memorandum of understanding with China Energy, Anderson said.

“Thanks to this strategic partnership, West Virginia is on the global stage,” Anderson said. “Now is the time to seize these business development opportunities that will help expand West Virginia’s energy market and provide cleaner, cheaper energy across the United States and beyond.”

David Lieving, president and CEO of the Huntington Area Development Council (HADCO), says the storage hub would create significant opportunities for the Tri-State area.

“It would promote job creation and new investment in the area and bring the value added types of activities that would bring jobs and other positive economic activity,” he said. “This is great news and is the kind of thing that West Virginia desperately needs.”

The Ohio Valley Environmental Coalition and other environmental groups oppose the storage hub, saying it would create a major petrochemical region with public health dangers and contribute to global warming.

The Associated Press contributed to this story.