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WVU Energy Institute pushes for regional liquid natural gas hub

By CONOR GRIFFITH

The State Journal

MORGANTOWN, W.Va.  — West Virginia University Energy Institute Director Brian Anderson said the recently signed memorandum of understanding between West Virginia and China Energy Investment Corp. Limited will help foster the development of a liquid natural gas storage hub and related infrastructure.

West Virginia University Energy Institute Director Brian Anderson

On Thursday, China Energy, a longtime research and development partner with WVU, announced an agreement that will bring an investment of $83.7 billion to West Virginia.

Anderson said the investment will be used to help develop the proposed Appalachian Storage and Trading Hub, along with other projects that can develop the state’s natural gas infrastructure and lead to plastics manufacturing.

The WVU Energy Institute has worked toward the storage hub for years, focusing its efforts on transportation improvement, workforce development, marketing and research.

“To quote Pat Getty, president of the Benedum Foundation: ‘Wealth is created where value is added,’” Anderson said.

He said the way forward represents a departure from the way West Virginia has handled its natural resources for the past 100 years.

Instead of sending out raw materials, Anderson said the goal now is to keep Marcellus and Utica Shale gas close to home, where it can be processed at cracker plants — such as the one Shell is building north of Pittsburgh — and shipped to manufacturing centers. That will be made possible with the trade and storage hub.

Having this hub, he said, means Appalachia can one day be on par with the country’s current natural gas hot spot, the Gulf Coast, with the added perk that most manufacturing centers that turn natural gas plastics into everyday products are much closer. That means cheaper shipping costs, less energy spent moving materials and even lower emissions.

Anderson said shipping out raw, unrefined goods can only go so far. He equated natural gas plastics with trading 100 pounds of wooden furniture versus 100 pounds of timber; one is going to fetch a better price than the other.

He hopes development of a trade hub in West Virginia will precipitate the opening of new cracker plants in West Virginia.

“We hope this catalyzes all the other ancillary industries,” Anderson said, emphasizing the importance of making sure hub development doesn’t move too far ahead of the rest of the industry and vice versa. “We have to be strategic and careful.”

Anderson said Shell’s cracker plant is scheduled to be finished in 2022, about the same time the trade and storage hub will be completed, based on the pace of engineering, procurement of property and construction. Sites for the hub in West Virginia have been considered but none have been finalized.

Anderson said it’s hoped the deal with China Energy will attract more partners to invest in the state further down the road.

In the meantime, more formalized agreements have yet to be sorted out as to how much of the China Energy funding will go toward the hub and how much will go to other related projects. In view of the memorandum, Anderson said the pace of hub development will stay the same so that everything falls in place as planned.Jennifer Scott of the American Chemistry Council said economists with the council conducted a study of the region, using the same input/output model used by more than 20 government agencies and 250 colleges and universities, to assess Appalachia’s natural gas resources.

“West Virginia and the region already has a natural gas/plastics manufacturing capacity, but with a trade and storage hub, we found potential for growth of that capacity,” she said.

Across four states, Scott said, development of the hub, along with the accompanying petrochemical industries, could generate more than 100,000 new and permanent jobs by 2025, jobs that would also generate $2.9 billion in tax revenue. She said those jobs would break down to about 25,700 directly employed by the natural gas industry, 43,000 jobs in businesses that supply and support natural gas operations, while a further 32,000 jobs can be created while the former two groups go spend their paychecks.

“This investment by China Energy is the culmination of years of relationship building, both by West Virginia University and the state,” WVU President Gordon Gee said in a statement. “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.”

West Virginia Forward aims to ID large-scale, short-term projects that can boost West Virginia’s economy through five principles: Building on existing assets; growing and diversifying beyond the sectors already established; finding disruptive trends; considering regional impact; finding the quick wins.

“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,” Gee said. “The agreement, and the ramifications from it, will help move West Virginia forward for years to come.”

Staff writer Conor Griffith can be reached by at 304-395-3168 or by email at [email protected]

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