Appalachian Storage Hub Story Archives - West Virginia Public Broadcasting

Environmentalists Question Future Gas Storage Hub In Light Of Federal Spending Language

Language included in the federal spending deal Congress passed this week could imperil a major natural gas storage project planned for the Ohio Valley that is seeking a $1.9 billion federal loan guarantee, according to environmental advocates.

In June, an amendment by Democratic Reps. Ilhan Omar from Minnesota and Pramila Jayapal of Washington, sought to clarify requirements for the Department of Energy’s Title XVII Innovative Energy Loan Guarantee Program. The program was designed to finance clean energy and advanced technology projects.

The amendment stipulates the program should only be used “for projects that avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases and employ new or significantly improved technologies as compared to commercial technologies in service in the United States upon issuance of the loan guarantee.”

Language from the amendment was included in the guidance document, or manager’s report, associated with the $1.4 trillion spending package snaking its way through Congress this week. The newly-passed spending package, which the president is expected to sign, provides $29 million to the Title XVII program.

A screenshot of the manager’s report associated with the 2020 federal spending bill package, H.R. 1865.

Some environmental groups argue the new language makes it clear the so-called Appalachian Storage and Trading Hub, a fossil fuel storage project, should not qualify.

The project, which has been in the works for nearly a decade, would provide underground storage for natural gas liquids like ethane, which are used to make plastics and other products. It has the support of West Virginia’s Congressional delegation and Justice administration.

Project developers are currently seeking a federally-backed $1.9 billion loan under the Title XVII program.

“The idea that we’re going to use a clean energy program to incentivize the build out of a plastics industry that is going to lead to more fracking and lead to more emissions of greenhouse gases flies in the face of the purpose of the program,” said Mitch Jones with environmental group Food & Water Watch.

Experts say building ethane storage is key to attracting new plastics and petrochemical manufacturers to the region.

In an emailed statement, Steve Hedrick, president and CEO of the Appalachian Development Group, LLC (ADG), said he remains confident the project will move forward.

“ADG’s engagement with the DOE on its Part II application of under DOE’s Title XVII authority is authorized under the current standard,” he said. “If those standards change as presented publicly, [the Appalachian Storage and Trading Hub] still meets the criteria.”

A representative for the Department of Energy declined to comment on specifics related to the project or the new Congressional language.

DOE Official Tells W.Va. Lawmakers Petrochemical Development is a Top Priority

West Virginia lawmakers heard testimony Tuesday from a top Department of Energy official that the federal government is prioritizing building out a petrochemical industry in Appalachia.

Speaking in front of the Joint Committee on Natural Gas Development, Steven Winberg, DOE’s assistant secretary for fossil energy, told lawmakers his agency and the Trump administration believe the Ohio Valley is “on the cusp of an Appalachian petrochemical renaissance.”

“Federal efforts are strong and continue to gain momentum,” Winberg said. “We also recognize that others are doing a lot and we believe that together we can make this Appalachian petrochemical Renaissance happen for the benefit of the industry, the region and the country.”

West Virginia, Pennsylvania and Ohio sit on top of some of the country’s largest reserves of ethane-rich natural “wet” gas, which can be processed into the chemical and plastics feedstocks.

According to a2017 U.S. Department of Energy report, U.S. natural gas liquids production in the region is projected to increase over 700 percent in the 10 years from 2013 to 2023.

Winberg said the federal government is devoting resources into ensuring pipelines, ethane storage and cracker plants are built in the region, including to get final investment in a proposed cracker plant in Belmont County, Ohio.

Thailand-basedPTT Global Chemical, and its partner South Korea’s Daelim Industrial Co., have applied for permits and purchased 500 acres of land in Dilles Bottom, just a few miles from both Shadyside, Ohio, and Moundsville, West Virginia, just across the Ohio River. About 30 miles northwest of Pittsburgh, Shell’s Monaca cracker plant is already under construction. It’s slated to produce 1.6 million tons of ethylene each year and permanently employ about 600 workers when done, according to the company.

Winberg urged West Virginia lawmakers to invest now in preparing sites for possible cracker development.

“What we need, ladies and gentlemen, is one of these crackers in West Virginia,” he told the committee. “These crackers are the anchor facilities that will drive job growth in this region.”

The American Chemistry Council estimates the hub could attract up to $36 billion in new chemical and plastics industry investment and create 100,000 new area jobs.

Gov. Jim Justice in January said the development of underground natural gas liquids storage, or the so-called Appalachian Storage and Trading Hub, is his office’s “number one economic focus.”

On the hub, Winberg said it’s a top priority for the Trump administration.

“At DOE we have a full court press on this,” he said.

Environmental groups feverently oppose this kind of development. Dustin White with the Ohio Valley Environmental Coalition said bringing the petrochemical industry to the region would subject residents to public health, environmental and climate impacts with limited economic benefits.

He argued automation would likely replace the need for human workers at the majority of these facilities, and he likened a petrochemical future in Appalachia to what has already occurred in the Gulf Coast. Louisiana and neighboring states are currently home the bulk of the nation’s chemical and plastics industry, and dubbed by some as “cancer alley” due to high levels of cancer and other diseases.

“Once again the human health impacts and safety were not brought up,” White said of Winberg’s presentation. “From my perspective, it’s all false hope.”

He urged lawmakers to invest public tax dollars instead in renewable energy and other non-fossil fuel-based industries, especially as an increasing number of cities and nations ban the use of single-use plastic, which would be a central end product of the proposed Appalchian petrochemical buildout.

As Top Dem on Senate Energy Committee, Manchin Prepares to Tout Region's Resources

The Senate Energy and Natural Resources Committee will begin holding full hearings this week with a new top Democrat: West Virginia Sen. Joe Manchin.

Manchin’s ascension to lead the Senate committee devoted to energy issues drew concern from environmental groups and more left-leaning members of his own party who fear the centrist Democrat may not be a strong climate advocate.

At a recent meeting of West Virginia oil and gas producers, the senator from coal country said he hoped to address climate change in this role, but would also use his newfound post to better promote the Ohio Valley’s energy resources.

Manchin, who said he will have a staff of about 17, will work closely with Sen. Lisa Murkowski (R-AK), who chairs the committee.

“The beauty about it is this: Lisa comes from Alaska, I come from West Virginia. Two heavy-lifting states, two heavy-producing states for the energy this country needs,” he told attendees of the West Virginia Independent Oil and Gas Association winter meeting last month in Charleston. “With that being said, we can set an agenda that basically shows them what we’re doing.”

Manchin said he hopes to highlight the energy contributions made by West Virginia and other states in the region from both the coal and growing natural gas industries.

“We haven’t been able to tell our story,” he said. “We’re just not telling it because there’s a strong wind blowing that doesn’t want that to get out. They want to believe there’s something utopian in a perfect world. Well, I’m hoping we get there in our lifetime. I don’t think so. Maybe our children or grandchildren, whatever. But until that happens I want to make sure they understand the ships from Russia are bringing natural gas in to the northeast. I want them to see that picture.”

‘All-In Energy Policy’

Environmental groups have expressed concern about Manchin taking the top spot on the Senate Energy and Natural Resources Committee in large part over fears the coal country Democrat will not be a strong voice for climate action.

In recent years, Democrats on the committee have used their positions to rail against Trump administration efforts to backtrack on climate policies and science.

Manchin has been steadfast in his position that while he believes climate change is real and that the country needs to prepare for its impacts, he will advocate for energy policy that contains a mixture of emissions-free electricity including renewables, but that also includes the use of fossil fuels for the foreseeable future. That is a break from some in the Democratic party who are seeking the immediate phase-out of fossil fuels in order to prevent the worst impacts from climate change.

“I’ve got a far left agenda coming from the people in my caucus, and I tell them basically that we’re looking for an all-in energy policy,” Manchin told the crowd.

Speaking after the meeting, Manchin also noted both he and Murkowski are pragmatic about the threat of a changing climate.

“We understand energy, we understand climate,” he said. “We understand that we have to live in this wonderful, beautiful world of ours, make it cleaner and better, but use all the energy we have in a much cleaner fashion.”

Manchin declined to provide examples of specific legislative proposals he might champion, but said investing in technology and research would be a top priority.

In preparing to take his post as second in command, Manchin said he had spent some time chatting with Microsoft founder and philanthropist Bill Gates. The billionaire has invested significantly in clean energy, including nuclear power. Manchin characterized Gates as pragmatic about the need to balancing clean energy and fossil fuels, and said he hoped to bring him to the committee.

Storage Hub Major Priority

The lawmaker also stressed his commitment to building more natural gas liquids storage capacity in the Ohio Valley. Specifically, Manchin noted his continued support for the Appalachian Storage and Trading Hub.

Manchin has long been a proponent of the project, now almost a decade in the making. It would be built with a combination of private investment and a $1.9 billion loan guarantee from the Department of Energy, which is being applied for by the project’s developer, the Appalachia Development Group, LLC.

A year ago, the project got approval for the first of two application phases for a $1.9 billion U.S. Department of Energy loan. Last summer, ADG announced it was hiring an outside firm, Parsons Corporation, to help with the second phase and data collection.

“It’s like the field of dreams, build it and they’ll come,” he said of the hub. “I think everything leads from that if people know we have available, dependable and affordable energy there to be accessed for the development that we need for our state, our region and our country, defense of our country, that’s a no-brainer.”

The full committee kicks off hearings this week. On Tuesday, it will hear testimony about the state of the country’s energy and mineral markets. On Thursday, it will hold a hearing on energy innovation in the United States.

Appalachian Underground Gas Storage Hub Gov. Justice's 'No. 1 Economic Focus'

West Virginia Gov. Jim Justice said a major underground natural gas liquids storage facility proposed for the Ohio Valley is a top economic priority for his office.

Speaking at the annual winter meeting of the Independent Oil and Gas Association of West Virginia in Charleston Wednesday, Justice said administration officials spoke this week to a “major player” involved in the development of the Appalachian Storage and Trading Hub, although he did not offer specifics. Justice said he would be reaching out to federal officials shortly to continue advocating for its development.

“The number one economic focus on my office today is the natural gas hub,” Justice said.

If built, the hub would allow more natural gas liquids to remain in Appalachia. Storage is a key infrastructure investment needed to attract petrochemical manufacturers to the region.

Justice touted his relationship with President Donald Trump and Energy Secretary Rick Perry as reasons why he was confident storage hub, which has been in development for almost a decade, would be built.

He said the hub is crucial to the state’s future prosperity.

“The hub ensures, the hub ensures job boom in West Virginia forever,” he said. “It ensures our security forever, the way I see it. Forever. “

The project would be built with a combination of private investment and a $1.9 billion loan guarantee from the Department of Energy, which is being applied for by the project’s developer, the Appalachia Development Group, LLC.

ADG’s CEO Steve Hendrick told meeting attendees he had growing confidence in the hub becoming a reality.

“Something that many people may have thought was a pipedream just a few years ago, no pun intended,” he said. “Something that many may still think is a dream, well I’m here to tell you, and any doubters who might be still out there, that the hope I’ve carried with me since we got this started and enganged in the effort, which shockingly was some nine years ago, this hope is based in reality and opportunity that is right on the tips of our fingers.”

A year ago, the project got approval for the first of two application phases for a $1.9 billion U.S. Department of Energy loan. Last summer, ADG annouced it was hiring an outside firm, Parsons Corporation, to help with the second phase and data collection.

Speaking at the conference, Hendrick said a number of sites have been selected for consideration, including in West Virignia.

A new report fedeal report released in December found developing ethane storage in Appalachia could provide a boost for the entire petrochemical industry. The American Chemistry Council estimates the hub could attract up to $36 billion in new chemical and plastics industry investment and create 100,000 new area jobs.

Environmental groups have expressed concern the storage hub would turn the Ohio Valley into a petrochemical manufacturing center, which could negatively affect public and environmental health.

Federal Report Touts Appalachian Gas Storage Hub

A new report fedeal report finds developing ethane storage in Appalachia could provide a boost for the entire petrochemical industry.

The report, asked for by members of Congress and released Tuesday by the U.S. Department of Energy, examined the feasibility of developing underground storage and distribution infrastructure for ethane, a natural gas liquid brought up during shale drilling and a key feedstock for most plastics.

The findings were praised by Energy Secretary Rick Perry, who added that the Trump administration also supports ethane storage in the region.

“There is an incredible opportunity to establish an ethane storage and distribution hub in the Appalachian region and build a robust petrochemical industry in Appalachia,” he said, in a press release. “As our report shows, there is sufficient global need, and enough regional resources, to help the U.S. gain a significant share of the global petrochemical market. The Trump Administration would also support an Appalachia hub to strengthen our energy and manufacturing security by increasing our geographic production diversity.”

The Marcellus and Utica shale formations, located under West Virginia, Ohio and Pennsylvania, are ethane-rich, and the agency estimates the largest growth in natural gas liquids production is expected from this region.

“Ethane production in Appalachia is projected to continue its rapid growth in the coming years, reaching 640,000 barrels per day in 2025 – more than 20 times greater than regional ethane production in 2013,” the report states.

Developing a natural gas liquid storage “hub” is critical to growing the plastics and chemicals industries.

Some storage capacity is under development in the region.

Energy Storage Ventures LLC is developing the Mountaineer NGL Storage project. When completed, the project would store 2 million barrels of ethane, butane and propane in four underground salt caverns on a 200-acre site, about a mile north of Clarington, Ohio, on the Ohio River.

Another high-profile public-private natural gas liquid storage project is also in the works. The Appalachia Storage and Trading Hub cleared its first major hurdle earlier this year when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan.

Republican Sen. Shelly Moore Capito of West Virignia priased the report’s findings in a tweet.

“This is something I have long advocated for & something I believe could be a game-changer for #WV & our economy,” she wrote.

DOE said building underground storage and distribution in Appalachia could benefit the entire industry and offer a “competitive advantage,” in part because it would diversify where ethane is stored geographically.

Currently, the bulk of America’s petrochemical industry and 95 percent of ethane storage is located near the Gulf Coast, which makes it vulnerable to climate change and extreme weather events.

The report focused largely on the economic benefits of ethane storage and did not examine the environmental costs, or factor in how increased flooding across Appalachia due to climate change might affect ethane storage or a petrochemical system.

Environmental groups say ethane storage and any petrochemical industry buildout in the region jeopardizes the region’s air and water quality and would negatively impact public health.

Appalachian Natural Gas Storage Hub Developers Bring in Outside Firm

Developers of a major underground natural gas liquids storage facility say they are one step closer to making construction a reality. The Appalachian Development Group announced in an Aug. 29 news release that it selected an outside development and engineering firm to help with project planning and construction.

Parsons Corporation will collect data and information the multi-billion-dollar project needs to move forward.

“We believe the best opportunity for success is achieved by engaging our journey partner in Parsons,” Appalachia Development Group CEO Steve Hedrick said via email. “This includes both with the U.S. DOE Loan Program Office and further through construction of the [Appalachia Storage and Trading Hub].”

The Appalachia Storage and Trading Hub cleared its first major hurdle earlier this year, when it got approval for the first of two phases for a $1.9 billion U.S. Department of Energy loan.

The project developers said the company will help the project as it seeks the full federal loan and outside funding.

The project has the support of both of West Virginia’s U.S. senators — Joe Manchin, D-W.Va., and Shelly Moore Capito, R-W.Va.. They sponsored legislation last year that would designate the hub as “critical energy infrastructure.”

China’s largest partially state-owned energy company, China Energy, has pledged an additional $84 billion investment in the region to facilitate the development of a petrochemical industry. The company signed an MOU with the state of West Virginia to build a series of facilities that would process natural gas liquids and its byproducts, but the escalating trade war with China appears to have temporarily slowed progress.

Environmental groups across the region have expressed concerns that the hub will turn the Ohio Valley into a major petrochemical region with public health dangers and contribute to climate change.