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.
State and federal politicians announced initiatives this week to move forward an effort to build a major underground natural gas liquids storage facility in the Ohio Valley, an effort opposed by environmental activists who fear a petrochemical expansion in the region will threaten not only the environment, but public health.
The Appalachian Storage and Trading Hub has been in the works for almost a decade. Developers are seeking billions in loan guarantees from the Department of Energy.
This week, Gov. Jim Justice met with officials from the U.S. Department of Energy to discuss the hub and developing the petrochemical industry in West Virginia. In a press release the governor said he would appoint a liaison to work with Energy Department officials on these issues.
“It is absolutely vital that we create a petrochemical industry in West Virginia versus building more pipelines that leave our state without creating any long-term manufacturing jobs,” Justice stated.
Officials from West Virginia, Ohio and Pennsylvania support efforts to bring cracker plants and other plastics manufacturing infrastructure to the Ohio Valley, which sits upon two of the nation’s most productive natural gas and natural gas liquids repositories, the Marcellus and Utica shale formations.
A 2018 study by the Department of Energy 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.
The announcement coincided with the Marcellus to Manufacturing Development Conference held this week in Morgantown. The conference, organized by the West Virginia Manufacturers Association, brought together officials and business representatives from across the region, largely to discuss expanding petrochemical manufacturing in West Virginia.
Conference keynote speaker West Virginia Commerce Secretary Ed Gaunch told attendees his agency actively wants to help bring plastics and other petrochemical manufacturers to the state.
“The sun’s about to shine on this wonderful state,” he said. “Opportunities abound in West Virginia.”
‘People Over Petro’
Credit Jesse Wright / WVPB
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WVPB
Protesters in front of the Waterfront Marriot Hotel Tuesday, April 9, in Morgantown, W.Va.
Not everyone sees it that way, and those opposed to the petrochemical buildout say they’ve struggled to be heard by elected officials.
“Petrochemicals are not energy. It’s plastic,” said Belmont County, Ohio resident Bev Reed. “It’s a dead product that doesn’t go anywhere except to poison people.”
Reed was one of about 40 protestors who gathered outside the conference. Protestors carried colorful signs, some with plastic grocery bags attached that whipped in the wind, and chanted “people over petro, people over plastics, people over profit.”
Activists voiced concerns that turning the region into the next plastics manufacturing center would place the state’s natural resources at risk, and harm its people, many of whom are already impacted by resource extraction.
Lawmakers in favor of the proposed of the petrochemical expansion often cite an American Chemistry Council study that projects the industry would bring 100,000 jobs to the region. It also estimates 60% of plastic production would be for food products.
Potential investment into the Ohio Valley’s petrochemical buildout comes at a time when some cities and companies around the globe are pledging to discontinue use of single use plastic.
Protestor BJ McManama with the Indigenous Environmental Network pushed back on the argument that a petrochemical future is the only one that can bring new jobs to the area.
“They shout jobs, jobs, jobs, making it sound like we don’t want jobs. We want handouts. We don’t want you guys have jobs. No, that’s not right,” she said. “We want clean, safe, sustainable jobs that create resilient, happy and peaceful communities.”
Federal Support
A long-sought, and key component, to creating a petrochemical industry in the Ohio Valley is building storage for ethane. Ethane is a component of the natural gas liquids abundant in the region, and a building block of plastic.
Both of West Virginia’s U.S. Senators, Democrat Joe Manchin and Republican Shelley Moore Capito, support the Appalachian Storage and Trading Hub.
At a budget hearing last week, Manchin pressed Energy Secretary Rick Perry about its progress.
“Are you all looking seriously at a natural gas storage hub in the mid-Atlantic region, and advancing that as quickly as we possibly can to have that backup for security? And how does that play into the national security of our country?” Manchin asked.
Perry said the hub was “not happening as fast as I’d like to see it,” but noted the Trump administration’s support.
“I think there is extraordinary potential in those four states and the Appalachian region – Pennsylvania, West Virginia, Kentucky, Ohio,” he said.
To bolster the argument that this development would improve national security, this week Manchin introduced a bill, the Appalachian Energy for National Security Act, which would task the Energy Department with studying the national security benefits of the proposed gas hub.
But for the protestors who picketed Tuesday, the fight isn’t over.
“We need to keep them from taking away what we have left,” said Ashley Funk, with the Mountain Watershed Association, an environmental group based Fayette County, Pennsylvania. “We must stand together from death alley to the Ohio River Valley to say to these companies that want to profit from our communities that we are not disposable.”
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.
More than 100 people braved freezing temperatures to both listen and have their say in front of Ohio environmental officials at a recent hearing in Belmont County, Ohio. For the three dozen or so people who testified, the stakes were high.
The hearing at Shadyside High School focused on a nearly 300-page, densely technical, draft air quality permit. The permit is one more step towards a massive, multi-billion dollar petrochemical plant proposed for the banks of the Ohio River just a few miles away from the auditorium.
Like many at the hearing, Glenn Giffin, president of IBEW Local 141 in Wheeling, West Virginia, used his three minutes to voice a position not merely on the permit at hand, but what this facility could mean for the region.
“It is a project such as this that will revitalize the Ohio Valley,” he said.
Credit Brittany Patterson / Ohio Valley ReSource
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Ohio Valley ReSource
Shadyside weathered coal’s decline, now the rise of gas fracking brings major changes.
Giffin and other supporters see a potential economic boom in the plant, called an ethane “cracker.” Its natural gas furnaces literally crack apart ethane — which is brought up during natural gas fracking — into smaller molecules used in plastics and chemical manufacturing.
But Belmont County resident Jill Hunkler sees this plant as the beginning of something else: an environmental nightmare.
“We want better options than a massive petrochemical plant,” Hunkler told the audience.
Officially, the hearing was about a permit. But everyone gathered understood that much more is at stake. The growing abundance of natural gas could fuel a new petrochemical industry in the upper Ohio Valley, with all the economic gains and environmental risks that might bring. The decision on the cracker plant permit presents a crossroads moment for those who live here.
Cracker Background
A few years ago, Thailand-based PTT Global Chemical began scouting the Ohio Valley for a location to place a cracker plant.
JobsOhio, a private economic development corporation created by Ohio Gov. John Kasich (R) in 2011 to help woo jobs to the state, worked closely with the company. Matt Cybulski, sector director of energy and chemicals for JobsOhio, said the group helped PTTG select the Belmont County location and put together an incentive package. That included remediation on the site of FirstEnergy’s old R.E. Burger coal-fired power plant that once stood at the proposed cracker’s location.
Credit Courtesy PTTGCA.
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Courtesy PTTGCA.
An ethane cracker plant in Thailand, home to PTT Global Chemical.
Cybulski said incentives offered by JobsOhio did not use state tax dollars, but there are tax credits that “can and often are offered to projects like this.”
He and many other state and county officials argue the PTTG project would create jobs.
“Once the plant is built, you have hundreds of good paying jobs that are operating the plant,” Cybulski said. “So, we see this as a long term economic benefit for the local community and the region.”
School district officials have said property taxes paid by the company could bolster local schools.
This year, it was announced that PTTG had partnered with South Korea’s Daelim Industrial Co. on the project and had 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.
A few homes, an apartment complex, a graveyard and a long-shuttered post office dot the unincorporated hamlet of Dilles Bottom.
PTTG’s project is not the first cracker in the region. About 30 miles northwest of Pittsburgh, Shell’s massive Monaca plant is already under construction. The massive petrochemical plant will produce 1.6 million tons of ethylene each year and permanently employ about 600 workers when done, according to the company.
Gas-Powered Growth
If built, the cracker plant in Belmont County could have far-reaching impacts for the entire Ohio Valley, according to energy analysts.
“It’s going to create some real momentum,” said Taylor Robinson, president of PLG Consulting. “There’s going to be some other large petchem companies that will follow suit.”
With that momentum will also come additional infrastructure.
“You’re going to need to have enough wells producing the gas,” Robinson said. “Then you’re going to have to have more gas processing facilities that will separate the ethane out. And then you need storage. Of course you need pipelines between all these things. It’s a complex supply chain that needs to be built for 40 years.”
Credit Alexandra Kanik / Ohio Valley ReSource
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Ohio Valley ReSource
A cracker plant converts natural gas constituents into manufacturing products.
The Ohio Valley is a prime candidate for petrochemical production because of its geology. The Marcellus and Utica shale formations are loaded not only with methane, the primary component of natural gas, but with more complex hydrocarbons like ethane, propane and butane. In the industry this is referred to as “wet,” and the gas being extracted so readily from the region is often referred to as “wet gas.”
While natural gas is desirable for power generation, the natural gas liquids, or NGL, are separated from their cousin methane to become valuable feed stocks for other industries.
According to a 2017 U.S. Department of Energy report, U.S. NGL production in the region is projected to increase over 700 percent in the 10 years from 2013 to 2023. The report adds, that while the region has made “significant investments” in NGL infrastructure to capitalize on the natural gas boom, more can be done.
“New investments to take advantage of the NGL resources in the region have been identified by industry, and forecasts for production over the decades to come highlight the opportunity for additional investments across the NGL supply chain,” the report states.
One investment is in cracker plants.
The Ohio Valley is ethane-rich, and most plastics and chemicals manufacturers are located in the Midwest. Traditionally, the bulk of the nation’s cracker plants are located on the Gulf Coast.
If Midwestern plastics and chemical manufacturing plants could source ethylene from the Ohio Valley that could reduce cost in an already competitive market, according to Robinson.
Infrastructure Needs
Even if the PTTG project is approved, challenges remain, namely that the Ohio Valley would need to develop more underground storage.
“That is extremely important when you start adding multiple crackers, because as you can imagine, there’s several steps to get the ethane to the plants,” Robinson said. “You need storage along the way, and those storage caverns are a key enabler to have enough flexibility to keep these crackers running 24/7, 365.”
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 one mile north of Clarington, Ohio, on the Ohio River.
Another high-profile public-private NGL 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.
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 a nonbinding agreement, known as a Memorandum of Understanding, with West Virginia state officials to build a series of facilities that would process natural gas liquids and byproducts. But the escalating trade dispute with China appears to have temporarily slowed progress.
‘Cancer Alley’ 2.0
For a growing number of people, this petrochemical future is not one they want for their communities.
Hours before the Ohio EPA air permit hearing, Martins Ferry resident Barbara Mew was powering through biting cold temperatures and snow flurries to go door-to-door in a neighborhood of Moundsville sharing information about the proposed project.
“I think I’ve pushed through to the other side,” she says laughing. “It’s not cold anymore.”
She worries about what types of pollution the huge plant will emit into the air and water. The draft air permit before Ohio EPA estimates the cracker will release almost 400 tons of volatile organic compounds each year. The plant would also produce the equivalent carbon dioxide emissions of putting about 365,000 cars on the road.
“It’s just it’s an environmental nightmare from top to bottom,” Mew said. “There are really no upsides to it.”
Credit Brittany Patterson / Ohio Valley ReSource
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Ohio Valley ReSource
Environmental groups posted signs in Shadyside, OH.
Opponents to the plant expressed concerns at the Ohio EPA hearing that the proposed air permit does not do enough to protect public health, despite assurances from agency officials that the plant would install top-of-the-line technologies to limit emissions.
According to the permit, nitrogen oxide and carbon dioxide emissions will be continuously monitored, but other pollutants will only be tested intermittently. Many people expressed concerns that PTTG is not required to do fence line monitoring, or to actively track what is being emitted from the plant. They are also concerned that the one air quality monitor that is installed in the county would not be sufficient to alert local communities of any pollution above permitted levels.
Many asked for a health impact assessment to determine the potential public health effects of the facility and for Ohio EPA to conduct a cumulative assessment of air emissions that would account for future natural gas industry infrastructure spurred by the PTTG plant.
Ohio EPA hearing officer Kristopher Weiss said the agency’s jurisdiction is fairly narrow and requires the agency to take action on permits within a set period of time. If the PTTG plant goes into operation and spurs additional developments, he said Ohio EPA would evaluate each new project on an individual basis.
“If PTT were to get its permit, and then other ancillary business were to come in, if those businesses need permits they would apply for whatever permits they might need and the agency would take the action they are required to take,” he said.
Leatra Harper, managing director of the nonprofit FreshWater Accountability Project, which organized the canvassing effort, said the volunteers knocked on hundreds of doors and found most people have concerns. A big one is that the Ohio Valley could turn into the next “cancer alley.” The term refers to the huge and heavily polluted belt of chemical manufacturing facilities in Louisiana.
“I don’t understand why fossil fuel extraction, why that’s the only kinds of jobs this area is offered,” she said. “We want jobs that won’t kill us.”
Credit Brittany Patterson / Ohio Valley ReSource
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Ohio Valley ReSource
The possible site of Thailand-based PTT Global Chemical’s ethane cracker plant along the Ohio River, as seen from Moundsville, WV.
Cumulative Effects
Retired public health practitioner Susan Brown sat in Van Dyne’s, a diner located on the outskirts of Shadyside known for its all-you-can-eat spaghetti. She says she worries about what will happen to her community.
“The fracking plant came in. Then we’re talking about the cracker plant. They’re talking about the underground tanks,” she said, sipping an unsweetened tea. She’s concerned that her town is approaching a point where it will be “an area that nobody wants to live.”
Brown says most people she talks to about the cracker plant feel like it’s a done deal. Still, she says it’s important to speak out.
A public hearing regarding the plant’s water permit hosted by Ohio EPA is scheduled for Wednesday, December 12, at Shadyside High School.
