The chairman of the Senate Energy and Natural Resources Committee, Joe Manchin of West Virginia, recently sent a letter to President Biden urging him to consider the benefits of natural gas production as his administration moves forward with policies to address global warming.
West Virginia has significant Marcellus Shale development and has looked to natural gas as central to its energy and economic development future as coal use has declined.
Manchin has advocated for an “all-of-the-above energy policy” that includes fossil fuel use, coupled with technological innovation to reduce greenhouse gas emissions. The Biden administration has made addressing climate change a focus and immediately rejoined the Paris Agreement on climate.
“Responsible production of natural gas and practices like hydraulic fracturing have improved our nation’s energy security while supporting the nearly 1.5 million hard-working Americans the industry employs, including in rural communities across our great nation,” Manchin’s letter states.
Manchin noted that natural gas liquids (NGLs) can serve as feedstocks for chemicals, plastics and other products. He also noted that exports of ethane have increased more than six-fold, with China amounting for much of the increase. “We put ourselves at a distinct disadvantage by exporting large quantities of our natural gas liquids and the manufacturing jobs that go along with them to China to then simply import finished product,” he said, advocating for bringing the supply chain and manufacturing jobs back to the U.S.
The abundance of natural gas in the region from the Marcellus and Utica plays, state and regional officials in the Appalachian Basin have been trying to attract downstream development to their areas.
An ethane cracker plant now under construction in Beaver County, Pa., is the first petrochemical plant to result from the ready supply of ethane and other natural gas liquids that are contained in the gas in this area. The pandemic dampened some hopes for a petrochemical buildout in the near future, as PTTGC indefinitely delayed a final investment decision on a second cracker plant in Belmont County, Ohio, just across the Ohio River from the West Virginia panhandle.
West Virginia is also hoping to also attract a cracker plant and downstream development through its Downstream Jobs Task Force.
A 2020 study by the Bureau of Business and Economic Research at West Virginia University’s John Chambers College of Business and Economics lays out the economic impact that downstream gas development could have in West Virginia.
“Despite the rapid growth of natural gas production in the state over the last decade, West Virginia has been slow to see growth in downstream industries – those that rely of natural gas as inputs to their production process,” the study states. “Downstream development has the potential to provide significant economic value if West Virginia can capture this development within its borders.”
The study determined the top three industries likely to locate in West Virginia are plastic material and resin manufacturing, petroleum refineries and petrochemical manufacturing.
It estimated that the total potential impact from those industries to be between $5.5 and $8 billion and potential direct employment to be between 1,500 and 2,200 jobs. In addition an additional 5,000 to 7,500 jobs could be added in secondary industries.
Austin Caperton, the chairman of the Downstream Jobs Task Force, noted in an article for the West Virginia Oil and Natural Gas Association, that petrochemical development decision are based on projections for world gross domestic product made before the COVID-19 pandemic. “Almost certainly there has been a significant impact, and the question becomes the length of the recovery period,” he said.
“Nevertheless, we will continue to position ourselves for the future and do everything possible to ensure that we do, in fact, capture natural gas and natural gas liquids downstream jobs.”