CHARLESTON, W.Va. — Leaders familiar with West Virginia’s new $83-billion deal with China Energy call the agreement key to developing a long-sought natural gas storage hub.

One of the focuses of West Virginia’s energy sector has been storing high-value natural gas liquids underground.

Shelley Moore Capito

“Most important to me, this is going to get our storage hub project that we’ve been working on, make it a reality,” Sen. Shelley Moore Capito, R-W.Va., said Thursday on MetroNews’ “Talkline.”

“The American Chemistry Council estimates that alone would bring 100,000 new jobs to the region. So that is obviously high on the priority list for this deal.”

The state Department of Commerce announced overnight an agreement with China Energy to invest $83.7 billion in shale gas development and chemical manufacturing projects in West Virginia.

MORE: West Virginia announces $83.7 billion gas development deal with China Energy
MORE: China natural gas deal may begin with new West Virginia power plants

The agreement was the biggest among several deals signed during President Donald Trump’s state visit to Beijing. The total value of the agreements stemming from Trump’s trip could reach $250 billion, Reuters reported.

Woody Thrasher, West Virginia’s Commerce secretary, signed a memorandum of understanding with China Energy President Ling Wen Thursday as Trump looked on.

Some national energy analysts cautioned that agreements such as a memorandum of understanding would represent a less firm commitment than a contract and the actual amount being invested could dwindle.

The state Department of Commerce sent out a news release about the announcement just after midnight. China Energy officials had made several trips to West Virginia and the memorandum represents the first of several expected commitments by the company, the Commerce Department said.

Planning for the projects is underway and will proceed in phases over the course of 20 years, according to the release from the Commerce Department.

The projects will focus on power generation, chemical manufacturing and underground storage of natural gas liquids and derivatives.

The natural gas storage hub has been a focal point of West Virginia’s economic development efforts.

A West Virginia University research team has been studying geological formations to pinpoint the best sites for natural gas storage. But state leaders also have been focused on how the private sector might invest millions of dollars in developing the hub.

Developers have estimated the startup cost for the storage hub is at least $1 billion, although the total buildout cost is probably more around $10 billion.

The storage hub is one of the projects that developers are working on under the memorandum of understanding with China Energy, said Brian Anderson, director of the WVU Energy Institute.

“China Energy is extremely interested in it for the same reasons we are in the sense that the Appalachian storage and trade hub, storing all these raw material precursors is a necessary piece of the infrastructure to build out a robust chemical industry in our region,” Anderson said.

“So if they’re investing in that robust chemical industry, they also are extremely interested in investing in the necessary infrastructure in the storage hub. We have the potential in our region to become the second major petrochemical hub in the United States.”

WV Oil and Natural Gas Association

Anne Blankenship

One of the most appealing aspects of the agreement is its focus on turning raw materials into end products in West Virginia, said Anne Blankenship, director of the West Virginia Oil & Natural Gas Association.

“This is about producing our natural gas here, turning those into natural gas liquids here in West Virginia,” she said. “This would give us the opportunity through a storage hub and through bringing petrochemical facilities back into this area so that we can keep it here, create the job and create investment and revenue opportunities.”

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