The announcement was stunning if, for no other reason, than the size of the number. China Energy says it will invest $83.7 billion in natural gas-related projects in West Virginia. As a comparison, that’s larger that the state’s entire economic output for 2016 ($73.4 billion).
The projects are a significant portion of the quarter-trillion dollars worth of deals announced by the Trump administration during a meeting in Beijing with Chinese leaders as part of the President’s attempt to correct the trade imbalance.
West Virginia Commerce Secretary Woody Thrasher, who was in Beijing for the announcement, explained that the investment will be over 20 years in power generation, chemical manufacturing and the construction of an underground storage hub for natural gas liquids.
Two natural gas power plants are already planned, tentatively one in Brooke County and another in Harrison, but Thrasher stresses that the site selection process is ongoing.
“This is the beautiful thing about this project,” Thrasher told me in an interview from Beijing. “These are raw products from West Virginia, and they are going to stay in West Virginia.”
The news is almost too good to be true, which does trigger a reasonable amount of caution. West Virginia’s road to economic doldrums is littered with announcements about the next big thing, so much so that the phrase “game changer” should be stricken from our vocabulary.
It was almost four years ago to the day (Nov. 11) that Governor Earl Ray Tomblin announced the planned development of an ethane cracker and associated petrochemical plants at Parkersburg. However, Odebrecht, later pulled out. Braskem, a subsidiary of Odebrecht, has taken over the project, but it has not proceeded with construction.
Additionally, the business publication Bloomberg raised caution flags about the U.S.-China deal. “The reality, however, is that the roughly 15 agreements unveiled on Thursday are mostly non-binding memorandums of understanding and could take years to materialize, if they do at all,” Bloomberg reported.
But there are reasons to have more optimism about at least the initial portions of the West Virginia deal. Thrasher reports that the Chinese have already been to the state scouting out sites for the power plants. Also, China Energy has a long-established research and development relationship with West Virginia University.
Brian Anderson, director of WVU’s Energy Institute, predicted the deal will have a dramatic impact on the state’s economy. “Instead of sending jobs offshore, we are bringing hundreds of thousands of jobs statewide and directly into the state,” he said.
We all hope so. Some of the largest deposits of natural gas are right below us and accessible through hydraulic fracturing. Utilizing the gas here through power generation and petrochemical production will create wealth and opportunity.
Certainly the memorandum of understanding with China Energy is a reason for optimism. This could be the start of what we have been waiting for ever since the first person uttered the “game changer” phrase about natural gas.
But we’ve been stood up enough times over the years to be cautious.