For several years now, we’ve been hearing that the Marcellus Shale natural gas deposits under West Virginia were going to be a “game changer.” The implication has been that the state’s economy, long subject to the boom/bust cycle of the coal industry, would finally have a second economic engine to help move the state forward.
Certainly hydraulic fracturing to reach the enormous gas deposits has been a boon to the state’s economy, and will be for some time. But the state has yet to reap the full range of commercial benefits from the industry.
That may be coming.
A beaming Governor Earl Ray Tomblin announced plans yesterday by the Brazilian company Odebrecht to buy several hundred acres along the Ohio River in Wood County with the intent of building a multi-billion dollar petro-chemical complex.
If the project succeeds, it will mean thousands of construction and permanent jobs and lots of downstream economic opportunities.
Tomblin cautioned that there’s a lot of work to be done before West Virginia finally has a “cracker”—permits must be issued, infrastructure has to be built—but the state has one inescapable advantage; it’s sitting on top of massive amounts of natural gas.
Additionally, West Virginia has shown foresight by passing legislation governing drilling that gives the industry regulatory certainty. Also, reforms over the last few years have made the state’s tax structure at least somewhat more competitive.
Along with Tomblin, credit must go to state Commerce Secretary Keith Burdette. He and his staff have been working on the “cracker” project for several years. (Burdette became so tired of reporters asking him about the “cracker” that at one point he started handing out packs of Saltines.)
But this deal is less about what government can do and more about the power of market-driven economies. As one administration official told me, “God blessed West Virginia with abundant natural gas and private enterprise takes the risk.”
Naturally, we don’t want to get too giddy.
Oderbrecht Director of Business Development David Peebles said his company has decided tapping into the natural gas industry in West Virginia “makes sense,” but it’s important to “manage expectations” in the continuing planning phase.
“It’s not that we are trying to be evasive but we do not want to exaggerate or overestimate and have people’s expectations raised because this is a deliberate process,” Peebles said.
And remember that last year Royal Dutch Shell announced plans for a multi-billion dollar ethylene cracker in southwestern Pennsylvania. But Shell has since cooled somewhat on the project.
We hope this doesn’t happen in West Virginia, and state officials are quietly and cautiously optimistic. Still, Tomblin, understandably, could not resist some gushing yesterday during the announcement, calling the project a “defining moment” for the economy of the state and the region.
That much talked about “game changer” might just finally happen.