Improved drilling technology and increased demand have contributed to a dramatic resurgence of the natural gas industry in our region. According to IHS Markit, the gas basins of the “Shale Crescent” (West Virginia, Ohio and Pennsylvania), account for 32 percent of gas production in this country, and it’s estimated that by 2040 nearly half (45 percent) of all gas produced domestically will come from these Marcellus and Utica reserves.
West Virginia is already benefiting significantly from increased production. West Virginia Oil and Natural Gas Association (WVONGA) Gas Facts 2019 cites state figures showing the industry employed nearly 18,000 workers in 2017 and paid $1.5 billion in wages. The industry accounted for $89 million in property taxes and $139 million in severance taxes. In addition, rights holders are collecting millions in royalties.
However, West Virginia and the rest of the region are not capitalizing on the full benefit of this plentiful and valuable resource.
Earlier this week, Steve Winberg, Assistant Secretary for Fossil Energy in the Trump administration, spoke at the Marcellus and Manufacturing Development Conference in Morgantown. His predictions for the future were tantalizing.
He pointed out that much of the Appalachian gas is “wet,” meaning it contains natural gas liquids, including ethane, which is a feed stock for ethylene that is used in the production of plastics.
Currently, over 95 percent of the country’s ethylene production is at facilities along the Gulf Coast, an area susceptible to severe weather. For example, in 2017 Hurricane Harvey knocked out 60 percent of ethylene production for weeks.
Winberg said it makes economic sense to have some “geographic diversity” in the petrochemical industry by expanding capacity in this area. Currently, a “cracker,” which converts ethane into ethylene, is under construction in southwestern Pennsylvania and another, planned for eastern Ohio, is clearing regulatory hurdles. Winburg believes the region could support as many as five crackers. (West Virginia officials announced a planned cracker near Parkersburg in 2014, but the project has stalled.)
Winberg said if Pennsylvania, Ohio and West Virginia can take full advantage of the resource, the economic benefits will be dramatic. “According to a recent American Chemical Council report, more than $35 billion in capital investment could flow into Appalachia; 100,000 jobs could be created and supported; nearly $30 billion in additional annual revenue could be generated; and over $1billion per year in state and local tax revenue.”
The Trump administration is all in on the possibility. Senators Shelley Moore Capito and Joe Manchin are both working with Energy Secretary Rick Perry on a proposal for a giant underground storage facility necessary to guarantee the steady supply of natural gas needed for petrochemical production.
It’s best not to count these chickens before they hatch but, clearly, the opportunity for an industrial rejuvenation is right under our feet.