Latest on Appalachian Storage Hub discussed at annual conference

WASHINGTON, Pa. — Back in 2010, natural gas production powered by horizontal drilling and hydrofracking was referred to almost daily as “the game changer” for the economies of West Virginia and the Ohio Valley region.

Gas production has been steadily increasing ever since, but there’s a new game changer: a revived petrochemical industry enabled by underground storage of the liquids that accompany the methane in natural gas: ethane, propane, butane and more.

This new game changer was the reason natural gas industry competitors and colleagues gathered in Southpointe, Pa., on Thursday for the third annual Appalachian Storage Hub Conference, sponsored by the Washington County Chamber of Commerce.

The theme: “The storage hub is the catalyst for a robust development and long-term success of the Appalachian Basin’s petrochemical and downstream industries. This is the pivot point defining a once-in-a-decade strategic shift.”

Some of it delved deep into technical weeds. Some of it was familiar.

Tom Gellrich, CEO of Topline Analytics, traced how the shale gas boom redrew the world’s energy picture. He recalled the 1973 oil shock, when OPEC formed, cars lined up at gas pumps and Toyota’s fuel-saving cars became part of the U.S. landscape.

The 1979 energy shock followed, with the Saudi oil and gas boom, more gas pump lines and soaring prices.

“Now we have what I call the shale shock,” he said. “That’s sort of the reverse. … It is creating a business boom.”

The old normal, he said, was that Middle East gas was half the cost of U.S.-produced gas. The new normal, is that North American gas is half the cost of the rest of the world’s. With a storage hub, it gets even cheaper. The liquids that serve the region’s petrochemical industry won’t have to be shipped to the Gulf Coast for processing into pellets that get shipped back.

The Shell cracker plant is being constructed in Monaca, Pa., outside Pittsburgh, he said. He predicts that the PTT Global Chemical cracker, tentatively planned along the Ohio River in Belmont County, Ohio, across from Moundsville, will get built and that will open the floodgates for more crackers and more manufacturers to use the plastic products.

A storage hub is what it sounds like – a hub, not a single storage huge storage tank but a variety of facilities connected to their sources and their clients by pipelines and other transportation modes, such as truck, rail and, in some instances, barge.

Tim Hanley’s company, Mountaineer Storage out of Denver, is developing a southeast Ohio salt formation for liquid petroleum gas storage. The Mountaineer NGL Storage Project will hold 3 million barrels, “Once you get the storage, the manufacturing will come back.”

It doesn’t happen overnight, thought. It’s taking about seven years develop this site.

Jason Stechshulte works for MPLX, which has a two-prong emphasis: logistics and storage, and gathering and processing at plants such as MarkWest’s Wayne County plant.

Without storage, said Rick DeCesar, with AECOM, the Shell cracker is relying on pipelines. Namely, the 100-mile Falcon pipeline that originates at separate sites in Pennsylvania and Ohio, crosses part of the Northern Panhandle and converges near the cracker.

Bryce Custer is a real estate developer for NAI Ohio River Corridor, specializing in petrochemical and energy services. He talked about federal opportunity zones, created under the Tax Cuts and Jobs Act of 2017 and aimed at revitalizing distressed, low-income communities through tax incentives for development.

“We are at the beginning of an economic revolution along the Ohio River Corridor,” he said, a transition “from Rust Belt to Plastic Belt.”

State governors identified more than 8,700 zones across the U.S., he said. Pennsylvania and Ohio have more than 300 each, while West Virginia has 55. Many of them lie within the three preferred sites identified by WVU to situate liquids storage: the Northern Ohio River/panhandle area, the shale region between Monongalia County and the Ohio River, and the Kanawha Valley.

Among the West Virginia communities that could benefit, he said, are Wellsburg, a good site for a plastics plant; Moundsville, near the proposed PTT Global Chemical cracker; and the Charleston area, where the first cracker plant arose.

Custer fielded a question about environmental concerns. The area’s environmental community strongly opposes an expanded petrochemical presence that could pollute rivers and create another “Cancer Valley.”

Admitting he’s no environmental expert, he said, “The companies that are in our area are good stewards. They’re here to do what’s right. If we can control the environmental issues, the overall greater good of what we can do for this area will be beneficial.”

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