Marcellus industry gazes into present, future of industry - Beckley, Bluefield & Lewisburg News, Weather, Sports

Expert: WV has a place in world market for natural gas

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West Virginia University Athletic Director Oliver Luck told Marcellus to Manufacturing conference-goers that just like WVU joining the Big 12, the industry looks optimistic, but it has some hard work ahead.

The conference kicked off on Wednesday in Charleston where industry leaders gathered to talk about the manufacturing opportunities that will be available downstream from Marcellus Shale natural gas development. Gases that come from the ground alongside conventionally sought-after methane such as ethane, propane and butane are highly valued for their use as feedstocks for plastics and other chemical manufacturing.

"The supply chain is just so large that it's benefiting businesses that wouldn't have otherwise expected to benefit, especially in areas like the Marcellus and Utica region, not the traditional oil patch of Texas, Oklahoma and Louisiana where you have manufacturers and tool shops who are used to taking advantage of that," said Christopher Guith, vice president of policy for the Institute for 21st Century Energy. "Here there's had to be a lot more outreach to explain to business how they can operate."

The salaries, direct and indirect economic benefit and tax revenues from oil and gas, Guith said, are all being pumped into the economy at a rapid rate as unconventional plays grow. Salaries averaging $90,000 in the gas and oil industry bring well-paying jobs to a state where the average salary is less than half of that.

"This is stuff that no one was planning," Guith said. "They didn't know this was going to happen. So, this has been a tremendous windfall to the state government and the local governments as well."

Jim Cutler, CEO of Appalachian Resins, a company developing an ethylene and polyethylene production facility near Wheeling, said development would likely work well as clusters of large plants. He said he was skeptical of the need to "superimpose" the Gulf petrochemical model onto Appalachia.

"I don't believe that the model that the petrochemical companies and industry in general is following now fits the 21st Century," Cutler said. "This is the fundamental message: We don't believe we need these so-called world-scale plants. … I think the industry and the region would be better served, not by little ‘tea-kettle' plants, but something that fits the regions better and to have clusters of these plants."

Cutler said increased risk of climate change, weather events and perhaps national security threats all justify a need to spread out such facilities.

"We want resiliency in the supply chain," he said.

He said the majority of downstream jobs could be created by places like extrusion companies that could be created relatively cheaply and simply with a relatively high number of jobs.

The Institute for 21st Century Energy is an initiative of the U.S. Chamber of Commerce that supports domestically produced energy. Guith says the Energy Information Administration is predicting only slight changes in the nation's energy mix through 2035, though he says he is skeptical.

"I don't know how plausible (their) estimate is and other analysts think otherwise, but this is where our federal government is coming from," Guith said. "They think in spite of all the regulatory burden that has been placed on industry, specifically the electric utility sector, that natural gas is only going to grow from 26 to 28 percent overall share and that coal is only going to drop by 1 percent. I hope they're right, but … I'm a little skeptical trying to figure out how they come to this given the regulatory burden they are placing on the industry right now."

Guith said though domestic energy use is expected to only grow 10 percent and the nation's energy mix might move away from fossil fuel as an overall share, other countries are still hungry for energy being developed in West Virginia and the rest of the U.S.

China, for example, is predicted to grow its energy use by almost double.

"They're a very thirsty energy country and they understand that having access to global supplies of energy is a national imperative and not a month goes by that you don't see a new investment they are making in North America trying to gain access to this treasure trove of energy that we have," Guith said.

Guith said the U.S. is increasingly supportive of oil and gas development, particularly with the spread of new techniques that are unlocking resources previously uneconomical sources.

"It's everywhere," he said. "It's not just Texas, Oklahoma and Louisiana anymore. It's West Virginia. It's North Dakota. It's Ohio. It's parts of California that have never seen oil and gas development before."

He said oftentimes the development is occurring where people had historically fallen on less than great economic times.

"If you're a religious person, it's difficult to not see this as God's way of making up for, some cases of fifty years of really crappy (economies)," Guith said.

The rise in gas, Guith added, is not necessarily a death knell for the state's coal industry.

"It's not about gas versus coal," Guith said. "It's about gas and coal. Frankly, there's way more in common between the two industries from both a policy standpoint and business standpoint than there are dissimilarities."