Appalachian Storage Hub, WV's foundation for future investment

The Appalachian Storage & Trading Hub will provide the foundation for West Virginia’s forthcoming manufacturing renaissance. This ten billion dollar investment will allow our multistate region, of which West Virginia is in the center, to become the second U.S. petrochemical manufacturing hub. Given this country’s reliance on petrochemical and plastics manufacturing and the fact that most of the feed stock so vital to these industries comes from the Gulf Coast, this opportunity is of national strategic significance. Creating supply chain redundancy is vital to national security interests. This is one of the reasons why there is so much national attention to our region. As far as West Virginia is concerned, the Appalachian Storage & Trading Hub creates the storage caverns, interconnected pipelines and trading infrastructure which will propel the region to the forefront in the construction of new manufacturing facilities. This investment will provide outstanding employment opportunities for decades to come. Creating high quality, sustainable jobs and dramatically expanding the tax base is what economic development is all about.

The Appalachian Development Group has been organized to champion this project. It is aggressively pursuing the next steps in obtaining approval for a $1.9 billion loan from the U.S. Department of Energy. Other financing opportunities are also being considered as the Storage Hub will ultimately be funded by multiple public and private sources with a mix of debt and equity. This multi-year effort is directly related to the future manufacturing investment in the region. It may be the single most important component of infrastructure needed to bring the region into the fold as a regional powerhouse in petrochemical and plastics manufacturing. The American Chemistry Council estimates that the United States produces 25 percent of the world’s natural gas liquids and one quarter of that comes from the northeast. With this availability of NGL’s, the ACC predicts that up to $36 billion of investment could be funneled into the northeast’s petrochemical and plastic manufacturing facilities creating employment for 100,000 workers.

The Marcellus, Utica and Rogersville Shale formations have already impacted the global oil and natural gas markets. It has changed the balance of power between the major energy producing countries. This impact will continue for the foreseeable future. What is less clear is how will West Virginia benefit in the long term from the game changing dynamics of shale gas and horizontal drilling technology? Exporting the natural gas and its derivatives to the Gulf Coast or shipping it to Japan and India do not provide the value added economic boost to the regional economy that is afforded when the natural gas liquids are used as raw materials for locally based manufacturing facilities. This is the end game for West Virginia. The resurgence of West Virginia as a manufacturing based economy provides a clear path to a balanced and sustainable future prosperity. The Appalachian Storage and Trading Hub provides the critical infrastructure which will provide manufacturers the confidence that the feedstock will be available in the quantity and pricing structure needed to assure a fair return on the billions of dollars in investment. This investment and the jobs that come with it is the real potential facing West Virginia.

The Appalachian Storage and Trading Hub is not without its detractors. The environmental community has expressed serious concerns with the exploration and production technologies used in extracting the natural gas and its liquids, as well as with the prospects for expanded or new petrochemical and plastic manufacturing facilities. These concerns must be thoughtfully address. The questions asked, must be answered. New technologies addressing these concerns need to be continually refined and improved. Environmental stewardship must be a top priority and we should to be unwavering in finding better ways to protect and nurture the world class ecological systems found within West Virginia. The state’s future rests on finding a sustainable balance between nature and the economy. The opportunities are too great not to address these issues head on. West Virginia will never reach its full potential until business and industry can find a mutually beneficial relationship with the environmental community. The sins of the past are too great to ignore. Going forward there must be a different world view, one which is based upon a close working relationship between the natural environment and economic development. They are not mutually exclusive.

Much of the future economic investment in West Virginia needs to be focused on infrastructure and expanded manufacturing facilities. This is the value added piece of the economic equations swirly around natural gas shale development. The dollars are dramatic. The employment opportunities are just as significant. The Appalachian Storage and Trading Hub provides the foundation for much of this hoped for growth and development. We need to do everything we can to make it a reality.

Brooks McCabe has been active in commercial real estate for 35 years. He is a former state senator and current West Virginia Public Service commissioner. He also is a special project consultant to The State Journal on business and economic development issues. His comments herein are his alone.

This piece was authored by Brooks McCabe for The State Journal. Click here to read it on the publication's website.