WV’s US Senators Lead the Charge to Build $10B NGL Storage Hub

A recent article in the left-leaning Roll Call (official publication for Washington, D.C. swamp dwellers) attempts to paint the Trump Administration as out of step with the people he wants to help in West Virginia. The article says Trump’s strategy to prop up failing coal and nuclear plants is an attempt to boost coal mining jobs in WV, but is running counter to the state’s strategy of embracing the natural gas industry. Perhaps they have a point. However, what’s most interesting about the article is not the ginned up conflict between Trump and WV, but how the article spotlights WV’s two U.S. Senators–Republican Shelley Moore Capito and Democrat Joe Manchin–and their continuing role in trying to make a $10 billion NGL (mostly ethane) storage hub facility become a reality. The storage hub will be a jobs magnet with some estimates that it will create more than 100,000 new jobs in the state. The storage hub will also draw manufacturers looking to locate near ethane crackers, as a source for plastics used in their manufacturing process. Capito, in her comments, attempts to gloss over the rivalry between coal and natural gas, saying “all those rivalries have gone by the wayside.” Er, a, we beg to differ. But leaving aside the coal v. natgas focus of the article, we found two very interesting items. (1) The Dept. of Energy loan guarantee that would cover $1.9 billion of the estimated $10 billion cost to build it is a much bigger deal that we had realized. Why? Because any project that wins such a guarantee has gone through a rigorous review process. Winning such a guarantee is like conferring a triple A rating on the project for others who will consider investing in the project. It gives them confidence that the project has been thoroughly vetted and is low risk. (2) Manchin, in speaking with DOE Sec. Rick Perry, is using an interesting and novel argument to convince Perry the storage hub is a good thing to do. Manchin said when hurricanes hit the Gulf Coast, it knocks out petrochemical industry there, with a cascading effect across the U.S. Cracker plants (fed by the storage hub) in the northeast, are not susceptible to hurricanes. So Manchin’s pitch to Perry is this: Keep the Gulf Coast crackers cooking for products to export to other countries, but let’s build the storage hub (and crackers) in the northeast, so our country’s petchem industry isn’t adversely affected by a major hurricane…
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Manufactured Controversy re $10B NGL Storage Hub Proponent

Steven B. Hedrick

There’s a new (manufactured) controversy swirling around Steven B. Hedrick, CEO of Appalachia Development Group and also CEO of the non-profit Mid-Atlantic Technology, Research and Innovation Center, or MATRIC. What’s that? You’re not familiar with that name? Hedrick, in his role as CEO of Appalachia Development Group, has led an effort to get a $10 billion NGL (primarily ethane) storage hub established in Appalachia–most likely in West Virginia. It’s a huge amount of money, will take cooperation from multiple states and will require multiple sources of funding to make it all happen. Hedrick has led the effort. Both of WV’s U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat) have worked on behalf of this project (one could argue they’ve worked on behalf of Hedrick) and have had words of high praise for Hedrick and his efforts. But the Charleston Gazette-Mail, working in tandum with the left-leaning ProPublica, has decided Hedrick needs to be taken down a notch or two. In a recent article, the Gazette-Mail tries to paint Hedrick as having a big conflict of interest and bilking taxpayers for a trip. Hedrich was a member of the delegation that visited China last year when then-Commerce Secretary Woody Thrasher got China to sign a mammoth $83.7 billion deal to invest in shale and petrochemicals in WV (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). The Gazette-Mail article says Hedrick went on the taxpayer-funded trade mission not to represent WV, but on his own behalf, attempting to get Chinese investment that would somehow benefit him (Hedrick) personally. No doubt he was trying to get the Chinese interested in investing in the $10 billion storage hub. We would expect nothing less! But that attempt has now been twisted into a narrative that Hedrick was trying to benefit himself rather than WV…
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What Will Convince Investors to Spend $10B on M-U NGL Storage Hub?

One more item to share with you from last week’s second annual Appalachian Storage Hub Conference convened at the Hilton Garden Inn Pittsburgh/Southpointe. As we previously highlighted, most of the event revolved around the proposed plan to build a $10 billion ethane storage hub (see Southpointe Event Focuses on M-U NGL Storage Hub). One of the panel discussions addressed the issue of how to attract that kind of money. $10 billion is just a number on paper. How much is that, really? West Virginia is the state most frequently mentioned as the host state for the $10B project. WV’s budget for this fiscal year is $4.3 billion. So the investment needed to build the proposed storage hub project would run the entire state of WV for more than two years! Where do you get that kind of money? And what do investors look for when deciding to spend that kind of money? That’s what the panel discussed…
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Southpointe Event Focuses on M-U NGL Storage Hub

Yesterday the second annual Appalachian Storage Hub Conference convened at the Hilton Garden Inn Pittsburgh/Southpointe. Topic A (and B and C) was the proposed $10 billion NGL storage hub, which we’ve written about in the past (see our stories here). When you drill for one hydrocarbon, like natural gas (methane), you inevitably get other hydrocarbons coming out of the ground along with it. In southwestern PA, the northern panhandle of WV, and eastern OH, those other hydrocarbons are NGLs–natural gas liquids–including ethane, propane, and butane. NGLs are key to the petrochemical industry. Ethane can be chemically “cracked” to produce ethylene, or raw plastics. Shell is building a $6 billion ethane cracker in Monaca (Beaver County), PA, near Pittsburgh. A second ethane cracker is likely to get built in Belmont County, OH–by PTT Global Chemical. Manufacturing companies then locate near the crackers so they can use the ethylene pellets created by the crackers in their own manufacturing processes. It’s all connected. And right in the center of it, at the nexus, is the ability to store ethane and other NGLs. Without storage, you have to immediately use the NGLs as soon as they are produced. Which doesn’t often happen. There is a mismatch–a delay between the time NGLs are produced and the time they are needed at the plant for cracking/processing. A storage hub addresses that issue and makes everything work. A storage hub is so critical that an entire one-day event was organized to talk about it…
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Appalachian NGL Storage Hub Conference June 6-7 in Pittsburgh

MDN has previously written about the Appalachian NGL (natural gas liquids) Storage Hub, a $10+ billion infrastructure project with no specific location identified as yet, but West Virginia often named (see M-U’s Next Mega Project: $10B Appalachian Storage Hub). An upcoming conference dedicated solely to the the Storage Hub is coming to the Pittsburgh area June 6-7. The Appalachian Storage Hub Conference is sponsored by our friends at Shale Directories (Joe Barone), along with TopLine Analytics (Tom Gellrich), in Canonsburg at the Hilton Garden at Southpointe. June 6th will see a cocktail reception in the evening and June 7th is the full conference. The conference will answer questions like, What in the world is a storage hub and why does the Marcellus/Utica need one? What are state governments doing to attract this project, and what remains to be done? What kinds of investment opportunities exist? And, How does our region compare with the Gulf Coast? If you have an interest in petrochemicals and NGLs like ethane, you need to attend this event. Oh! And did we say, seating is very limited? It is, so now is the time to act if you want to attend. There’s a few remaining slots…
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Appalachian NGL Storage Hub Gets Serious with DOE Loan Guarantee

Just yesterday MDN told you that Mountaineer NGL Storage wants to be THE main ethane/NGL storage hub for the Marcellus/Utica region (see Mountaineer NGL Wants to be THE Appalachian Storage Hub). There has long been talk of a major, $10 billion regional NGL storage hub. But until know it’s been just that–talk. A major hub is now much more of a possibility. Last June West Virginia’s U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat), introduced Senate Bill 1337–the “Capitalizing American Storage Potential (CASP) Act”–a bill that would make a regional ethane storage hub (hopefully built in WV) eligible for the Department of Energy’s Title XVII loan guarantee program (see WV Sens. Capito & Manchin Introduce 2 More Ethane Storage Hub Bills). The bill didn’t go anywhere, but the intention of the bill certainly did. Yesterday it was announced that the DOE has invited those promoting the regional ethane storage hub to submit “Part II” of the application for a Title XVII loan guarantee of $1.9 billion. There’s a lot to unpack in the announcement below. First, the regional storage hub has an official name: The Appalachia Storage & Trading Hub (first time we’d read of it). Second, the project has an official backer: the Appalachia Development Group, LLC (or “ADG”). Third, ADG previously filed Part I of the application with the DOE, back in September. Fourth, since the DOE has invited ADG to supply Part II of the application, that implies Part I from September was/is approved. Fifth, $1.9 billion is far short of the eventual cost bandied about of $10 billion–but it can certainly get this project off the ground and running. And sixth, this is NOT a loan from the government, it is a guarantee. Someone else would make the loan, but the full faith and credit of the United States would back it up, in case of default. A Title XVII loan guarantee makes it much easier to find a loan…
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Mountaineer NGL Wants to be THE Appalachian Storage Hub

When the topic of NGL (natural gas liquids) storage comes up with respect to the Marcellus/Utica region, there are two separate and distinct projects mentioned: A massive, $10 billion ethane/NGL storage hub with no specific location identified as yet (but West Virginia often named), and the much smaller Mountaineer NGL storage hub proposed for Monroe County, OH. Recently none other than the U.S. Dept. of Energy issued an NGL primer to call attention to the need for a large NGL storage hub (see DOE Publishes NGL Primer for Marcellus/Utica, Pushes NGL Storage). The Mountaineer project was mentioned in the DOE report. We’ve written plenty about Mountaineer NGL, located just across the river (and border) from West Virginia (see our Mountaineer NGL Storage stories here). What do we know about the proposed Mountaineer NGL Storage project? The Colorado company behind the project plans to spend up to $500 million to build it; some 20 drillers have expressed interest in contracting with the facility to store ethane; and both the nearby PTT Global cracker plant project (if it gets built) and the under-construction Shell cracker plant are both interested in connections to the facility. In November, we learned there is a construction delay until mid-this year (see Yet Another Update on Stalled Mountaineer NGL Storage Proj in OH). We are on record having previously said this: “Could the Mountaineer NGL Storage project end up being THE main NGL project for the entire region, being touted by so many? No. But it is an important project–one of the key pieces of the NGL storage puzzle that will serve our region.” It appears Mountaineer may not agree with our take. In an interview with the Pittsburgh Business Times, Mountaineer makes it clear they want to be THE NGL storage hub for the Marcellus/Utica region. Instead of building a huge $10B project from the start, Mountaineer’s strategy is to grow slow but steady–responding to market conditions along the way. Mountaineer says that’s how it was done in Texas, and that’s how they believe it can (and should) be done in our region…
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Tyler County, WV Mentioned as Candidate for $10B NGL Storage Hub

In May 2016, MDN brought you the news that a researcher at West Virginia University (WVU) believes a natural gas liquids (NGL) storage hub is what the Marcellus/Utica region really needs (see WVU Researcher Says Marcellus/Utica Needs an Ethane Storage Hub). According to Brian Anderson, director of WVU’s Energy Institute, without ethane storage (and pipelines) the Marcellus/Utica region risks seeing its abundant ethane leave the area, mostly heading to the Gulf Coast. We need that ethane here, in our area. Kevin DiGregorio, executive director of the Chemical Alliance Zone, also took up the cause in an editorial in July 2016 (see WV, OH, PA, KY Should Cooperate on $10B NGL Storage Hub). Since that time we’ve run a number of stories about the proposed $10 billion NGL storage hub for the Marcellus/Utica. In particular, West Virginia’s two U.S. senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat) have been pushing hard for such a hub (see WV Senators Ask Trump to Create NGL Storage Hub Commission). It has been thought that WV and PA and OH would need to cooperate to help fund such a project. Even the mighty Shell cracker is “only” costing $6 billion! So $10 billion is almost incomprehensible. But then everything changed last week when we told you we now have a pretty good idea of how the project will get funded–by the Chinese (see China Agrees to Invest Amazing $83.7 BILLION in WV Shale, Petchem). West Virginia has, from the beginning, been the state most often mentioned as the location for such a storage hub–but until now no specific site has come across our radar. That’s changed. With money flowing from China for a bevy of shale-related projects, different locations across the Mountain State are speaking up. Tyler County is the latest, saying they are under consideration for the $10B NGL storage hub, and they will do “whatever needs to be done” to win the project. There are, however, two other locations in WV also under consideration…
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WV Senators Ask Trump to Create NGL Storage Hub Commission

West Virginia’s U.S. Senators, Shelley Moore Capito (Republican) and Joe Manchin (Democrat), continue to be a driving force in advocating for a $10 billion NGL storage hub to be located in WV, PA or OH. Back in May, Capito and Manchin introduced a bill to study such a project (see WV/OH Senators Intro Bill to Study Appalachian Ethane Storage Hub). In June, they introduced another pair of bills, aimed at making the storage hub project eligible for federal loan guarantees (see WV Sens. Capito & Manchin Introduce 2 More Ethane Storage Hub Bills). The effort continues. Last week Capito, Manchin and other lawmakers sent a letter to President Trump requesting he create a blue ribbon commission to support the project…
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WV, OH, PA, KY Should Cooperate on $10B NGL Storage Hub

cooperationIn May MDN brought you the news that a researcher at West Virginia University believes an natural gas liquids (NGL) storage hub is what the Marcellus/Utica region really needs (see WVU Researcher Says Marcellus/Utica Needs an Ethane Storage Hub). According to Brian Anderson, director of WVU’s Energy Institute, without ethane storage (and pipelines) the Marcellus/Utica region risks seeing its abundant ethane leave the area, mostly heading to the Gulf Coast. We need that ethane here, in our area. Kevin DiGregorio, executive director of the Chemical Alliance Zone, is also taking up the cause. Writing an opinion article in the Charleston Gazette-Mail, DiGregorio says West Virginia, Ohio, Pennsylvania and Kentucky need to band together to build such a project. Set aside their competitive natures and cooperate? Yes. Why? Such a project will cost an estimated $10 billion–far more than a single ethane cracker project. No one state can do it on its own. It will take all our states cooperating to pull it off. Below is DiGregorio’s op-ed along with more details about the proposed NGL storage hub…
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Ohio Continues to Drag Feet Approving Mountaineer NGL Storage

We’ve written plenty about Mountaineer NGL Storage hub project proposed for Monroe County, OH, located just across the river (and border) from West Virginia (see our Mountaineer NGL Storage stories here). What do we know about the proposed project? The Colorado company behind the project plans to spend up to $500 million to build it; some 20 drillers have expressed interest in contracting with the facility to store ethane; and the nearby PTT Global cracker plant project (if it gets built) and the under-construction Shell cracker plant are both interested in connections to the facility. In November, we learned there is a construction delay until mid-this year (see Yet Another Update on Stalled Mountaineer NGL Storage Proj in OH). Why the delay? The delay is because of regulators in Ohio. There is no one agency charged with reviewing and issuing permits for the entire project–it involves three OH agencies. There also seems to be an issue with one of the agencies, the Ohio Dept. of Natural Resources (ODNR), becoming comfortable with storing NGLs in a salt cavern (done all the time in other locations). ODNR is dragging its feet, and members of the Ohio Oil and Gas Association (OOGA) are beginning to publicly voice their dissatisfaction with the delays…
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DOE Publishes NGL Primer for Marcellus/Utica, Pushes NGL Storage

The Trump Dept. of Energy is hopping on the natural gas liquids storage bandwagon. Yesterday the DOE published a 45-page report called, “Natural Gas Liquids Primer: With a Focus on the Appalachian Region” (full copy below). The DOE uses its own data along with data from the U.S. Energy Information Administration (our favorite government agency) to create an up-to-date picture of Appalachian NGL supply, demand, and infrastructure. What does that picture show? It shows we are in desperate need of our own regional NGL storage facilities. No doubt one of the reasons for the report is to goose China into investing in a proposed $10 billion NGL storage plan being pushed by many (see Tyler County, WV Mentioned as Candidate for $10B NGL Storage Hub). The report gives an important shout-out to the Mountaineer NGL Storage project. The report is a primer–it runs through the basics of NGLs (what they are, why they’re important). The DOE says this report is an important first step in preparing a more comprehensive report requested by Congress about the benefits of Marcellus/Utica NGLs. That comprehensive report will be ready sometime next year. In the meantime, this report will give you an important foundation of knowledge…
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Mountaineer NGL Storage Spending Up to $500M on Ethane Facility

Mountaineer NGL Storage wants to build a new underground NGL storage facility in Monroe County, Ohio, near Clarington, along the Ohio River (see New Company Announces Open Season for NGL Storage in Ohio Utica). The project, which will store primarily ethane but also propane and butane, still needs to build a 3.25 million barrel brine pond, used to pump out stored NGLs. Mountaineer is waiting for a clearance from the Ohio Dept. of Natural Resources to build the pond. At a recent industry event, Mountaineer CEO David Hooker said 20 drillers are interested in storing ethane at the facility, when it gets built (see Mountaineer NGL Says 20 Drillers Interested in Ethane Storage). Hooker keeps the NGL storage project front and center in the news. Yesterday he announced plans to spend an initial $150 million, and potentially as much as $500 million, to build the facility. To the best of our recollection that’s the first time numbers have been offered for how much money it will take to fund the project. Hooker also gave a new timeline for the project, saying he expects all permits to be in hand “within the first six months of 2018,” and after that, construction will begin…
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WVU Appalachia Ethane Storage Hub Final Report – We Need it Bad

A research team from West Virginia University spent the past year studying geologic regions in 50 counties in the Marcellus/Utica Shale region to see if our region would support a proposed $10 billion ethane storage hub. The conclusion was delivered last week at a meeting in Southpointe, PA: Heck yeah! Some 100 geologists, chemical engineers, oil and gas people members of academia gathered to hear about the results. WVU researchers released their findings in a published 181-page report titled “A Geologic Study to Determine the Potential to Create an Appalachian Storage Hub for Natural Gas Liquids” (full copy below). Among the study’s findings: A shale ethane storage hub could help create $36 billion in investment and more than 100,000 permanent jobs. It’s HUGE! Our region currently produces three times the amount of ethane that can be used by the mighty Shell ethane cracker, pointing out the need for more cracker plants. Here’s the exciting news that we need an ethane storage hub, and we need it bad…
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Mountaineer NGL Storage Connecting w/3 Pipelines Under Ohio River

The president of the company looking to build the Mountaineer NGL Storage facility in Monroe County, Ohio, near Clarington, along the Ohio River says operating the facility close to the Ohio River is safe and “is not rocket science.” Last week West Virginia University researchers released a report that the Marcellus/Utica region needs an ethane storage hub (see today’s companion story, WVU Appalachia Ethane Storage Hub Final Report – We Need it Bad). Most of the talk has been about a massive, $10 billion ethane storage facility to help feed cracker plants and other petrochemical facilities that will locate in our region. At the meeting last week, David Hooker, president of Energy Storage Ventures which wants to build the Mountaineer NGL Storage facility, made the point that his company is already working on what will likely be multiple NGL storage facilities. MDN has been following the Mountaineer NGL project. At least check in June, Mountaineer still needs customers to sign up, and they need more regulatory approvals from Ohio (see More Clarity on Status of Mountaineer NGL Storage Facility in OH). We got an update last week from Hooker, including details new for us: the storage facility will connect with three pipelines running beneath the Ohio River…
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NGL Storage Facilities in Marcellus/Utica Good for the Environment

Can proposed NGL storage facilities in the Marcellus/Utica benefit the environment? The answer is a resounding, YES! How? First you must understand what an NGL is, and why we have so much of it in the northeast. NGL stands for natural gas liquid. When you drill a hole in the ground to extract oil, or natural gas, you almost always get not only oil, but natural gas (and vice versa). In addition, you also get NGLs. They are all hydrocarbons with slightly different atomic configurations. NGLs include propane, butane, isobutane and ethane. Aside from natural gas (or oil), the most common hydrocarbon coming out of a well is ethane. Ethane, as it turns out, is quite useful. It can be “cracked” chemically and turned into ethylene, which is the raw feedstock for manufacturing plastics, among other things. We have at least one ethane cracker plant coming in our neck of the woods–Shell’s cracker plant in Beaver County, PA (near Pittsburgh). Another one is likely to get built by PTT Global Chemical–in Belmont County, OH. Other smaller plants that process ethane are also likely to get built. They all need a ready supply of ethane. Enter storage hubs–huge underground caverns to store NGLs until they can be used. Mountaineer NGL Storage is close to beginning work on such a facility (see More Clarity on Status of Mountaineer NGL Storage Facility in OH). However, a much larger, multi-state cooperative NGL storage project costing $10 billion to build is also actively under consideration (see WV, OH, PA, KY Should Cooperate on $10B NGL Storage Hub). In the meantime, what happens to all of the NGLs (like ethane) that are coming out of the ground now in the Marcellus/Utica? Some of it gets separated and sold, via pipeline, to markets in other countries or to the Gulf Coast. However, most of it is kept in the pipeline and mixed in with natural gas (methane), and ends up getting burned. In some cases ethane is “flared” or burned off. What a waste. If we capture and use that ethane for the plastics industry, it will remove it from being burned and ending up in the atmosphere. So yes, building NGL storage facilities can and will positively impact the environment…
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