Trade War Puts $83.7 Billion Chinese Investment in WV on Hold
You can’t say we didn’t warn you. In early April, when the current “trade war” with China began to heat up, we said this with respect to the deal China signed to invest $83.7 billion in West Virginia shale and petrochemicals: “However, if a trade war does develop, it would be foolish to not think those investments (withholding them) will be used against us.” (Will Trade War with China Affect $83.7B Investment in WV Shale?) At yesterday’s Northeast U.S. Petrochemical Construction Conference in Pittsburgh, our fears (and prediction) were confirmed. Chinese officials were due to attend the event and announce the first round of investments in WV. However, Brian Anderson, director of the West Virginia University Energy Institute, said given the trade war now on with China, the officials elected to stay home instead. Anderson said, “The pending trade war has put this project in jeopardy.” Add to the trade war the fact that WV Gov. Jim Justice just fired the guy who built the relationships and negotiated the $83.7 billion deal, Commerce Sec. Woody Thrasher (see WV Commerce Secretary Who Brokered $83B China Deal…Fired), and it doesn’t bode well for China’s billions of investment. The Chinese are using their announced investment as an economic weapon against the U.S. Which points out the folly of relying on investments from your enemies to prop up your economy. Make no mistake: China is an enemy of the United States. However, there’s one thing the Chinese are not retaliating against, and indeed something they want more of: U.S. LNG…
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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 
Last week the second annual Appalachian Storage Hub Conference convened at the Hilton Garden Inn Pittsburgh/Southpointe. As we pointed out in a post last week, the main topic of discussion was the $10 billion NGL/ethane storage hub (see 
On average, New York residents pay 44% more for electricity than neighboring states, like Pennsylvania. In January of this year, New Yorkers (and NY utility companies) were briefly forced to pay a record high of $140.25 per thousand cubic feet (Mcf) for natural gas, as opposed to what everyone else was paying (an average of $3.08/Mcf)–which is 46 times as much! Both stats are rooted in the same issue: NY pays WAY MORE for energy than it has to, because Andrew Cuomo is blocking natural gas pipelines into the state from PA. So says a new report titled “Pipelines and their Benefits to New York” (full copy below). The report, published by the Consumer Energy Alliance, examines the benefits of pipelines to New York, highlighting the need for affordable energy supplies to keep the daily lives of families and businesses across New York moving. Without those pipelines, we’re toast. You can’t build windmills and solar farms fast enough to meet the growing demand for electricity–and natgas. Cuomo’s dysfunctional energy policies are blocking all New Yorkers, upstate and downstate, from living even moderately prosperous lives…
Here are some numbers that are, frankly, hard for us to wrap our heads around. LNG Allies, a nonprofit trade group, recently issued a study they conducted showing that LNG exporters will add between $716 billion and $1.267 trillion in cumulative “direct, indirect, or induced value added” to the U.S. economy by 2050. Yes, trillion, with a “t”. During the same period of time, the study says value added to the economy from supplying the natural gas to those LNG plants (that is, all of the drilling and fracking), will be worth $948 billion to nearly (gasp) $2 trillion! No wonder President Trump is pushing hard to get more LNG export plants online. Here’s a quick overview, followed by a copy of the study/slide deck…
West Virginia Secretary of Commerce, Woody Thrasher, once again addressed the issue of an ongoing trade war with China at yesterday’s West Virginia Oil and Natural Gas Association (WVONGA) conference at Oglebay Park. Last November Thrasher signed a memorandum of understanding with the Chinese government, an agreement in which the Chinese pledged to spend $83.7 billion over the next 20 years in WV’s shale and petrochemical sectors (see 
The Penn State campus in Erie County (called Penn State Behrend) has been tapped by the PA Dept. of Community and Economic Development (DCED) to be the “lead partner” for developing business and market opportunities for the state related to the mighty $6 billion Shell ethane cracker–currently under construction in Beaver County. Erie County where Behrend is located is certainly not next door to the cracker, not nearly as close as some other Penn State campuses. So why was Behrend selected? In a word, plastics. “The strength of Erie’s plastics industry and the success of Penn State Behrend’s School of Engineering, which offers one of only six accredited U.S. plastics undergraduate programs, makes Erie of particular interest to DCED.” According to DCED’s Denise Brinley, senior energy adviser, “Penn State Behrend can provide critical connections to research support, materials testing and a talent pipeline that will add value to this large-scale petrochemical investment and associated growth in the plastics sector.” Penn State is kicking in a $250,000 grant to their Energy University Partnership for oil and gas strategies, to help prime the pump…
We don’t know how many times we have to say it (have said it for years, continue to say it): The Chinese are not America’s friends. They are our enemies. We tend to forget it because we love our iPhones and other electronics built by Chinese children. We’ve become far too cozy, too comfortable, in trusting that China will not do anything to harm America for fear of ending their gravy train. When President Trump wisely slapped tariffs on China in retaliation for their THEFT of our companies’ intellectual property and knock-off goods, China felt the need to respond. Part of that response is proposed tariffs on liquefied petroleum gas (i.e propane), and petrochemical products. The not-so-subtle threat is that they may add oil and LNG to the list. Since China imports more U.S. LNG than any other country, a tariff would definitely hurt. Ditto for oil. We currently export 435,000 barrels a day of oil to China. If that oil flow were suddenly shut down, it would have a dramatic impact on the price of oil here at home (sending West Texas Intermediate into the basement again). Meanwhile, West Virginia’s Secretary of Commerce, Woody Thrasher, says he “hopes” all this trade war stuff won’t affect China’s announced $83.7 billion investment in WV, an investment in shale and petrochemicals. The trade situation with China is high stakes stuff. We’re just glad the guy who wrote The Art of the Deal is the one playing a necessary game of chicken with China…
Tom Gellrich, founder of Top Line Analytics–a consultancy focusing on downstream shale gas development like ethane crackers–spoke Wednesday at Kallanish Energy’s “Crackers, Storage & Pipelines 2018” event at Southpointe. He had some interesting things to say. Among them: The Marcellus/Utica region has enough ethane to easily support up to eight ethane cracker plants–plants the size of the massive Shell cracker being built now in Monaca (Beaver County), PA. So far only Shell has pulled the trigger and begun to build such a plant. PTT Global Chemical, based in Thailand, is actively considering (and likely) to build a second regional cracker plant in Belmont County. So the multi-billion question is this: Why aren’t more companies building crackers in our region, given the abundance of cheap ethane? Gellrich had some thoughts on that…
This week representatives from Shale Crescent USA are in Houston, TX attending the 33rd Annual World Petrochemical Conference–and they have in hand a dynamite study that shows it’s more cost effective to build a petrochemical plant in the Marcellus/Utica region than it is along the Gulf Coast. Which is heresy if you live along the Gulf Coast. “Benefits, Risks, and Estimated Project Cash Flows: Ethylene Project Located in the Shale Crescent USA versus the US Gulf Coast” is an independent report by IHS Markit commissioned by Shale Crescent USA to evaluate and compare the financial returns and risks of a major petrochemical and plastics investment in the region with an identical investment in the US Gulf Coast. The numbers don’t lie. Here’s one juicy statistic from the newly released study: ethane (the feedstock used to make raw plastics) in our region costs 32% less than it does in the Gulf Coast region. One more factoid from the report: If the Marcellus/Utica were its own country, it would be the #3 natural gas producing country, IN THE WORLD! Our region produces more natural gas than the countries of Saudi Arabia, Iran and Qatar. Last year the Shale Crescent folks were the new kids at the World Petrochemical Conference. They were just about laughed out of the event. We have a feeling this year is going to be a lot different…
We spotted an article appearing on the Forbes magazine website that has a chart that stopped us cold in our tracks. The article was written by Jude Clemente, one of our favorite contributors to the Forbes website. He includes three charts in the article to update folks who have an interest in the natural gas space (the article is titled 
The Japanese recently found out more about the Marcellus/Utica and the region in the Mid-Ohio Valley called the “Shale Crescent.” In June 2016, MDN told you about an economic development group of business and government leaders from Ohio and West Virginia (the Mid-Ohio Valley) called Shale Crescent (see