September 2019

Executive viewpoint

The time has come for an Appalachian Storage Hub
Senator Joe Manchin / U.S. Senate

The United States has seen drastic increases in natural gas production over the last decade, including in my home state of West Virginia, where we and the surrounding states are sitting on an ocean of energy. We have seen an uptick in good-paying jobs, increased revenues for state and local governments, and the direct and indirect economic impacts are felt in communities across the Appalachian region. This additional revenue supports local schools and infrastructure projects.

While these are welcome and much needed economic benefits, they are a fraction of what we would see, if we did more with our natural gas than merely exporting it in its raw form to other states. By keeping these energy resources at home, we would open up additional economic possibilities for the region. An Appalachian Storage Hub is an important step toward rebuilding the manufacturing sector within the region. Natural gas liquids—such as ethane, propane, and butane—can be used in the production of plastic and other items that we use in everyday life. The hub would attract petrochemical manufacturers to the region, allowing us to process and export these more valuable products. This would drive more economic investment and has the potential to transform the region and create new jobs.

Benefits beyond economics. The benefits of an Appalachian Storage Hub are more than just economic. In November 2018, the Department of Energy (DOE) examined the feasibility of establishing an ethane storage and distribution hub in the U.S., and issued a report titled, “Ethane Storage and Distribution Hub in the United States.” The report noted that the main driver of total domestic natural gas production growth is continued development of the Marcellus and Utica shale plays in the eastern U.S. The report highlighted the strategic benefits of such a hub in the Appalachian region. According to the DOE, 95% of ethylene production capacity in the U.S. is currently clustered along the Gulf Coast in Louisiana and Texas. This geographic concentration poses a strategic risk to the economy and security of the U.S., in the event that an extreme weather event required operations to shut down.

I have had several conversations with Department of Energy Secretary Rick Perry about the risk that weather disasters pose to our natural gas supplies and infrastructure on the Gulf Coast. One hurricane could potentially knock an entire facility offline and leave the U.S. less resilient. Secretary Perry went as far as to call an Appalachian Storage Hub a “win-win for America,” when he testified before the Senate Energy Committee.

Petrochemical benefits. Unlike the Gulf Coast, the mountainous terrain of Appalachia shields us from the hurricanes, tornados and similar weather disasters that the Gulf Coast is seeing more frequently as a result of the changing climate. That, combined with the abundance of natural gas beneath the ground in West Virginia, Pennsylvania, Ohio and parts of Kentucky, makes Appalachia particularly well-suited for a storage hub. An Appalachian Storage Hub could not only serve regional demand for NGL derivatives but also help the U.S. gain global petrochemical market share.

The petrochemical industry has a rich history in the Appalachian region. During World War II, the region served an important role of providing the energy required to power military efforts. While it is a shell of what it once was, the footprint remains, with the ability to grow to meet the needs of the country.

Legislative efforts. As Ranking Member of the Senate Energy and Natural Resources Committee, I have doubled down on my efforts to bring a storage hub to Appalachia. Earlier this year, the Senate Energy and Natural Resources Committee passed my Appalachian Energy for National Security Act, which would require the Department of Energy, Department of Defense and the United States Treasury to examine the national and economic security benefits of a storage hub in Appalachia.

In July, an official from DOE’s Office of Fossil Energy testified before the Senate Energy and Natural Resources Committee about the Appalachian Energy for National Security Act. I took the opportunity to request an update on the Administration’s efforts to invest in economic development and diversification in the Appalachian region, specifically in the petrochemical industry. The official reiterated that Secretary Perry is serious about creating a storage hub in the region, because he understands the need to diversify our supply for economic security reasons.

Making sense. The proposed storage hub in Appalachia is a common sense, strategic investment in our nation’s national and economic security. It would act as a much-needed backstop and provide flexibility, diversity, and reliability to our nation’s petrochemical supply, while also creating additional economic opportunities in a region of our country that would greatly benefit from them. I agree with Secretary Perry—that’s what I call a “win-win.” As Ranking Member of the Senate Energy and Natural Resources Committee, I will continue to look for ways to bring this project to fruition. WO

About the Authors
Senator Joe Manchin
U.S. Senate
Senator Joe Manchin is West Virginia’s senior senator and has served on the Senate Energy and Natural Resources Committee since joining the Senate in 2010. Prior to serving in the U.S. Senate, Sen. Manchin served as West Virginia’s Governor and Secretary of State, and in the West Virginia legislature. As Ranking Member, Sen. Manchin is strongly committed to developing a balanced national energy plan that utilizes all U.S. resources. Every state must do its part to use its resources—whether it’s clean coal and natural gas or wind and solar—to make energy independence a reality. Sen. Manchin has always stood up for energy policies that are good for West Virginia jobs and America’s security. Sen. Manchin was born and raised in the small coal mining town of Farmington, W.V. and became a successful businessman after attending West Virginia University on a football scholarship. He is an avid pilot, outdoorsman, hunter, angler and motorcyclist. He and his wife, Gayle, have been married for more than 40 years and, together, they have three children and ten grandchildren.
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