The Appalachian Storage Hub is going to be the cornerstone of manufacturing for multiple regions while creating unprecedented economic opportunities.
The Appalachian region has been coal country for generations. Working in the mines is tough work and demands a special breed of people. Spawning generations of highly-skilled workers with the get-it-done attitude, the region is perfect for new industries.
West Virginia is one of these coal states that have been struggling since coal has taken a back seat to other fuel sources. They have depended on coal for so long, that when the coal demand slipped, so did their local economies. To combat this, a new wave of support on both sides of the aisle has been thrown towards something called the Appalachian Storage Hub.
The Storage Hub is a $10 billion project that will bring 100,000 permanent jobs and $2.9 billion in new federal, state, and local tax revenue annually, according to the American Chemical Council. It will have the capacity to store 75 to 100 million barrels of natural gas liquids and a large network of 3,000 miles of underground pipelines.
While smaller than the Mont Belvieu Hub in Texas, the Appalachian Hub’s proximity to the Marcellus and Utica shale would make it very strategic for chemical manufacturers. In fact, according to Break Bulk, 70% of the North American polyethylene and polypropylene is within 700 miles of the Appalachian basin. The Proximity to the natural resources greatly reduces costs.
While the Mont Belvieu Hub is larger, transportation costs account for 65-70% of the cost of ethane and propane. The Appalachian Hub would be half of that, leading to more manufacturing and less expensive end-user products – conveniently placed to supply the northeast and the midwestern regions where the Mont Belvieu cannot easily supply.
The Appalachian Storage Hub is planned with a view toward supplying, on-demand, the new crackers in the region, including the Shell Ethane Cracker just northwest of Pittsburgh. Shell says the ethane cracker will have the capacity to produce 3.3 billion pounds of ethylene while the three polyethylene units will produce 3.5 billion pounds. Another cracker is being considered in Ohio, just a few miles away from West Virginia by PTT Global Chemical Public Co. Ltd.
This storage project is going to require a lot of skilled workers to bring the needed infrastructure together – and West Virginia’s former coal workers can bridge the gap. According to the Rand Corporation’s “Wages, Employment, and STEM Education in Ohio, Pennsylvania, and West Virginia” report, the region will benefit as follows:
- Employment in the core occupations of the Marcellus Shale gas industry increased 130 percent—by more than 15,000 jobs—from 2009 to 2013, with average wages of Marcellus Shale–related industries reaching $90,000 per year (Center for Workforce Information and Analysis, 2014). This is what will be supported by the new project.
- According to employment projections from West Virginia’s Department of Commerce, the oil and gas extraction industry in West Virginia will experience a 17-percent increase in employment from 2012 to 2022, while mining not related to oil and gas extraction will suffer a 16.4-percent decrease, a loss of almost 4,000 positions.
- As the natural gas industry matures in the Utica Shale, more local workers are projected to be hired, especially for the long-term maintenance and engineering jobs associated with production and midstream infrastructure (Lendel et al., 2015).
The rise of STEM jobs and the current needs of skilled workers such as machinists and welders among others could position West Virginia to have a job boom to rival that of North Dakota’s. Just as with the North Dakota boom, I expect there will be a larger demand for skilled workers than they can supply locally. Skilled workers who can be persuaded to join the new growth are in a unique position to make a lot of money and that will, in turn, feed local economies, spur additional investments, and finally provide some relief for these coal regions that have a lot of grit, but little opportunity until now.