When Hurricane Harvey hit the Houston area in August 2017, the devastation was unimaginable. The storm not only impacted an untold number of homes and businesses, it also exposed a weakness in America’s petrochemical industry.
When the storm hit, 17 ethylene crackers, representing 60 percent of the production capacity in America, went offline. These facilities provide the feedstock for the plastics and chemical industries, and shortages and spikes in prices impacted manufacturers coast to coast. Gradually, the crackers returned to production after several weeks, but not before this major disruption to America’s economy.
Why does this matter? Ethylene is a vital ingredient that goes into hundreds of products from food packaging to carpet to tires. Simply put, it is essential to our economy and way of life.
A recent report issued by the Department of Energy states that 95 percent of America’s production of ethylene is produced on the Gulf Coast in Texas and Louisiana — a region exposed to major storms like Hurricane Harvey. Should we be worried about the vulnerability of our country’s petrochemical industry? Wouldn’t it make sense to build some redundancy so an industry vital to America’s economic and national security is not clustered in one location? The Department of Energy and other experts have already answered with a resounding “yes.”
The question is where this secondary “Hub” should be located. The Appalachian region would be a natural location. The development of the Marcellus and Utica Shales over the past decade has made West Virginia, Pennsylvania and Ohio the largest shale gas-producing area in the country. The increase in production has led to an abundance of natural gas liquids, which are currently shipped to the Gulf Coast or up to Canada where they are processed.
Why can’t we utilize this valuable commodity closer to home and attract downstream industries that require access to ethylene? The supply is here. The capacity to store it is here. A large market for the products that use ethylene is nearby. The only hurdle is building out the infrastructure to store and process natural gas liquids.
Developing such a “Hub” in Appalachia would bring significant investment and jobs to the region. A 2017 report by the American Chemistry Council estimates it would create more than 100,000 direct and indirect jobs and $36 billion in investment by 2025. From construction jobs building plants and infrastructure to manufacturers further down the supply chain that would locate nearby, an Appalachian Hub has the potential to transform the economy in our region.
For nearly four years, I have worked to promote this project, introducing legislation to authorize a DOE study, ensuring project developers can utilize federal loan guarantees, and discussing the project with President Trump and Energy Secretary Rick Perry. While, ultimately, it will take private investment to complete this infrastructure, having federal support will help smooth the path forward.
Momentum is starting to build. Shell is building a cracker facility in Monoca, Pennsylvania, which is on target to begin operating in 2020. A consortium of Thai and South Korean companies are planning to develop a facility across the river from Moundsville. Additional projects are in various stages of consideration.
As more facilities consider locating in Pennsylvania, Ohio or West Virginia there will be need for more pipeline and storage infrastructure. There is ample underground storage in the region using salt domes and hard rock caverns. The storage could hold more than 10 million barrels, ensuring a supply of ethane these plants will need to run.
Developing a hub for petrochemicals in the Appalachian region will reduce America’s dependence on a single Hurricane-prone area for ingredients that are required for products we use every day, create a supply for manufacturers located in the Northeast and the Midwest, and transform our region’s economy, creating opportunity for an area that deserves economic diversification.
Any undertaking of this size requires the cooperation of many stakeholders. In the past few years, we have worked with federal and state agencies, the private sector, labor unions and others to bring this vision to fruition. As the momentum behind the Appalachian Hub continues to grow, we stand ready to help advance this project. It is good for West Virginia, good for Appalachia, and good for America.
Rep. David B. McKinley, R-W.Va., represents West Virginia’s First Congressional District. He serves on the Energy and Commerce Committee and is chairman of the Congressional Coal Caucus. He is one of two licensed engineers in Congress.
