West Virginia Emerging as a Natural Gas Powerhouse

As it turns out, Pennsylvania is not the only Marcellus shale state with amazing production results.

Long a mainstay of US coal production, neighbour West Virginia has quickly become the seventh largest US natural gas producer.

Since the shale revolution took flight in 2008, gas output in the state has boomed more than sevenfold to 1.8 Tcf in 2018.

West Virginia’s gas production has reached a record for ten straight years and now accounts for five to six percent of total US output.

Ranked fourth nationally, West Virginia today holds around 35 Tcf of proven gas reserves.

Overlying the Utica play as well, shale now accounts for 95 percent of West Virginia’s gas output. In particular, two of the state’s largest producers, Southwestern Energy and EQT, have impressively responded to a lower priced environment in the shale-era by deploying constantly evolving technologies and operational efficiencies.

New pipelines have come online to ship West Virginia’s gas to markets in the Northeast, Midwest, southern Canada, and the Gulf Coast.

The state now has over 4,000 miles of interstate and intrastate gas pipelines.

Per EIA, West Virginia has 31 underground natural gas storage fields which have a storage capacity of 535 Bcf that accounts for almost six percent of the nation’s total.

The proximity of this gas to high demand markets makes West Virginia a key supplier to surrounding areas during the winter months when usage peaks 40-60 percent.

Indeed, West Virginia still gets 90-95 percent of its electricity generation from coal, with only two percent coming from gas. This is in contrast to fellow Appalachian shale giants Ohio and Pennsylvania, two long-time coal states which seek to displace with more gas.

This lower domestic reliance on gas will allow West Virginia to remain critical in supplying gas to other states and even LNG export facilities to nations abroad.

There are US$30-35 billion, 25 ~Bcf/d of takeaway capacity now in the works in Appalachia, pipelines which will heavily rely on West Virginian supply.

These projects are essential across a number of areas: Appalachia accounts for 37 percent of total US gas supply. And at 235,000 MW, EIA has gas adding the most power capacity in the decades ahead, 35 percent more than solar and nearly ten times more than wind.

Up from almost 45 percent today, gas is quickly rising toward being an overwhelming 50 percent of total US. power capacity.

Shale production in West Virginia is also bringing mounting supplies of gas liquids, such as ethane and propane. These are feedstocks for manufacturing and making plastics.

In Pennsylvania, for instance, Shell is now building the first ethane cracker outside the Gulf of Mexico in over 20 years.

In fact, DOE Secretary Rick Perry wants Appalachia’s shale to turn the region into an industrial hub of global significance. Just recently, West Virginia Governor Jim Justice signed an executive order for a task force to create more downstream manufacturing opportunities as the industry continues to expand.

The West Virginia Chamber of Commerce is also touting the economic benefits of natural gas for the Mountain State. West Virginia’s GDP per capita is almost 30 percent below the national average, and shale gas offers economic diversification for its embattled coal industry.

To illustrate, the US$6 billion Shell cracker in Pennsylvania is expected to bring 7,400 permanent jobs and untold billions in tax revenues. The gas boom is a driver for other industries, such as the steel business which enables the shale industry’s fittings, gauges, and other heavy equipment used.

Finally, although offering both controversy and scepticism, West Virginia’s shale is still waiting on a game-changing US$84 billion, 20-year investment promised by China.

Some 21 months after the non-binding deal was announced, China Energy Investment Corporation has still not spent any money in West Virginia’s energy projects.

Hampered by the US-China trade war, officials note how even ten percent of that amount would be of enormous benefit.

Source: Rigzone