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Underground Natural Gas Storage Hub Clears Hurdle

By Staff | Jan 10, 2018

CHARLESTON – A hurdle has been cleared in the development of an underground natural gas liquids storage hub that industry representatives said could create thousands of jobs and encourage billions of dollars of development in Appalachia.

Appalachia Development Group LLC of Charleston on Wednesday announced it has been invited to submit a Part II application under the U.S. Department of Energy Title XVII Loan Guarantee Program to support the development of infrastructure for the Appalachia Storage and Trading Hub. The loan guarantee would be for $1.9 billion from the Department of Energy.

The company in a statement said it recognizes it is the first of several steps in the process to secure a conditional commitment and final loan agreement.

“We are pleased to have achieved this major milestone, but we are far from satisfied in our pursuit of a vibrant and growing Appalachia based in sound business principles,” said Steve Hedrick, CEO and president of Appalachia Development Group and president and CEO of Mid-Atlantic Technology, Research and Innovation Center.

“We are grateful for the collaboration with the states in Appalachia, and industry, legal and financial partners,” he said. “There is much work to be done to drive this forward, and our team is strong, prepared and highly motivated to move forward. The growth of our business will serve the industry well, and we look forward to the day that the outputs of the ACC’s report are enabled as industry grows alongside the hub.”

Appalachia Development Group submitted a Part I application in September and has worked with the Energy Department Loan Program Office over the last few months. Appalachia Development simultaneously will work to secure a $1.4 billion equity position in the project, the company said.

Hedrick also cited the help from West Virginia University and the Mid-Atlantic Board of Directors.

“Sometimes a goal is bigger than one person, one company or one state, and while we still have a long way to go and a lot of work to do, this is a significant milestone along the journey to maximize the Shale opportunity in the Appalachia region,” he said.

The proposed hub will be an underground storage facility for natural gas liquids and intermediates. The American Chemistry Council said the development of the hub could encourage $36 billion in petrochemical investments and more than 100,000 new long-term jobs.

Several areas in the region have been described as possible sites for the facility, including at Bens Run near the Tyler-Pleasants counties line.

“We’re hopeful that the Bens Run run site is going to be the storage facility. We think it would be a great location. It would benefit not only Pleasants and Tyler county, but the entire region,” said Jody Murphy, executive director of the Pleasants Area Chamber of Commerce. “We’re committed to doing whatever we need to do to make this happen.”

The project has been supported by members of West Virginia’s congressional delegation. “I have long said that the Appalachian Storage Hub is a vital project that will help us capitalize on our state and region’s abundant natural resources, growing infrastructure and innovative spirit,” Sen. Joe Manchin, D-W.Va., said. “This storage hub will create jobs and develop our economy by attracting significant manufacturing and related investment to West Virginia and our neighboring states. It will also be vital in helping to secure our energy future by providing a reliable affordable supply of natural gas liquids.”

Advancing to the second part of the process “is a clear indication of the strength of their application, and it demonstrates the department’s interest in the transformative job creation and economic growth potential of developing an Appalachian market for natural gas liquids,” Sen. Shelley Moore Capito, R-W.Va., said.

“This is another step in the right direction, and I will continue working to help make this game-changing idea a reality,” she said.

The announcement was “exciting news for the entire region,” Rep. David McKinley, R-W.Va., said.

“This project will not only transform the region, it will impact the entire country by enhancing America’s energy dominance,” he said.

Underground storage of natural gas liquids was part of the agreement announced in November with China Energy Investment Corp. Ltd. to invest nearly $84 billion in shale gas development and chemical companies in West Virginia over the next 20 years.

Gov. Jim Justice also issued a statement on Jan. 3.

“I’m extremely pleased that the West Virginia Department of Commerce, West Virginia University and the Mid-Atlantic Technology, Research and Innovation Center have been able to move the process forward for establishing this storage hub,” Justice said. “Thousands of potential jobs and numerous downstream businesses could result from development of this project. We are anxious to see it come to fruition over the next several months with the invitation for ADG to now complete part two of the application process and seek the issuing of the loan guarantees.”