MORGANTOWN — The much-hoped-for and often-talked-about Appalachian Storage Hub received another shot of attention on Capitol Hill this week, as Sen. Joe Manchin prodded a U.S. Department of Energy official on the topic during a Senate hearing.
Manchin D-W.Va., also raised the issue of the also-much-talked-about but far more nebulous China Energy agreement with the official.
The hearing, by the Energy and Natural Resources Committee, delved into 11 energy-related bills, including Manchin’s Appalachian Energy for National Security Act. Manchin, a committee member, took the opportunity to question DOE’s Shawn Bennett – who carries the lengthy title Deputy Assistant Secretary for Oil and Gas, Office of Fossil Energy – on the proposed hub.
Manchin reminded Bennett that he’s had several talks with DOE Secretary Rick Perry about the hub, including during an April committee hearing, around the time Manchin introduced his bill.
Perry, a former Texas governor, said in April that much of the nation’s petrochemical industry is concentrated along the Gulf Coast, and a huge hurricane traveling up the Houston shipping channel could severely damage it. For that reason, the nation needs a back-up petrochemical hub and the Appalachian shale play is an ideal spot for it.
Perry also said then that progress on the hub is too slow.
Bennett agreed this week that Perry is fond of the hub. “We definitely want to share in wanting to have the petrochemical industry stay in Appalachia.” He repeated the oft-cited fact that if the tri-state area was its own country, it would be the world’s third-largest natural gas producer.
Manchin and Bennett also discussed the local provision of President Trump’s April executive order, “Promoting Energy Infrastructure and Economic Growth.” Section 9 of the order calls for the DOE to produce a report describing opportunities for promoting economic growth, economic diversity and workforce development in the Appalachian region – including the growth of the petrochemical region.
“We are definitely looking at that,” Bennett said. “We are hard at work on supplying that executive order” and expect the report to be complete in August.
Manchin’s bill stems from a related DOE report issued in November.
That report, “Ethane Storage and Distribution Hub in the United States,” supports the idea of a second hub as a form of economic security based on the threat of Gulf Coast hurricanes.
Manchin’s bill – still sitting in the Energy Committee with the others – calls on the DOE to complete that study. The study would include an examination of potential risks to national and economic security posed by foreign ownership and control of domestic petrochemical resources.
It would examine: “the types of additional infrastructure needed to fully optimize the potential national security benefits of the hub; whether geopolitical diversity of export destinations would undermine or bolster national security; the necessity of evaluating public interest with respect to exports for national security; the potential benefits of locating the proposed hub in the area near the Marcellus, Utica, and Rogersville shale plays.”
Manchin told Bennett he hopes his bill will be included in an overall energy legislation package later this year.
China Energy
Manchin’s bill’s reference to foreign ownership of domestic resources reflects Manchin’s skepticism about the $83.7 billion China Energy memorandum of understanding announced in November 2017, which to date has yielded several visits from China Energy officials but no announced investments – and no details about what’s in the MOU.
Manchin told Bennett, “China is trying to buy every drop of propane, butane and ethane in that new shale industry. If they do, they’ll suck out every opportunity that we have for revitalization of manufacturing, and energy protection we need for our country.”
He said he hopes the DOE is aware of that potential problem. That $83.7 billion “seems to be very attractive for people that don’t know what their end game is. … We’ll do everything we can to stop them from taking this product without the review of how it is for the security of our nation.”
Manchin expanded on his doubts during a Thursday committee hearing on the role of U.S. liquefied natural gas in evolving global markets.
Our [West Virginia’s] budget is only $4 billion a year and they’re going to invest $83 billion. What would be their interest? We cannot find out one iota of what the MoU is. I have asked them directly and cannot get a direct answer about their investments,” Manchin said. “It could take away our building stock for manufacturing.”
One of the hearing witnesses, Melanie Hart, senior fellow and director of the China Program Center for American Progress, suggested China doesn’t necessarily play fair or straight.
President Obama signed a shale gas cooperation agreement with China in 2009, she said, to give companies access to China’s shale sector. But that didn’t happen. “So there is an agreement on the books but it was not fully honored on the China side. Their geological data is still fully classified. We do not have anything like reciprocal access in the China market.”
Sen. Shelley Moore Capito, R-W.Va., has also been a big hub booster.
Asked about the Manchin bill and the China Energy MOU, her office pointed out that language Capito was able to enact into law led to the November DOE report and an earlier report – Natural Gas Liquids Primer; With a Focus on the Appalachian Region – issued in June 2018.
Her office said, “DOE also clarified there are more than enough resources to meet growing domestic and international demand and that there was therefore no threat to our economic or national security.” Capito appreciates the work done so far to study the hub project and looks forward to seeing it advance.
Regarding the China Energy MOU, state Commerce Secretary Ed Gaunch could not be reached for comment.
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