CLARKSBURG — North Central West Virginia’s oil and gas industry remains an integral part of living and working in the region.
The industry directly employs tens of thousands, from pipeline workers to oil field operators, and has a residual impact on the livelihoods of many more.
Municipalities and counties around the state rely on revenues from oil and gas severance taxes to fund important projects. Other dollars generated by production and extraction operations have contributed heavily to the state’s recent rounds of historic revenue collection numbers.
From small business owners to experts working in support service roles, the industry has an influence on nearly every individual, community and area of economic interest.
John Deskins, economist and director of West Virginia University’s Bureau of Business and Economic Research, said assessments of the future of oil and gas remain positive.
“We’re still saying that oil and gas production is going to grow at a healthy pace for quite a while,” he said. “We think production is going to be strong. Producing, extracting and exporting raw natural gas creates jobs; it creates tax revenues; it creates other economic benefits.”
While much of what is produced in the state is exported elsewhere, West Virginia would see additional benefits from oil and gas if it were to expand investment into auxiliary and support industries, Deskins said.
“Our focus needs to be on keeping the gas in West Virginia and putting it into our chemical industry, our plastics industry and various sectors like that to see value added here,” he said. “Then we can ship out and export more valuable products, rather than just shipping out the raw gas and seeing it converted into more valuable products elsewhere. Attracting those additional downstream activities would multiply the benefits of the gas boom many times over,” he said.
Charlie Burd, executive director of the West Virginia Independent Oil and Gas Association, said his organization also remains bullish on the industry’s future prospects.
“Currently, the exploration and production side of the oil and gas industry remains very steady. We are investing in leases and sites. We are drilling wells. We are hiring workers. The co-tenancy law passed by the 2018 Legislature is just now showing its importance to those leasing processes.”
Based on current production levels, West Virginia has far more oil and natural gas than its residents can actually use, Burd said.
“The biggest challenges are related to the mid-streams side — that is, the timely permitting and construction of very needed pipelines to take away the vast amounts of natural gas and liquids being produced here every day. Currently, West Virginia is producing over 1.7 trillion cubic feet of natural gas. The state uses just under 200 billion cubic feet,” he said. “That means West Virginia produces 8.5 times more than it consumes.”
In order to fully capitalize on its vast resources, the state must invest in the infrastructure needed to help keep profits within its borders — like the proposed Appalachian Storage and Trading Hub in the Charleston area, Burd said.
“Our future opportunity is quite simply the much-needed storage and trading hub that will be constructed and provide the ability to store several liquids associated with the production of natural gas,” he said. “Such a hub can be the catalyst to tens of thousands of jobs for hard-working West Virginians. In addition, such a hub will create a second source for the storage of liquids such as ethane and butane and dramatically lessen the market and pricing swings associated with only having the Henry Hub in Louisiana as the nation’s sole source of such storage.”
There are numerous ways to quantify the industry’s economic importance to West Virginia, Burd said.
“Well, directly we employ roughly 17,000 workers and contribute to twice that many indirect and induced jobs. We do our best to hire local, and we reinvest in West Virginia,” he said. “Also, since 2008, when horizontal drilling took off, the state’s oil and natural gas industry has contributed over $1 billion in severance taxes to the state’s general revenue fund, over $1 billion in property taxes to the counties and hundreds of millions of dollars in royalty payments. Ask any shop or restaurant owner in the areas being drilled, and they will verify the wonderful economic boon they are experiencing.”
The legal challenges causing delays and setbacks for projects like the Atlantic Coast Pipeline and the Mountain Valley Pipeline present a serious threat to the industry’s future growth and development, Burd said.
“If pipelines can get permitted and constructed, we believe there can be an increase in drilling, natural gas and liquids production, jobs, taxes and royalty payments,” he said. “Taking away our current or future markets would be, in my opinion, extremely and economically devastating to the citizens of West Virginia.”
Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, said her organization also sees environmental challenges to the pipeline projects as an impediment to the industry and its potential to contribute to the state.
“We continue to see anti-fossil fuel activist groups challenge our progress, particularly in regard to pipeline projects. The legal challenges which have stopped construction of these projects are harming local communities which are not benefiting from the income generated by these projects. The challenges only slow down the projects, delaying the benefits and increasing their costs,” she said.
However, there are lots of opportunities ahead for the industry, Blankenship said.
“We expect the industry will continue to grow especially when the much needed pipeline infrastructure is complete and operational,” she said. “Projects like the Appalachian Storage Hub will provide even greater opportunities to store and market natural gas liquids in the eastern part of the country, which will spur development of manufacturing in our area and create even more long-term, good-paying jobs.”
If West Virginia’s residents want to remain competitive with neighboring states and continue to maximize the benefits of oil and gas, they need to call on their elected officials to support and champion the industry, Blankenship said.
“Although we hear support for the industry generally, and gratitude towards the economic benefits it has offered to the state, we still need active support and promotion of natural gas-fired electric generation facilities and pipeline projects,” she said. “We need more state legislative support to promote the development of the industry and efforts to prevent West Virginia from becoming even less competitive with our surrounding states where drilling in the Marcellus and Utica shales is occurring. Operating companies are here based on their decision to invest and succeed in West Virginia. Our leaders and lawmakers must make decisions to help keep investments and encourage new ones in West Virginia in order for the oil and gas industry to remain healthy and thrive.”