Gas storage hub project clears first hurdle for big loan
CHARLESTON, W.Va. — Supporters of a regional storage hub for natural gas are excited the proposed project has cleared a significant hurdle for a possible $1.9 billion federal loan guarantee.
The federal Department of Energy invited Appalachia Development Group to submit a second phase application for the loan guarantee.
Appalachia Development Group said it recognizes that this is the first of several steps to secure a conditional commitment and final loan agreement. The group said it also aims to secure $1.4 billion through other financing.
The Appalachia Storage & Trading Hub is a proposed underground storage facility for natural gas liquids and intermediates. Supporters tout its potential for secondary products from natural gas.
The American Chemistry Council estimates the facility could attract up to $36 billion in new chemical and plastics industry investment and create 100,000 new area jobs.
Appalachia Development Group submitted its Part I application this past Sept. 13.
“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, chief executive of Appalachia Development Group.
Appalachia Development Group is owned by MATRIC and the West Virginia University Innovation Corporation. Hedrick is also the CEO of MATRIC.
News releases from several West Virginia officials offered congratulations.
“I am very excited that the Department of Energy is moving forward with the Appalachia Development Group in its efforts to secure a loan to develop the Appalachian Storage Hub,” stated Sen. Joe Manchin, D-W.Va.
“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. Shelley Moore Capito, R-W.Va., also expressed congratulations over advancing to the second phase of consideration for the loan guarantee.
“This 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,” Capito stated.
“This is another step in the right direction, and I will continue working to help make this game-changing idea a reality.”
Congressman David McKinley, a Republican who represents the northern counties of West Virginia, said the storage hub has the potential to transform the region.
“This project will not only transform the region, it will impact the entire country by enhancing America’s energy dominance,” McKinley stated.
“The storage hub has the potential to create thousands of jobs, attract billions in investment, invigorate Appalachia’s economy, and establish our area as a force in the petrochemical industry.”
Gov. Jim Justice also offered praise for the development.
“Thousands of potential jobs and numerous downstream businesses could result from development of this project,” Justice stated.
“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.”
The natural gas storage hub has been a focal point of West Virginia’s economic development efforts.
A West Virginia University research team has been studying geological formations to pinpoint the best sites for natural gas storage. But state leaders also have been focused on how the private sector might invest millions of dollars in developing the hub.
Developers have estimated the startup cost for the storage hub is at least $1 billion, although the total buildout cost is probably more around $10 billion.
The hub got another boost with the announcement of West Virginia’s $83-billion deal with China Energy late last year. State leaders called the agreement key to developing the long-sought natural gas storage hub.
The storage hub is one of the projects that developers are working on under the memorandum of understanding with China Energy, said Brian Anderson, director of the WVU Energy Institute.
“China Energy is extremely interested in it for the same reasons we are in the sense that the Appalachian storage and trade hub, storing all these raw material precursors is a necessary piece of the infrastructure to build out a robust chemical industry in our region,” Anderson said in November.
“So if they’re investing in that robust chemical industry, they also are extremely interested in investing in the necessary infrastructure in the storage hub. We have the potential in our region to become the second major petrochemical hub in the United States.”
By: Brad McElhinny
Source: Metro News
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