April 14, 2024

The Ohio River Again At Center of Seminal Industrial Transition

Ohio River near Marietta, Ohio. Photo/Keith Schneider

SOMERSET, KY — Ever since I reported and completed a project to suggest a new development strategy for Owensboro, KY. — and met and married one of the city’s great and beautiful civic leaders –I’ve been fascinated by the evolution of the Ohio River Valley. See a ModeShift archive here.

Every economic era in American history opened along the river’s banks. Most of those that closed also weakened and died on a river that stretches 981 miles from its start in Pittsburgh to where it empties into the Mississippi in Cairo, Illinois. I’ve had in my head for eight years now a great non-fiction book on the Ohio’s contemporary story of reviving cities, cleaner shores, technological advancement, energy transition, and political retreat. A story, in other words, of America. Just one from a region of the country that attracts scant attention and invites limited perspective even from the more than 5 million people who live along its banks.

This week I’m off to the region around Pittsburgh, Morgantown, and Charleston to report for the New York Times and Energy News Network on the potentially colossal natural gas processing industry emerging on the banks of the upper Ohio. Royal Dutch Shell is building a $6 billion plant in Monaca, PA. to process natural gas liquids into feedstock compounds useful in the production of chemicals, plastics, and fuel.

Downstream, Ohio late last year approved air emissions and water discharge permits for a similar-size plant in Belmont County. The Department of Energy is considering a $1.9 billion loan guarantee to build a $3 billion gas storage and distribution hub in West Virginia. MarkWest, a big player in the industry, is spending $2 billion on gas processing facilities in the upper Ohio region. Billions more is being invested in pipelines to move gas and gas liquids to market. In 2017, during talks in Beijing between President Trump and Chinese Leader Xi Jinping, China indicated it was prepared to invest $83.7 billion in gas processing and distribution infrastructure in the upper Ohio states.

There are intriguing personalities involved. One is Brian Anderson, an MIT-educated chemical engineer and former head of the West Virginia University Energy Institute, the group that promoted the storage facility. Anderson founded a private company called the Appalachia Development Group to commercialize the facility, and he played a role in 2017 in gaining China’s interest in financing it. He also attracted the attention of Energy Secretary Rick Perry, who supports providing the federal loan guarantee. Anderson was just named director of the National Energy Technology Laboratory, a unit of the Department of Energy focused on fossil energy research and development. NETL is a player in deciding the loan guarantee. Anderson said he’s no longer involved with Appalachia Development Group.

Another is Woody Thrasher, the principal of the Thrasher Group, an engineering and design firm that he started with his father in 1983 in West Virginia and grew to 400 employees. The firm works in construction, wastewater plant design, and energy production. Thrasher also is the former Secretary of Commerce in West Virginia who helped negotiate the deal with China for developing gas infrastructure in the region. The specific language and agreements contained in the deal have not been made public. Thrasher was fired in November, 11 months after being named to the secretary position, for financial irregularities in a FEMA disaster relief fund stemming from a 2016 flood.

Federal energy loan guarantees of the magnitude under consideration for West Virginia have a mixed record (to put it politely) of achievement. In 2011, for instance, DOE approved an $8.3 billion guarantee to build two new nuclear reactors in Georgia. The initial estimated construction cost — $14.3 billion — has almost doubled and the plants are not close to being completed. Federal taxpayers and Southern Company customers will be responsible for the added costs regardless of whether the reactors are ever completed and opened.

The West Virginia gas cluster, and that big loan guarantee face similarly uncertain design and construction costs, and unstable market conditions. Though there is a wealth of natural gas lying beneath West Virginia, Pennsylvania, and Ohio there is no guarantee at all that there’s a sizable future long-term market for methane (for power generation) or gas liquids (plastics and fuels and chemicals manufacturing). The reason: natural gas is in plentiful supply. So are gas liquids. Prices are low and expected to stay that way.

The upper Ohio cluster would be competing with a larger gas processing cluster in Texas that is supplied by the Permian Basin in west Texas and New Mexico, which is even larger and producing more fuel than the three-state upper Ohio region. Meanwhile renewable energy is coming on very fast to supply electricity and is cost-competitive now with gas.

What’s happening around Pittsburgh and south is a big deal, no matter how little attention it’s received. The federal loan guarantee and China’s investment interest are bids to accelerate public and private investment in energy infrastructure and try to assure that natural gas is the favored American fuel of the century. But is it the right fuel? Are renewable sources of energy a smarter and safer investment – for jobs, for communities, for the climate?

So here, once again, is a nationally significant confrontation — between fossil fuel and renewable energy — on a river that is accustomed to such turning points. After all Marietta, Ohio, a gorgeous river town, is where the Northwest Territories Ordinances were developed and signed in the mid-1780s to decide how lands along the river and Great Lakes Basin would be settled and managed. The ordinances also outlawed slavery.

In the 19th century the river served as the watery gateway slaves sought to gain their freedom.

In the 20th century, a multi-state compact formed to rid the Ohio of its dangerous water pollutants.

In the 21st, coal-fired power is being replaced by cleaner alternatives.

The three states of the upper Ohio are now among the largest natural gas producers in the world. The natural gas processing corridor emerging along the banks of the Ohio River takes advantage of that enormous fuel reserve, which Energy Department data anticipates will last over a century at projected rates of consumption. Billions are being invested in a region that was the buckle of the Rust Belt. Communities welcome the industrialization, which developers say will produce much cleaner plants emitting lower levels of pollution.

As an economic zone, the upper Ohio gas corridor would compete with the Gulf Coast as a center of gas processing, chemical manufacturing, and transportation fuels production.

As a center of hope for the planet’s climate, the future is considerably more obscure. If natural gas outcompetes renewable technology for electricity and transportation, thousands of jobs would develop along the Ohio as climate disruption becomes more dangerous.

— Keith Schneider

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