Watching Government: West Virginia's impressive deal

West Virginia reached its stunning agreement for China Energy Investment Corp. to invest as much as $82.7 billion in the state on shale gas and chemical manufacturing projects because Gov. Jim Justice (R) and others objected a few weeks earlier when it looked as if federal trade officials had overlooked the Mountain State. So they let US President Donald Trump know.

"We had two major things going for us. We are close friends with the president, and he truly wants to do things to help West Virginia. He also wants to reduce the US trade deficit with China," Justice said at a Nov. 13 press conference in Charleston.

"I mentioned to him that the US Departments of Energy and Commerce left us out of this trade mission's process, and he said that wasn't right. The next thing we knew, we were a part of it," he said.

The agreement dwarfed other deals that were announced on Nov. 8 when Trump visited China, including a $43-billion joint development agreement for the Alaska LNG export project. It also benefited West Virginia Commerce Sec. Woody Thrasher's months of groundwork, Justice said.

Thrasher said he came back from visiting China and Japan last spring with reports of several opportunities. "About a month ago, we had a visit from a delegation from one company we visited in China, Shenhua Energy Corp. It said it wanted to help address the trade imbalance President Trump has mentioned," he said.

"It also expressed interest in providing funding for up to $80 billion of projects and wanted to learn about possibilities," Thrasher said.

The resulting deal differed from others announced in Beijing because Shenhua committed to build manufacturing plants in West Virginia that would use natural gas from the Marcellus and Utica shales to make products that would be sold in China. "It's absolutely a total game-changer beyond our wildest expectations," said Thrasher. "It's important to recognize their interest in this since they don't have access to comparably priced gas supplies in China."

Added value's path

"The added value starts with Marcellus and Utica gas, stripping out the methane, and using the liquids that are left to manufacture new products such as diapers, plastic bottles, toys, or automotive components," said Brian J. Anderson, who directs the West Virginia Energy Institute. "It could grow with creation of the Appalachian gas trading hub and polyethylene and polypropylene projects farther downstream."

More specifics were not available, the officials said. "We're farther down the road than yesterday, but we still haven't seen the first shovels in the ground," said Justice.

Thrasher said, "I believe we'll see construction starting to take place a year from now."