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21–998 2017

S. HRG. 114–507 

THE ECONOMIC IMPORTANCE OF MODERN, 

RELIABLE ENERGY INFRASTRUCTURE TO 

WEST VIRGINIA AND THE UNITED STATES 

FIELD HEARING 

BEFORE THE 

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

AUGUST 29, 2016 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 

Available via the World Wide Web: http://fdsys.gov 

(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

LISA MURKOWSKI, Alaska, Chairman 

JOHN BARRASSO, Wyoming 

JAMES E. RISCH, Idaho 

MIKE LEE, Utah 

JEFF FLAKE, Arizona 

STEVE DAINES, Montana 

BILL CASSIDY, Louisiana 

CORY GARDNER, Colorado 

ROB PORTMAN, Ohio 

JOHN HOEVEN, North Dakota 

LAMAR ALEXANDER, Tennessee 

SHELLEY MOORE CAPITO, West Virginia 

MARIA CANTWELL, Washington 

RON WYDEN, Oregon 

BERNARD SANDERS, Vermont 

DEBBIE STABENOW, Michigan 

AL FRANKEN, Minnesota 

JOE MANCHIN III, West Virginia 

MARTIN HEINRICH, New Mexico 

MAZIE K. HIRONO, Hawaii 

ANGUS S. KING, JR., Maine 

ELIZABETH WARREN, Massachusetts 

COLIN HAYES, Staff Director 

PATRICK J. MCCORMICK III, Chief Counsel 

SEVERIN RANDALL, Senior Counsel 

BRIANNE MILLER, Professional Staff Member 

ANGELA BECKER-DIPPMAN, Democratic Staff Director 

SAM E. FOWLER, Democratic Chief Counsel 

SCOTT MCKEE, Democratic Professional Staff Member 

RICH GLICK, Democratic General Counsel 

(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Capito, Hon. Shelley Moore, a U.S. Senator from West Virginia ........................ 1 

Manchin III, Hon. Joe, a U.S. Senator from West Virginia ................................. 3 

WITNESS 

Anderson, Dr. Brian, Director, West Virginia University Energy Institute ....... 6 

Deskins, Dr. John, Director, West Virginia University Bureau of Business 

& Economic Research .......................................................................................... 15 

Earl, Chad, Director of Marketing and Business Development, ORDERS Construction Company, Inc. ....................................................................................... 20 

Hedrick, Steve, President and Chief Executive Officer, Mid-Atlantic Technology, Research & Innovation Center (MATRIC) ............................................ 25 

Keffer, Jeffery, President and Chief Executive Officer, Longview Power, LLC . 31 

Poling, Dan, Business Manager/Secretary-Treasurer, District Council 53, 

International Union of Painters and Allied Trades .......................................... 39 

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED 

Anderson, Dr. Brian: 

Opening Statement ........................................................................................... 6 

Written Testimony ............................................................................................ 10 

Capito, Hon. Shelley Moore: 

Opening Statement ........................................................................................... 1 

Deskins, Dr. John: 

Opening Statement ........................................................................................... 15 

Written Testimony ............................................................................................ 17 

Earl, Chad: 

Opening Statement ........................................................................................... 20 

Written Testimony ............................................................................................ 22 

Hedrick, Steve: 

Opening Statement ........................................................................................... 25 

Written Testimony ............................................................................................ 28 

Keffer, Jeffery: 

Opening Statement ........................................................................................... 31 

Written Testimony ............................................................................................ 33 

Manchin III, Hon. Joe: 

Opening Statement ........................................................................................... 3 

Poling, Dan: 

Opening Statement ........................................................................................... 39 

Written Testimony ............................................................................................ 41 

(1) 

THE ECONOMIC IMPORTANCE OF MODERN, 

RELIABLE ENERGY INFRASTRUCTURE TO 

WEST VIRGINIA AND THE UNITED STATES 

MONDAY, AUGUST 29, 2016 

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Morgantown, West Virginia. 

The Committee met, pursuant to notice, at 2:04 p.m. in Courtroom 1 of the Monongalia County Justice Center, Morgantown, 

West Virginia, Hon. Shelley Capito presiding. 

OPENING STATEMENT OF HON. SHELLEY CAPITO, 

U.S. SENATOR FROM WEST VIRGINIA 

Senator CAPITO. I am feeling very all-powerful up here. 

I want to thank everybody for coming and our witnesses for coming. Senator Manchin and I are really pleased to be talking about 

something that we have much agreement on, probably all agreement on, and it is extremely important to our state. 

I would like to extend the fact that we invited Congressman 

McKinley to join us today, but he was unable to be here. I know 

he is as passionate about this subject as we are as well. 

I would just like to say that a field hearing in my view is like 

we are right in Washington in our committee room giving the testimony. This will be part of the permanent record of the U.S. Senate, 

and I believe it is going to be online in the next 24 hours or so. 

If you do not catch something you wanted to catch, you can listen 

to it. For the general public, I think that is important. 

The way this goes is I am going to make an opening statement, 

Senator Manchin is going to make an opening statement, and then 

we are going to have each person testify. If they have a longer 

statement, they will give a five-minute overview of their statement, 

and then we will begin the questioning. I do not want to make it 

real formal, but that is kind of how we are going to roll here. 

Again, thank you all very much for coming. I am going to gavel 

us in. 

I want to start by thanking the Monongalia County Justice Center for hosting us, and I would like to thank Judge Clawges—I 

hope I said his name correctly—Robin Bailey and the other justice 

court officers for going above and beyond. They greeted me and got 

me in perfectly fine, and I know it is a disruption to their day so 

I appreciate that. 

2 

Again, I want to welcome our witnesses to talk about the economic importance of energy infrastructure in the State of West Virginia. 

We are now at a point, I think, where the United States is becoming one of the most dominant players in energy production in 

the world, which makes this hearing incredibly well-timed and important. There is arguably no other state where the discussion on 

energy infrastructure is more critical than in West Virginia. 

In 2013, the United States surpassed Russia and Saudi Arabia 

as the leading oil and gas producer in the world, and yet we are 

still woefully ill-equipped to handle this boom in production. 

The good news, however, is that building modern infrastructure 

will do exponentially more than just deliver cheap, reliable energy. 

New infrastructure creates jobs—and that is what we wanted to 

focus on today, boosts communities, adds billions of dollars to the 

economy, improves the safety and reliability of our grids and contributes to less emissions. 

West Virginia has always been one of the blocks in the foundation of our country’s energy production, but our economy in many 

of our communities has been devastated due to the downturn in the 

coal industry. We continue to rank 10th in production of all energy, 

10th in the production of natural gas, second in the production of 

coal, and West Virginia has proven time and again that we have 

the perfect storm in a good way of natural resources and skilled 

work force that make investment in energy infrastructure so valuable. 

Advanced drilling techniques have made our natural gas wells 

some of the most productive in the country. The Marcellus and 

Utica Shales have accounted for 85 percent of the growth in the industry. In 2014, one EQT well in Wetzel County just below Marshall County, home of my birth, alone provided enough gas to provide the power for 77,000 homes for an entire year. 

This rate of production, coupled with the fact that the gas demand for power generation alone in the lower 48 is expected to increase by almost 75 percent between now and 2025, means that 

there is a crucial need for this transmission infrastructure. 

The shale gas revolution has made it possible to produce enough 

gas to meet both our domestic demand and increase our footprint 

around the world in the global oil and gas markets. The ability to 

export liquefied natural gas, which I have been a supporter of, 

means more job opportunities here at home as well as abroad. 

The export project at Cove Point is almost online, and Dominion 

right now has 2,000 workers—they are probably not all Dominion 

workers but contractors and all—that are working on that job right 

now. It will export gas to countries like Japan and India, friendly 

countries to us, and will considerably lesson our reliance and their 

reliance on hostile countries that threaten the global security. 

Additionally, due to the exponential increase in natural gas reserves, we will see that exports do more than just provide trade 

revenue. So the need for pipelines to transport our abundance of 

natural gas is crucial. That is why I included language in the Energy Policy Modernization Act of 2016, which is actually in conference right now, which is the most comprehensive energy legislation we have done in years and very bipartisan. I know Senator 

3 

Manchin and I both voted for that coming out of the committee and 

on the Floor, and, speaking for myself, I hope we get the chance 

to vote for that conference committee. 

My bill would help to streamline the permitting process for pipelines. We have learned the permitting process can be so broken 

apart and convoluted that we can streamline it, not doing away 

with any of the environmental regulations at all because those are 

extremely important, but just have it make more common sense. 

Pipeline infrastructure is critical for job creation. It is estimated 

that for every mile of natural gas transmission line pipeline, a total 

of 58 jobs are created. Because of our upstream capacity, West Virginia can have a more robust chemistry sector that accounts for 

nearly 40 percent of our state’s manufacturing jobs and is the second-largest exporting industry in the state. 

Using ethane from natural gas as a feedstock means chemical 

companies can choose to operate in West Virginia due to the enormous benefits of being right on top of the resource. That is why, 

again, I included language in the energy bill that would require the 

Departments of Energy and Commerce to conduct a study to look 

at the feasibility of an ethane storage and distribution hub here in 

Appalachia, in West Virginia, or in the region. 

Congress’ role in improving infrastructure is only a piece of what 

needs to be done. Innovation and private investment is extremely 

important to building safe, efficient energy infrastructure. Innovation, we are doing it here on the campus of West Virginia University and also at the National Energy Technology Lab, is extremely 

key. Senator Heitkamp and I have worked on a bipartisan group 

that focuses on carbon capture technology, which we are going to 

talk about later. We need to foster an environment where risks associated with infrastructure are vastly outweighed by the incentives to move forward. 

One of the greatest contributions to our energy infrastructure is 

the diversity and ingenuity of our work force, and we are going to 

talk about that today, and West Virginia, as an energy-exporting 

state, I think is a prime example of this. 

I hope we can accomplish a lot in the hearing today. I hope that 

this will give us some impetus as we move back to Washington, 

DC, after Labor Day, to move that conference committee bill and 

the energy bill. It has a lot to do with what we are going to be talking about today, and I want to again thank the witnesses. 

Before we move to the panel, I would like to ask Senator 

Manchin for an opening statement. 

STATEMENT OF HON. JOE MANCHIN III, U.S. SENATOR FROM 

WEST VIRGINIA 

Senator MANCHIN. Well, thank you, Madam Chairman. I thank 

you for holding this hearing today. 

We both serve on the Energy and Natural Resources Committee 

which is very important to our state and very important to this 

country. 

I just want to thank all the witnesses. I know everyone is concerned about this right now. We are hitting some tough times, and 

it is going to be all of us pulling together to figure this one out and 

working together, and we cannot let politics get in between. I think 

4 

you will see that Senator Capito and I will work across party lines 

and try to show a pathway forward in Washington that we should 

be doing what is best for our country and our state that we respectfully represent. That is what I think we will do here today, and we 

will continue to do that. 

I want to thank all of you again. Dr. Deskins, thank you and I 

appreciate it; Dr. Anderson, Mr. Earl, and Steve Hedrick, who we 

have worked with very closely over the years, and Mr. Keffer, I appreciate you all being here and, Delegate Poling, thank you as always for being involved. 

I also want to make a little announcement right now—Senator 

Capito and I have been working very hard trying to get Secretary 

Moniz to come to West Virginia. We finally got it confirmed, and 

he is going to be coming September the 12th. He will be visiting 

NETL. We are going to take him out to Longview, and we are going 

to show him what West Virginia does for this country and how well 

we do it. 

So we are pleased to announce today that he will be coming. We 

have worked on this long and hard. Secretary Moniz would have 

visited earlier, but the Iran nuclear discussion took him away from 

us for a while. We have got him scheduled, and we are happy for 

that. 

It is no secret that West Virginia has been economically challenged recently. Our economy is suffering largely due to a transition away from coal. We continue to experience persistently high 

unemployment rates. In fact, in some counties those numbers are 

over two times the national average. 

In our southern counties, traditionally our largest coal-producing 

region, we are consistently posting unemployment numbers in the 

double digits: Mingo County, 11.7 percent; McDowell, 12.5; Logan, 

10 percent; Wyoming, 9.1; Boone, 8.3. 

Workforce West Virginia reports that between July 2015 and 

July 2016 we lost 4,800 mining and logging jobs; 700 manufacturing jobs; and 1,700 trade, transportation, and utility jobs. The 

slowdown of natural gas exploration and production in Marcellus 

and Utica has dampened new hiring, as well as state tax revenue, 

as we all know. To complicate matters, we just experienced a oncein-a-century flood that took West Virginia lives, homes and businesses, a tragic event from which we will be recovering for years. 

More than ever, it is critical that we go the extra mile to examine the opportunities for jobs creation and economic development 

while ensuring we remain an energy leader for our nation. 

Historically, West Virginia has been an energy exporter. Our 

home state sits on abundant reserves of coal and natural gas which 

Senator Capito has just pointed out. We are the fourth-largest 

state of proven reserves of natural gas behind only Texas, Pennsylvania, and Oklahoma. 

In the 2016 Annual Energy Outlook, the Energy Information Administration (EIA) projected that, even under a Clean Power Plan 

scenario, coal and natural gas will make up approximately half of 

our electric generation mix in 2040. 

We talk about deniers. You know, there are those who deny there 

is climate change going on, and there are those who deny we are 

going to be needing fossil fuel for the next two, three, or four decVerDate Nov 24 2008 15:35 Apr 07, 2017 Jkt 021998 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21998\C21998.TXT C21998
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ades. Both of these groups are severely handicapping us from the 

standpoint of doing the job that we need to be doing, and I would 

hope that all those on either side would look at the facts. They are 

entitled to their own opinions, just not entitled to their own facts. 

So these are the facts as we bring them forth. 

Coal and natural gas are going to continue to be a critical part 

of our energy mix in our economy for decades to come. It is important for us, very important for us, to support the policies that ensure West Virginia continues to be a significant and sustainable 

participant in the energy future of this nation. 

Two pieces of these polices, simply put, are technology and infrastructure. Technology must further develop and commercialize carbon capture utilization and sequestration in order to secure a future for reliable, affordable coal energy both here at home and 

abroad. In addition, we must put the necessary infrastructure in 

place to take advantage of the robust opportunities that come from 

our abundant natural resources while ensuring the reliability of 

our electric grid. 

I would mention one thing. I have spoken to a lot of our state 

legislators, and I said we have got to start thinking in terms of a 

regional energy hub, a mid-Atlantic energy region, such as the 

Southwest. We should be looking at Pennsylvania in the highest 

part of this region, not the borders that separate us but basically 

the ability that we have to work together to build these pipelines 

that basically keep some of this product in this market area. They 

say, ‘‘Build it and they will come.’’ I truly believe if you have it, 

they will come, but you have to have access to it. 

Transportation of energy has always been a key part of the energy economy and will be a key in its future. When developed responsibly in harmony with local stakeholders these pipeline 

projects offer our state economic benefits. The Interstate Natural 

Gas Association of America Foundation released a study earlier 

this year which noted that new investments in midstream pipeline 

infrastructure will range from $183 billion to $282 billion over the 

next two decades. 

It is no secret that pipeline development in West Virginia is 

growing particularly because our region is blessed with vast 

amounts of gas and natural gas liquids. We need to ensure these 

high-value West Virginia products can reach new markets—and 

this is what we are looking at—as well as attract long-term investment in our state and our work force. 

Expanding pipeline infrastructure will allow consumers and businesses access to more affordable energy and attract new investments and lead to job creation. West Virginia’s workers and businesses should have access to job opportunities associated with 

these infrastructure projects. When I say job opportunities, I mean 

high-paying, quality opportunities that offer West Virginians a 

means of obtaining the skills and knowledge required to cultivate 

a viable, long-term career path. 

We have seen great success in our state when industry, workers 

and local community and technical colleges can provide students 

with the skills and training they need to succeed. For example, 

West Virginia’s partnership with Bridge Valley Community and 

Technical College has ensured that students are learning in-deVerDate Nov 24 2008 15:35 Apr 07, 2017 Jkt 021998 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21998\C21998.TXT C21998
6 

mand 21st century skills so that Toyota has access to a highly 

qualified work force. If you have not been down to our southern 

high-tech center, you should see that operation. The students are 

earning while they are learning, and they have a very, very, very 

good job waiting for them. 

In conclusion, West Virginia has helped power the nation for decades. I have said this and I said this to the President and I have 

said this to many people in the White House. I said if you want 

to know how we feel in West Virginia, we feel like a returning Vietnam veteran. We have done everything you asked us to do, we 

have done the heavy lifting, we have done the hard work, and now 

you act like you do not appreciate it and you do not respect it and 

you do not really think it was needed. 

Without West Virginia and the efforts that we have made over 

the last century, I assure you, we would not be sitting in the freest 

country on earth, the superpower of the world, if it had not been 

for what West Virginia has contributed. 

With that, I say thank you all for being here. Madam Chairman, 

thank you. 

Senator CAPITO. Thank you, Senator Manchin. 

What I am going to do is introduce you individually, and then 

you can make your statement. Dr. Brian Anderson is the GE plastics Material Engineering Professor in Chemical Engineering at 

WVU. He is also a native of Ripley, I found out, so that is a mark 

of excellence, and he serves as a Director of the WVU Energy Institute. He graduated from WVU, and he has his advanced degrees 

from MIT. I want to welcome you here, Dr. Anderson. 

STATEMENT OF BRIAN ANDERSON, DIRECTOR, WEST 

VIRGINIA UNIVERSITY ENERGY INSTITUTE 

Dr. ANDERSON. Senator Capito, Senator Manchin, thank you very 

much and good afternoon. I really appreciate the opportunity to 

testify today. 

As you mentioned, I am Brian Anderson. I am the Director of the 

WVU Energy Institute at West Virginia University (WVU). The 

WVU Energy Institute serves to facilitate collaborative and innovative solutions to the energy future of West Virginia and the United 

States. And as the coordinating institution of energy research at 

the flagship, land grant university in West Virginia, it is central 

to my organization’s mission to work with stakeholders within the 

university and across the state and region to help further that land 

grant mission. 

A key aspect of that mission is to assist in stimulating economic 

development in West Virginia. As you know, the economy of West 

Virginia has long been grounded in the energy sector. From the 

early development of oil and gas resources in the United States to 

the long history of the coal industry, much of the economic base of 

West Virginia is highly dependent on the energy resources with 

which the state has been blessed. 

Almost 100 years ago, in 1921, the world’s first commercial ethane cracker was built in Clendenin, West Virginia, due to the proximity of liquid rich natural gas production in the Elk and Kanawha 

River valleys. This development spurred on the modern petrochemical and plastics industry that we have today. 

7 

Due to the abundance and proximity to the natural resources in 

the U.S. Gulf Coast however, much of the expansion of the petrochemical industry and plastics industry has occurred in that region 

over the past half-century. 

However, with advances in horizontal drilling and hydraulic 

stimulation techniques first developed in part by research done in 

Morgantown, West Virginia, at what is now the Department of Energy’s National Energy Technology Laboratory, we are again now 

realizing abundant resources of natural gas and natural gas liquids 

in this region. 

The Marcellus Shale is now the largest producer of natural gas 

in the United States, and the Utica Shale shows similar, if not 

more, prolific potential. These two Shales in the region are not only 

producing large volumes of natural gas but also of natural gas liquids such as ethane, propane, and butane. 

Ethane and propane are the raw materials used to make pharmaceuticals, industrial, chemical and consumer goods. Over the 

last ten years, production of ethane and propane from the 

Marcellus and Utica Shales have driven the cost of these very valuable raw materials to a price point well below global and national 

prices. Connecting this valuable resource to the national and global 

markets will take modern robust infrastructure, the topic of this 

hearing. 

I contend that the types of infrastructure necessary to benefit 

both the region and the nation is not only a reliable, modern network of pipelines but also a robust, regional system of natural gas 

liquid storage and distribution. 

Recently Royal Dutch Shell Chemical Appalachia announced a 

final investment decision on building a multibillion-dollar ethane 

cracker in Pennsylvania not far from the West Virginia border. 

Shell has said that constructing the plant would employ about 

6,000 workers and provide 600 permanent operational positions 

when it opens. 

Shell, which has been pulling back in parts of its global operation, said that this facility was a particularly competitive project 

because it will use ethane from the Appalachian Basin, the lowestcost shale gas basin in North America. The Shell ethane cracker 

will consume about 105,000 barrels of ethane per day, producing 

1.6 million tons of polyethylene pellets per year to be molded into 

consumer products and packaging. 

Two other companies are now examining the potential to join 

Shell in investing billions of dollars into this region and creating 

thousands of manufacturing jobs due to the proximity and abundance of the natural resources in the Appalachian Basin. Each of 

these other facilities would use another 50,000 to 100,000 barrels 

per day of ethane. With current ethane production rates in the 

basin at around 500,000 barrels per day, the resource is certainly 

sufficient to support a renewed and robust chemical industry, that 

is, as long as there is modern and robust energy transportation infrastructure to support that. 

Last October, in a regional effort as mentioned by Senator 

Manchin, the Governors of West Virginia, Pennsylvania, and Ohio 

signed a regional cooperation agreement to enhance regional cooperation and job growth through the continuing development of 

8 

shale gas in the Appalachian Basin. In this agreement, four primary areas of cooperation were identified: marketing and promotion, work force development, transportation and infrastructure, 

and research. As part of the agreement, the states are working together to support infrastructure like pipelines, railroads, and roadways critical to shipping natural gas and natural gas-related products. 

In addition, they are encouraging the state-sponsored universities such as us to collaborate on research to find appropriate end 

uses for natural gas products. They will also collaborate on preparing for emergency response, promoting recycling and environmentally friendly practices in the industry, as well as supporting 

entrepreneurship. 

The WVU Energy Institute is playing a key role in each of these 

four areas in that tri-state agreement. In particular, we are leading 

an effort involving the state geologic surveys of these three states 

as well as an industry consortium currently with 12 members, also 

funded by the Claude Worthington Benedum Foundation, to examine the geologic potential for safe and reliable subsurface storage 

of natural gas liquids. The goal of this project is to provide essential data to support the development of the chemical manufacturing 

industry, promoting economic development. 

As evidenced by the industry’s commitment to our project, developing storage and transportation infrastructure is a critical pathway to developing the industry in the region. Subsurface storage 

and distribution and a network of pipelines will benefit both the 

raw material producers—the upstream oil and gas industry, as well 

as the chemical industry by fostering a readily available and reliable network and source of natural gas liquids and developing a 

predictable price point of the commodity in the region. Currently, 

there is only one spot pricing hub for natural gas liquids in the 

United States, and that is on the Gulf Coast. 

Thirdly, promoting regional investment and a more robust ecosystem for the industry, it is all critical to establish a reliable trading hub into which producers can sell their products. The primary 

example of an ethane storage hub and associated piping in the 

United States exists between Brownsville, Texas, and Lake 

Charles, Louisiana. The piping and infrastructure necessarily—this 

infrastructure encourages the growth in this region due to its 

interconnectivity to multiple manufacturing facilities in the vicinity. 

In conclusion, many projects at various stages of development are 

underway to build takeaway capacity from the region, moving the 

raw materials to the East Coast, to the Gulf Coast and to Canada. 

However, to spur on a more diverse national economy, a robust regional infrastructure is necessary. Advances in technology have 

provided us with an opportunity to implement best-in-class construction and monitoring techniques to ensure the safe operation of 

natural gas liquids storage facilities, as well as pipeline infrastructure, so regional and national collaboration is essential to the development of this reliable and robust interstate energy infrastructure. 

The States of West Virginia, Pennsylvania, and Ohio have already begun collaborating to erase these state borders, and we look 

9 

forward to working with our Federal counterparts in this exciting 

effort. 

And so, Senators Capito and Manchin, thank you very much for 

this opportunity to testify today, and I look forward to answering 

any questions you have. 

[The prepared statement of Dr. Anderson follows:] 

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Senator CAPITO. Thank you. Thank you very much. 

Our next witness is Dr. John Deskins, and he is the Director at 

the Bureau for Business and Economic Research at WVU. He focuses primarily on state economic development, small business economics, government and tax expenditure, policies at the state level. 

He has a Ph.D. in Economics. So welcome, Dr. Deskins. 

STATEMENT OF DR. JOHN DESKINS, DIRECTOR, WEST VIRGINIA UNIVERSITY BUREAU OF BUSINESS AND ECONOMIC 

RESEARCH 

Dr. DESKINS. Senator Capito, Senator Manchin, thank you so 

much for inviting me to appear before you today. It is truly an 

honor to be here to discuss the importance of a modern, reliable energy infrastructure for the West Virginia and national economies. 

By any measure, West Virginia is an energy state. For example, 

energy accounts for 17 percent of economic output in the state, 

making it the state’s largest industrial super sector. Energy jobs 

are among the highest-paying jobs in the state, often by far. Coal 

is our largest export commodity, and natural gas is poised to become another key export commodity. Severance tax revenue from 

energy is vital to our state and local governments. 

The deep decline in coal production that has occurred in recent 

years has had a devastating effect on our state’s economy. Coal 

production has dropped to an expected 70 million tons for this year, 

down 56 percent from its 2008 level. This has led to a loss of 

13,000 coal jobs and a direct loss of $4 billion in economic output. 

For 2015, West Virginia’s total economic output was lower than in 

2011. 

And these losses create a vicious cycle where we see continuing 

population loss, an aging population, drug abuse, and so on, making it even more challenging to attract new business to West Virginia, and therefore continuing that vicious cycle. 

Some may read the numbers associated with declining coal output and imagine that the losses are spread across the coal-producing regions of the nation. We have seen a national drop in the 

demand for coal, caused by a perfect storm of three factors. But the 

effect of this drop in demand has been felt most strongly in the region with the lowest coalmine worker productivity, Central Appalachia, which of course includes southern West Virginia. There we 

have been mining the region’s hotter-burning and cleaner coal deposits for well over a century, such that the coal that remains is 

generally deeper in the ground, in thinner seams, and more expensive to extract. 

So in central Appalachia, coal production has fallen by 51 percent since 2010, compared to a decline of ten percent for the nation’s other coal-producing regions, 51 percent versus ten percent. 

Coal production in northern West Virginia, part of the northern 

Appalachian coal seams, has generally been stable. Correspondingly, nearly all of the coal job losses that have occurred in West 

Virginia have come from our state’s southern coalfields. 

The concentration of these job losses has created a great depression in six counties, two of which Senator Manchin mentioned a 

second ago. But the six are Boone, Clay, Logan, McDowell, Mingo, 

16 

and Wyoming. Job losses over the past four years range between 

25 percent and 33 percent in each of these counties. 

Consider Boone County, our state’s largest coal-producing county 

for many years. Their coal production and employment stand at 

around 30 percent of their 2010 levels. Statistics are beginning to 

show other losses in the county as less money is flowing to other 

local businesses—grocery stores, entertainment venues, etcetera. 

Losses in coal severance tax revenue have led to a severe public 

school layoff in the county. 

The industrial mix in these counties also lends to the crisis. In 

Boone County in 2010, coal accounted for 55 percent of all the jobs 

in the county, making it difficult, if not impossible, for many laidoff coalminers to find alternate employment locally. 

My point is the heavy concentration of losses in coal output and 

employment is far worse than would be the case if the losses were 

widely dispersed. The current situation gives rise to the question 

of whether these affected communities are sustainable over the 

long run. 

The natural gas boom that West Virginia has enjoyed has helped 

for sure. The boom created around 3,000 high-paying jobs between 

2010 and 2014. Many of those jobs have been lost since early 2015 

due to a slowdown in natural gas drilling, but a return to growth 

is expected in coming years. 

And while it is beneficial for our state in many ways, natural gas 

extraction is very capital-intensive, and as such, is unlikely to employ the number of workers needed to ensure broad prosperity. 

Broad prosperity associated with natural gas will require more 

downstream activity, creating more value added and more jobs. 

Many call for industrial diversification as the solution to West 

Virginia’s economic crisis. I myself make this call routinely in 

speeches and discussions across the state. It is crucial for West Virginia to cultivate strength in manufacturing, tourism, and other industries. However, industrial diversification is a long-term proposition which requires long-term action on the part of businesses, 

entrepreneurs, government and community leaders. 

A more viable path for West Virginia in the short run is through 

strengthening our state’s energy sector. As I believe all these figures indicate, this is desperately needed for our economy. And 

while many of the factors affecting energy in West Virginia are outside of the reach of policymakers, I hope the information provided 

here today can certainly help move our energy sector forward and 

our overall economy forward and help turn around this vicious 

cycle that plagues our state. 

Thank you. 

[The prepared statement of Dr. Deskins follows:] 

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Senator CAPITO. Thank you. 

Our next witness is Mr. Chad Earl. Chad is the Director of Marketing and Business Development for ORDERS Construction Company in St. Albans, West Virginia, and has been there since 2013. 

He is a lifelong West Virginian, and he has an extensive background in infrastructure development. He is also a member of the 

2016 Leadership West Virginia class. Welcome, Chad. Thank you. 

STATEMENT OF CHAD EARL, DIRECTOR OF MARKETING AND 

BUSINESS DEVELOPMENT, ORDERS CONSTRUCTION COMPANY, INC. 

Mr. EARL. Thank you. Yes, thank you for this invitation. It is 

truly an honor to come before you today to discuss my perspective 

and how important the energy industry and infrastructure development is to my family, our company, and all of West Virginia. 

Let me begin by saying I am a proud and lifelong West Virginian. I grew up in Grantsville, which is a rural community in 

Calhoun County, and started helping my dad take care of oil wells 

when I was about 12 years old. I graduated from Glenville State 

College and worked my way through college as a pipeliner and environmental technician there in Glenville. 

So when I think about it, the energy industry, particularly the 

oil and gas industry, has had a huge positive effect on my life. It 

gave my family the ability to support me and my brothers, and now 

it is giving me the opportunity, and many others like me, the ability to support their families and have promising careers. 

I am active in several professional organizations related to the 

construction, manufacturing, and energy industries, all of which 

are affected by a reliable infrastructure that we are here to discuss 

today. 

As I said, I am a native West Virginian. In fact, I share many 

of the same opinions and beliefs about West Virginia that I have 

heard Senators Capito and Manchin mention on several different 

occasions. I am sure they will agree with me when I say the beauty 

of our state is immeasurable, our natural resources are abundant, 

but it is the people from every corner of the state that is our greatest strength. 

Our people are intelligent and hardworking and very passionate 

about their communities. They are proud of the heritage of belonging to one of the highest energy-producing states in the nation. We 

want to live here, and we want to stay in West Virginia. We want 

to stay home, and we want the opportunity for our children to live 

here and stay home if they choose to do so. 

In order for this to happen, we need to create an economic environment that allows for growth. We need to have this opportunity 

with the natural gas industry. To be clear, shale gas is revitalizing 

West Virginia’s economy. 

I serve as the director of business development for ORDERS Construction Company. We are a family owned business and have been 

in business since 1964 and have expanded from a bridge-building 

contractor in our early days to a trusted, reputable and dependable 

construction company that spans many different business segments 

of the economy. Our markets include State and Federal highways, 

21 

manufacturing facilities, chemical and industrial complexes, water 

and waste plants, and energy companies as well. 

Our group employs approximately 400 people with very good 

jobs, and most salaries are well above the national average. Because of the increased activity in the oil and gas fields, we have 

been able not only to retain the labor force that supports us but 

consistently add jobs and grow our business. This is more than important; it is vital to our local economies and the families that live 

here, especially when you look at the decline of the coal industry 

and the economic devastation of southern West Virginia. 

I can point to over 50 positions within our company that have 

been created just to support the shale industry alone. We can continue to grow only if the energy industry remains strong because 

it impacts all businesses in West Virginia. It affects our tax base 

for roads and schools. It affects the chemical and manufacturing industry because it brings in raw materials and energy supply. It impacts other small business such as restaurants, gas stations, hotels, 

the school band, the football team. All of them get money from the 

gas industry, so it is no secret that in West Virginia our communities prosper when the energy industry is robust. 

Expanding our energy infrastructure will create jobs. It will 

strengthen communities. It will help attract manufacturing to the 

region. Above all else, it will give this region of the country a little 

hope that our elected leaders are working with us and not the activists who have dedicated their agendas to help hinder progress as 

they work every day to try to put small businesses like ours out 

of business. 

Each state in the country makes use of its resources. Massachusetts uses fishing. The Midwest and the flat fields has farming. 

Florida attracts tourists to its beaches for warm weather. West Virginia can harvest the massive gas deposits under it for the benefit 

of its people for decades to come; however, it will not happen without the support of government policies that allow it to be done and 

done properly. 

Pipelines and energy production will continue to make us more 

stable from other regions of the world. The pipelines we build are 

more than pipelines. They are highways that deliver a required resource to end users, families, manufacturing facilities, and other 

small businesses, as well as schools and hospitals. They are the 

safest and most economical long-term transportation option available today. 

Senators, make no mistake, shale is revitalizing West Virginia. 

Shale is providing small, family owned businesses like ours with 

the opportunity they need to bring this raw material to market and 

will continue to enhance our energy security and independence. 

The men and women of West Virginia are industry professionals. 

Our history is that of an energy-producing state. Please help our 

people strengthen the state economy and help us produce and 

transport energy in our region that we so desperately need. 

Thank you very much. 

[The prepared statement of Mr. Earl follows:] 

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Senator CAPITO. Thank you, Chad. 

Our next witness is Mr. Steve Hedrick. Steve is the President 

and CEO of Mid-Atlantic Technology, Research and Innovation 

Center, known as MATRIC, in South Charleston, West Virginia. He 

has more than 20 years in the petrochemical industry, leading 

businesses, chemical manufacturing. In his capacity as President 

and CEO, he helps MATRIC deliver market-driven innovation, research and technical engineering. 

Welcome, Mr. Hedrick. We are glad to have you here today. 

STATEMENT OF STEVE HEDRICK, PRESIDENT AND CHIEF EXECUTIVE OFFICER, MID-ATLANTIC TECHNOLOGY, RESEARCH AND INNOVATION CENTER 

Mr. HEDRICK. Thank you so much, Senator. I thank both of you 

for the opportunity to appear before you and before the committee 

today. 

Good afternoon, ladies and gentlemen. Thanks for the opportunity to all of you. As was mentioned, my name is Steve Hedrick, 

and I am the President and Chief Executive Officer of MATRIC, a 

strategic innovation partner that provides deep, uncommon expertise and research and development infrastructure to solve the most 

challenging problems in the areas of science and technology. We 

are proudly based in South Charleston, West Virginia, and have a 

division here in Morgantown, West Virginia. 

I am also a West Virginia native, and we have been through good 

times and bad and seemingly more bad lately, but we have shown 

resilience. I am a firm believer, whether you are running a business, a state or a country, a certain level of resilience is a pivotal 

component to success. 

So one of the greatest ancient historians, Thucydides, once said, 

‘‘The bravest are surely those who have the clearest vision of what 

is before them, glory and danger alike, and yet, not withstanding, 

go out to meet it.’’ 

In thinking about why we are here today, we are talking about 

this region, our state, our country, the future, the gift of energy 

below our feet. We are prepared to go out and meet the most challenging demands that our country can face and to do so from a position of authority. And what generates that position of authority, 

of course, is manufacturing, which is the cornerstone of West Virginia’s future. 

While we have seen apparent progress, we have yet to even begin 

to scratch the surface of the possibilities. But we know our vision. 

It is clear. And there is glory to be found for our citizens and their 

families, for our nation, when we achieve that vision. 

But first, we need to realize our own new reality because, frankly, if we do not, we will never get out of this rut. So how do we 

do this? Investing in innovation and R&D and key assets like the 

West Virginia Regional Technology Park is a must because they 

are the keys to high-tech jobs in the quad-state region represented 

by Pennsylvania, Ohio, West Virginia, and Kentucky. 

But the real reason we are all here today, of course, is infrastructure in energy. We cannot take advantage of the Utica, Rogersville, 

and Marcellus Shale opportunity without infrastructure to support 

the demands of the associated industries. The infrastructure reVerDate Nov 24 2008 15:35 Apr 07, 2017 Jkt 021998 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21998\C21998.TXT C21998
26 

quirements associated with new build-outs must be delivered by 

multiple parties. Now it will not be easy, and it will not be cheap. 

We will need cooperation and support from the Federal and State 

governments, private equity, and existing business platforms, all to 

their mutual benefit. 

Now you may be asking yourself what about Royal Dutch Shell’s 

announcement earlier this month and its intentions to build a 

three-state ethane pipeline system to feed its Monaca, Pennsylvania, cracker. Are they not already doing this? Well, the answer 

is yes but no. This decision clearly demonstrates the necessity for 

specific infrastructure for Shell to be successful and that they cannot wait for a public-private partnership. But let me confirm it 

does not even begin to satisfy the need for infrastructure for the 

petrochemical industry to expand or to increase the demand side 

of the highly valuable and readily available natural gas liquids in 

this region. 

More specifically, this announcement does not satisfy the need 

for ethane off-take for our natural gas industry, as Dr. Anderson 

mentioned a moment ago. There is simply too much ethane available for this single investment to advantage our nation to its maximum potential. 

This cracker from Royal Dutch Shell and its associated pipeline 

has an estimated capacity of about 100,000 barrels a day. Rather 

than exporting additional ethane available via pipeline to the 

United States Gulf Coast, Europe, Asia, or even Canada, it could 

be utilized here in the Appalachian Basin here in America to maximize the value potential of our raw materials. 

According to the publication Natural Gas Intelligence, ethane accounts for more than 50 percent of the typical NGL barrel in the 

Appalachian region, and with exports now leaving Marcus Hook 

near Philadelphia, ethane production has been increasing in the region. In fact, the midstream company MPLX’s CEO, Gary 

Heminger, recently said, ‘‘With incremental ethane takeaway 

projects and the projected completion of a regional cracker facility, 

we anticipate reaching full utilization of our existing facilities.’’ In 

other words, we need more infrastructure, and companies like Shell 

need more elasticity in the supply chain in order to maximize the 

benefit of ethane. 

Now, we would propose that the corridors naturally created by 

the Ohio and Kanawha Rivers be utilized as a platform for a substantial pipe system that will support the distribution of key raw 

material and intermediate constituents, including but not limited 

to methane, ethane, ethylene, propane, propylene, and chlorine, all 

of which are significant building blocks to the petrochemical industry, and hence, our society. 

We therefore must have substantial underground storage of the 

highest value and broadly used raw materials, specifically ethane, 

ethylene, and propane, and butane if we are able, and create a 

built-for-purpose Appalachian Storage Hub. This can be safely and 

efficiently done in naturally occurring underground caverns, in depleted natural gas extraction points, or even in depleted salt 

domes. In fact, the brightest minds in geological formations are 

currently studying the best location for the hub. 

27 

It is time for this to be done and done right to enable growth and 

prosperity for our citizens, our economy and our way of life. It is 

time for leadership, even boldness, in decades of incredible value 

creation, for a generational opportunity to be brought to fruition. 

I urge you show your resilience and reinvest in our great nation 

through innovation and infrastructure to secure the success of another generation. I urge you, as Thucydides once wrote, to go out 

and meet this challenge and assure the investment in innovation 

and infrastructure by the public sector, by the Federal Government 

and supporting state governments that have the courage to do so 

as well. We should all do our part to make this happen, and each 

of you can count on me and on MATRIC to do our part, and thank 

you very much. 

[The prepared statement of Mr. Hedrick follows:] 

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Senator CAPITO. Thank you very much. 

Our next witness is Mr. Jeffery Keffer. He is the President and 

CEO of Longview Power located in Maidsville, West Virginia. He 

has more than 32 years of experience in the power generation industry. I was lucky enough to tour your facility just recently and 

was amazed to see the good work that they are doing, but he continues to oversee the strategic management and business operations of Longview Power and Mepco. Welcome. 

STATEMENT OF JEFFERY KEFFER, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, LONGVIEW POWER, LLC 

Mr. KEFFER. Thank you, Senator Capito, Senator Manchin. 

I want to start by thanking you both for bringing the Senate 

Committee on Energy and Natural Resources to Morgantown today 

to talk about such an important topic for our State of West Virginia. Earlier this year both of you visited our plant and also took 

the time to meet with our employees, which they were very pleased 

with. Thank you. 

I am here to report that the sunset on the coal-fired generation 

industry is highly exaggerated, and the model for the future of 

coal-fired generation in this country is a few short miles from here 

in Maidsville, West Virginia, at the Longview power plant. 

Longview is four years young, while the average age of a PJM coal-fired fleet is 45 years. The plant initially cost $2.1 billion to 

build, the largest private investment in West Virginia history, and 

last year, we invested another $120 million to make the plant highly reliable. 

Longview now reliably produces enough electricity for 700,000 

homes while being the lowest-cost coal-fired generator in PJM and 

the most efficient, as measured by the lowest heat rate, of any coal 

plant in North America. The plant also has exceptionally low emissions and zero wastewater discharge to surface waters. 

Now Longview is able to achieve these milestones through its 

state-of-the-art technology. In 2015, Longview made repairs and 

improvements to its oiler, its fuel and air controls. It replaced its 

control system and made a number of changes to its emission systems, all of which improved reliability. Since last November when 

we completed all that work, the plant has been available to produce 

electricity 98 percent of the time. 

With this exceptional reliability and our highly effective emission 

system, we are able to remove targeted pollutants, including NOx, 

SO2, and PM—particulate matter—to well below the very stringent 

permitted levels for our plant. We also reduced CO2 emissions 

without adversely affecting cost or efficiency. 

Now coal is not the only fuel required for coal-fired power plants 

to run, secondary fuel that is required to startup, and at Longview 

we use natural gas supplied from the local gas distribution company when it is available. And we have talked about the constraints that we are dealing with in this state in terms of the availability of natural gas where we need it. 

So at Longview, in order to ensure that we had gas available to 

startup during peak seasons like the wintertime, we installed a 

unique LNG system, the largest mobile LNG system in the United 

States, in order to startup the plant when the pipeline capacity is 

32 

constrained. This allows us to meet very strict PJM capacity performance requirements. And when pipeline gas is available, we 

have been able to demonstrate that we can co-fire with up to 20 

percent natural gas, further increasing the plant’s efficiency and 

reducing its emissions. 

Longview’s coal supplier is Mepco, its affiliated coal company, 

and the coal is supplied by a 4–1/2 mile conveyor. Through its full 

integration with its fuel source and combined through a byproducts 

disposal facility, Longview achieves best-in-class results and produces low-cost electricity while minimizing environmental and community impacts. 

Longview is a major employer and economic driver in northern 

West Virginia. Longview and Mepco together employ over 600 

workers, providing well-paying jobs with combined annual payroll 

and benefits of $72 million. We not only purchase our coal locally 

and limestone locally, we purchase over $105 million per year of 

goods and services from local and regional vendors, and we made 

almost $8 million in pilot and local tax payments annually. 

Longview is demonstrating the future of coal-fired electrical generation with its best-in-class coal combustion technology and gas 

co-firing capability. Longview proves that replacing the existing 45- 

year-old coal fleet with modern, highly efficient, advanced coal 

plants can greatly improve our coal plant efficiency, reliably 

produce low-cost electricity, and lower conventional and CO2 emissions. 

New advanced coal plants in West Virginia and other coal-dependent states could require the hiring of thousands of construction 

workers and could incorporate proven design improvements and 

use higher BTU fuel from Appalachia to produce and export electricity to energy-dependent states. 

Designing new plants to co-fire with natural gas would further 

increase efficiencies and reduce conventional and CO2 emissions to 

levels that would help to meet national climate change goals, as is 

being demonstrated in Germany and Japan as we speak. 

If we can achieve this, we do not need to retrain miners and 

workers but keep them working at the well-paying jobs they know 

well. All of the 600 employees at Longview and Mepco are paid 

highly competitive salaries. By building modern, advanced, highly 

efficient coal-fired plants, we would keep thousands of middle-class 

jobs in the region, maintain the stability of an electrical generation 

delivery system, and provide the low-cost, reliable electric power 

necessary to support homes and manufacturing in the USA. 

Longview demonstrates what modern clean coal-fired power 

plant design and operation can achieve. Longview should be the future of coal: low-cost, very clean, and highly reliable. 

I want to thank you very much, and I commend our story to you 

for your consideration in your deliberations in Washington. It is a 

great plant and we are very proud of what it is doing here in West 

Virginia. It sets a standard for not just the U.S. but for the rest 

of the world. Thank you. 

[The prepared statement of Mr. Keffer follows:] 

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39 

Senator CAPITO. Thank you. 

Our final witness is Mr. Dan Poling. He is the Business Manager/Secretary-Treasurer of the District Council 53, International 

Union of Painters and Allied Trades. He has 43 years of experience 

in the construction industry. 

Prior to his current position, he completed a U.S. Department of 

Labor registered apprenticeship class and worked as a craftsman 

for 25 years in the field before becoming an instructor. Welcome, 

Mr. Poling. 

STATEMENT OF DAN POLING, BUSINESS MANAGER/SECRETARY-TREASURER, DISTRICT COUNCIL 53, INTERNATIONAL UNION OF PAINTERS AND ALLIED TRADES 

Mr. POLING. Thank you. Thank you, Chairman Capito, Senator 

Manchin, for hearing this important issue to us here in West Virginia. Thank you for the opportunity to speak on this. I want to 

talk about the important topic we have here, examining the economic importance of modern, reliable energy infrastructure to West 

Virginia and the United States. 

As you mentioned, as a Business Manager for Painters District 

Council 53, I represent 1,800 painters and allied trades in West 

Virginia and the surrounding counties around the borders. In addition, I am here today representing 20,000 construction workers affiliated with the West Virginia State Building and Construction 

Trades Council where I also serve as Vice President, and as such, 

I wanted to thank both of you for your continuing support in the 

trades, and we certainly appreciate the opportunity to work with 

you and to support our members. 

Construction jobs relating to any industrial or commercial project 

in our state are critical to the economic future. Energy jobs—in 

particular the manufacturing of electricity from coal, wind, hydro, 

natural gas, or other resources—make up a substantial portion of 

our work of our members and contractors year in and year out. 

Many people refer to construction jobs as temporary, and while 

that may be true in part, I would like to emphasize that thousands 

of construction workers earn their livelihood in the energy sector 

every year in occupations other than mining, drilling and facility 

operations. And as they talk about temporary, I myself, as you 

said, completed an apprenticeship—back in 1973 I began and completed it in 1976, and I have worked temporary jobs ever since and 

always been gainfully employed. I have over 70,000 hours as a temporary worker. So if that is temporary, I think we need maybe 

more of that. [Laughter.] 

Mr. POLING. And at that time I have had health insurance, you 

know, and have a retirement to fall back on. 

So I would like to talk about the available supply of skilled, 

drug-free construction workers, what it does for our state. First, 

this social infrastructure enhances prospects for new projects. Companies want to know their projects will be built on time and within 

budget. If companies are looking for skilled, qualified, drug-free 

workers in West Virginia, we only need to know how many and 

when do you want them to start. 

Second, having local workers on the job maximizes the economic 

impact from projects. Local workers spend their paychecks in their 

40 

communities, pay into training and apprenticeship programs, have 

health insurance, retirement funds, and in general infuse the local 

economy with funds. When workers from outside the region are 

used on construction projects, there is a leakage of economic activity to other regions, and that negatively impacts our communities. 

The labor component on a typical construction project is 25 percent. That means 25 percent of every dollar spent on a project like 

a school or a bridge goes to paying wages and benefits on average. 

On mega-industrial projects such as an ethane cracker that is very 

capital-intensive, expect the labor component to be a third of a 

third. By that I mean if a $6 billion project is announced, we expect 

$666 million to be spent on wages, $666 million. That is a lot of 

paychecks, a lot. So paying attention to where paychecks from our 

energy projects land is critical to a healthy local economy. 

Finally, I would like to mention our robust apprenticeship method of training workers for the construction trades. Apprenticeship 

is more than on-the-job training. It includes related hands-on training at 29 training centers in and around West Virginia. Programs 

cover a variety of occupations from boilermakers to sheet metal 

workers. These programs are private sector partnerships between 

trade unions and construction employers. Apprentices learn while 

they earn and at no cost to the apprentice or taxpayer. Together, 

we have developed the best way to create the most productive, 

highly skilled workers in the world. 

Approximately ten percent of our work force is in the apprenticeship programs, which range from a three-to a give-year commitment. We would like to see that number increase to 20 percent, 

and given a commitment to hire locally, we certainly would be able 

to accomplish that goal. Such an increase could mean 4,000 apprentices per year getting the skills for a lifetime career, 4,000. 

That is community and technical college. 

In conclusion, the energy sector remains a vital construction job 

creator for our economy. The growth of the natural gas industry 

has provided many needed jobs to local construction workers building pipelines and gas processing facilities. We anticipate 

groundbreaking on a new gas-fired electric generating facility in 

Moundsville later this year. Major pipeline projects are just a step 

away from completing their regulatory review. We are currently 

building a wind project in Grant County and recently completed a 

hydro project on the Ohio River. 

Our workers continue to work on repair and modernization 

projects at many coal-fired power plants throughout the year, every 

year. We are excited about the jobs an ethane cracker—hopefully 

two or three—in the region could bring and the jobs such a project 

would create downstream as well. 

I thank you all for inviting me here, and I appreciate the opportunity to be a part of this panel and to serve with these honorable 

speakers here. Thank you. 

[The prepared statement of Mr. Poling follows:] 

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43 

Senator CAPITO. Thank you. Thank all of you. With that, we will 

go to the question phase. I will start and keep mine to five minutes, and then we will go to Senator Manchin. We will go back and 

forth. 

Dr. Anderson, let me ask you a question. I am really interested 

in this storage possibility for the Appalachian region. Could you 

just tell me and others, how many present-day storage units are 

there now for natural gas? There is one—what is it, in Texas 

or—— 

Dr. ANDERSON. Well, for natural gas liquids is what—— 

Senator CAPITO. Right. 

Dr. ANDERSON.—we are specifically talking about. Really, there 

is the large-scale storage facility in Texas, Mont Belvieu, Texas, 

just northeast of Houston. There are smaller storage facilities 

around the country, but the Mont Belvieu facility is the only one 

that is large enough to warrant a natural gas liquids trade price 

point. 

Senator CAPITO. Is there one in Canada too, or no? 

Dr. ANDERSON. Actually, I am not sure. 

Senator CAPITO. No. Okay. Well, in terms of the future, in my 

view to develop and create and keep the jobs in and around our region, we have to have something like this or all we are going to 

do is build pipelines to send it somewhere else. Would you agree 

with that? 

Dr. ANDERSON. That is right. That is why we are proposing and 

working on—Steve Hedrick mentioned the Appalachian Storage 

Hub geologic project, and that is what we are—we are leading with 

the three state surveys specifically to try to lower the barriers to 

private industry and the storage facilities in this region. 

Senator CAPITO. Do you know if the one that was built in Texas 

was a public-private partnership or do you know how that was financed? 

Dr. ANDERSON. My understanding it was. 

Senator CAPITO. Was? 

Dr. ANDERSON. Over the course of time and—— 

Senator CAPITO. Mr. Hedrick, do you have a comment on that? 

Mr. HEDRICK. Yes, ma’am, it was. As I understand it, the publicprivate partnerships were established after the Strategic Petroleum 

Reserve was put into place and the salt domes were—or the salt 

strata was well understood then northeast of Houston, and the extraction of the salt to allow for the storage of the liquid at that 

time. 

Senator CAPITO. According to your statement, we already have 

some of the geological—because we have some abandoned wells, we 

have some salt mines. Is this a natural fit for the region? I know 

it is not just West Virginia but for the region? 

Mr. HEDRICK. It is a natural fit for the region certainly. As an 

example, there are natural gas extraction points, methane extraction points in the State of West Virginia that are utilized as elasticity points for the Northeastern U.S. During any given summer, 

you see them growing. During winter, you see them falling normally when it is nice and cold during the winter. 

There is also salt strata reaching from the Great Lakes across 

the State of Ohio down to the vicinity of New Martinsville, West 

44 

Virginia, in fact. They could avail us with the opportunity to do exactly what we have done in Mont Belvieu. And there are other 

areas. I am not a geologist and would not want to offer—— 

Senator CAPITO. Well, I want to be very supportive of that. I put 

that amendment into the energy bill to be supportive of this project 

because I think it could bear real fruit for the State of West Virginia. 

Let me make another statement about that. There is a movement 

of ‘‘keep it in the ground’’ across the country that I think would be 

crossways with what we are trying to develop here in terms of a 

storage basin. I think there are some people that think if you keep 

it in the ground, you can just bring it up as rapidly as you may 

need it. That, I guess, is an unlikely scenario. You need that storage basin to be able to multiply the petrochemical and other industries close by. Could you speak to that? 

Dr. ANDERSON. So about 85 percent of the natural gas that is in 

the ground is methane, and what we are talking about is the 15 

percent that is not methane. And so what is necessary is to bring 

it out of the ground, fractionate it or de-ethanize it, separate the 

natural gas liquids on the surface, and then that is the raw material feedstock for the manufacturing and petrochemical industry. 

Once you separate it and you have the 85 percent that is methane, that is what we use to produce power to heat homes. And so 

it is necessary to bring it up, separate it, and then store it as the 

natural gas liquid. 

Senator CAPITO. Have it ready. Another thing that I have in the 

energy bill is streamlining on the regulatory thing. Mr. Earl, I 

know ORDERS Construction does a lot of energy work but also a 

lot of transportation work. 

Mr. EARL. That is correct. 

Senator CAPITO. Talk to us a little bit about the permitting. I 

know that in the transportation bill we both tried to streamline the 

regulatory regime there. Has that been working? And in my scenario we would have FERC be the lead agency. We would try to 

move these things side by side, have definite deadlines and those 

kinds of things in reporting, public reporting on how far along we 

are on the permitting process. Can you speak to that just generally? 

Mr. EARL. Generally, yes. There are so many different agencies 

that a producer has to report to. It could be streamlining helped 

out quite a bit. I mean, you have, you know, OPS oil and gas, DEP, 

EPA, water and waste. It is just a continuing list of just—it is almost overbearing whenever they have to go through and fill out all 

these permits and get them in hand before we can start work. 

Senator CAPITO. Right. And in that case time is money if you—— 

Mr. EARL. Yes. 

Senator CAPITO.—have a permit application and you do not get 

permitted for five years, it exponentially increases the cost—— 

Mr. EARL. Yes. 

Senator CAPITO.—and I think that is a consideration, without 

forgoing any of the environmental regulations. I think we could do 

a much better job. 

45 

Mr. EARL. Yes, correct. And, you know, whenever these guys are 

building wells now, I mean, they are $7 million a pop, so they are 

regulated internally as well as externally. 

Senator CAPITO. Right. Senator Manchin? 

Senator MANCHIN. Thank you. Again, thank all of you for your 

statements. 

I will start with Dr. Deskins. Doctor, your 2016 economic report 

went into us being into a downturn, which is an understatement. 

Dr. DESKINS. Sure. 

Senator MANCHIN. The downturn that we have had in energy, especially in our coal industry, which is a large trail of employment 

that is hard to replace even by the onslaught of the new gas finds 

that we have had. I think you acknowledged that in your report. 

When you look at basically the rapid downturn of the coal industry, 

was it market forces? Was it basically the EPA overreach, overregulation or accelerating that? Where do you put the concern? And 

then also, how do we get reinvestments back into the energy market? 

Dr. DESKINS. Sure. Thanks for that question. I think what we 

saw with coal was really a perfect storm. In my report I said three 

factors. I think we have the natural gas boom, which is critical, of 

vital importance in terms of putting downward pressure on coal. 

And I think that works in conjunction with the regulatory climate. 

In my view, you know, coal had a cost advantage at one point 

in the past. Here is the cost of coal; here is the cost of natural gas. 

Natural gas boom lowers the cost of natural gas from the perspective of an electric power producer. The regulatory climate raises 

the cost of burning coal. So both of those together are working to 

tip the scale away from coal in favor of natural gas from the perspective of so many electricity producers. 

It is really hard to say how much is due to one versus how much 

is due to the other. That would really require an in-depth analysis 

at the power plant level. But the two are working together and the 

two are both very important. 

And a third piece of that puzzle is the export climate. Globally, 

economic growth is down. Europe is smaller now than it was in 

2007 in terms of economic output. China is slower, Brazil, Russia. 

Slower economic growth globally means less need for steel, that 

means less demand for West Virginia coal exports. 

So those three things came together at the same time, put tremendous downward pressure on national demand, but then as I 

said as well, that is not spread all the way across America. That 

demand is affecting central Appalachia, southern West Virginia 

particularly hard. 

But the second part of your question was, how do we turn this 

around? I do not know all the answers but I know that it is absolutely crippling West Virginia. Natural gas is a positive obviously, 

but just from extraction, that is not creating nearly enough jobs to 

replace the lost coal jobs. We have to talk about midstream activities and downstream activities, bringing those in the state as well. 

That is the only way we are going to be able to get enough—— 

Senator MANCHIN. So basically just us having all this wonderful 

find of natural gas, whether it be Utica, Marcellus, whatever, is 

46 

never going to replace what we have had in the coal industry unless we are able to get the downstream investments? 

Dr. DESKINS. That is my opinion. We have to—— 

Senator MANCHIN. So storage that we are talking about basically, 

all these different things just leads into my next question to either 

Dr. Anderson or Steve Hedrick. Are you looking at gas as a baseload? I mean, the only thing I ever understood as a baseload was 

coal and nuclear because you could not interrupt it; it was there. 

Dr. ANDERSON. Right. 

Senator MANCHIN. Gas is still interruptible no matter what you 

do with the pipeline. So is it going to be looked at from transmission as a fuel for baseload generation? 

Dr. ANDERSON. Yes, it is. We have seen the shift of our neighboring states, the balance between coal and natural gas, and nationally, we have seen natural gas overtake coal as a baseload. And 

right now, just recently—— 

Senator CAPITO. How does that affect the transmission, basically 

our reliability of the system? 

Dr. ANDERSON. Well, it puts additional load on the natural gas 

infrastructure and on the pipelines distributing our gas. And we 

see projects that are underway and taking gas from the Appalachian Basin across our mountains in West Virginia and Virginia 

and North Carolina to deliver the natural gas. It is now increasingly going into power plants in Virginia. Duke Energy just got 

into the rate base in Virginia, a natural gas power plant, extremely 

efficient and a CO2 footprint that is lower than the CDP standards. 

Senator MANCHIN. Steve, you might want to talk real quick on 

why are we located centrally for this type of storage that could 

really help bring more of that product or keep that product in this 

area? 

Mr. HEDRICK. Thank you, Senator, for that question. We are located within two-thirds of the population of the United States of 

American and one-third that of Canada. That is a day’s drive easy, 

easy travel for transportation of material goods, finished goods like 

this bottle that is sitting in front of me. It would be perfect for that 

to occur. 

It is also geographic diversification from the United States Gulf 

Coast away from natural disasters that are naturally occurring 

from hurricanes, of course. And, you know, I feel very sad, of 

course, for the people in Louisiana who have had to deal with a 

flood just like we have in West Virginia within the last six weeks 

or so. 

But it is too great a detriment to industry as well, and the trillion-dollar hits that we take in the economy sequentially every hurricane season because they have to shut everything down because 

a hurricane rolls into the Gulf. I guess that can be smoothed out, 

if you will, by virtue of bringing an Appalachian Storage Hub to 

this Appalachian Basin. 

Senator MANCHIN. Jeff, just to finish up real quick. 

Mr. KEFFER. Senator Manchin, just to add to this because obviously we are producing power, selling it into PJM, who are closely 

what our competition is. Our competition really is now new gasfired power plants that are being built throughout the region takVerDate Nov 24 2008 15:35 Apr 07, 2017 Jkt 021998 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21998\C21998.TXT C21998
47 

ing advantage of the opportunity that exists because of the abundance of gas. 

We anticipate by the time we get many of those plants, I think 

there is like 35 or whatever in the queue at this point, many of 

those get built. Plus, with the crackers in place and the other opportunities to use gas, the question will then be or the issue will 

then be where does gas go? Gas has been historically a very volatile fuel and can be very expensive when there are constraints such 

as when the polar vortex occurred a couple years ago. In fact, there 

just was not gas, believe it or not, during that period of time and 

so there were many plants that could not operate. 

So there is an opportunity there for baseload, and I think it is 

really part of the mix and it really needs to be part of a regional 

mix, as you were describing, in terms of power production. There 

is no reason why we cannot have gas-fired power plants, combinedcycle plants here in West Virginia and throughout the region that 

are supplying electricity to the people who need it who do not want 

to have those power plants. But we also need other sources of electricity for when the gas becomes expensive again, for when the gas 

is not available because of the constraints of the infrastructure, 

and I see that continuing to be pulled, as I described in my testimony. 

Senator MANCHIN. I will follow up later with these questions. 

Senator CAPITO. Yes, following up on that, Mr. Keffer, we are not 

building another plant like Longview in this country at this time, 

correct? 

Mr. KEFFER. Unlike the Germans, unlike the Japanese, unlike 

the Chinese and people in India and across the world, no, we are 

not. 

Senator CAPITO. That is what I was going to ask you, where are 

they building them? Every place but here? 

Mr. KEFFER. Unbelievably, because in fact some of these countries like Germany and Japan have very restrictive climate control 

plans in place, even more so than what we would have here under 

the Clean Power Plan, and yet their mix of energy will include 

coal-fired power plants like Longview or more advanced plants 

than Longview. 

Senator CAPITO. Is the reason that we are not building them 

here—is it the expense, the regulatory environment, the fear of the 

unknown, or a little bit of each? 

Mr. KEFFER. Well, right now, we have got the regulatory environment that is clearly a block. It is not part of the Clean Power Plan 

but the carbon New Source Rule, which is an adjunct to it, would 

make it so that to build a Longview, you would have to incorporate 

carbon capture and sequestration. And there are not investors who 

are willing to take that kind of risk at this point in time because— 

and I know this is subject to litigation but I will just say what I 

think. It is really not commercially feasible—— 

Senator CAPITO. Right. 

Mr. KEFFER.—at this point in time. Much more work has to be 

done—— 

Senator CAPITO. Go to Mississippi. 

Mr. KEFFER. Well, that is a different type of plant—— 

Senator CAPITO. Right. 

48 

Mr. KEFFER.—but it also shows how difficult it is to make big 

leaps—— 

Senator CAPITO. Right. 

Mr. KEFFER.—in the power industry. We made some incremental 

changes and leaps with Longview, and they were difficult enough 

to be able to make to see the results that we are seeing now. We 

had to reinvest additional amounts. But those huge leaps—which 

also people talk about renewables and talk about battery storage— 

that is another very, very large step into the future that we probably will not see for some time to come. 

Senator CAPITO. That is an interesting technology, too, on the renewable side with the battery storage. 

Dr. Deskins, you mentioned just briefly that your projection for 

natural gas is that industry will take back off. I do not even know 

what the price—I know it has been very, very low. There are a lot 

of wells that are shut in. A lot of our companies, unfortunately, 

have laid off a lot of people. What makes you make that projection 

that it is going to get more—does that mean the price is going to 

go up? Because we know we have the supply. Is it because LNG 

is going to be coming on? 

Dr. DESKINS. Sure. What we see with natural gas is not surprising or not really bad, and the good thing is production capacity 

with natural gas has outstripped our infrastructure, which is a 

good thing, right, for productive capacity to grow that much. But 

over time—the result is right now we have a glut of natural gas 

in this part of the country. We are causing that production capacity 

with their infrastructure constraints. 

But as infrastructure improves to natural gas to where it needs 

to be across the country geographically, as infrastructure improves 

to get gas to where it needs to be in terms of industry and manufacturing, both of those are going to help improve the natural gas 

situation. And as we can move forward with an exported liquified 

natural gas to Europe, that is going to improve. All those things 

will expand—effectively, those three things are expanding the market for natural gas from this region. That will lead to price depreciation over the long run, and that is something that is going to 

benefit natural gas and coal both as those natural gas prices go up. 

As a matter of fact, one of our top sources of optimism in our coal 

forecast is if natural gas prices are even higher than we expect. 

Senator CAPITO. Right. 

Dr. DESKINS. That is going to be a source of optimism for coal, 

too. 

Senator CAPITO. Right. Mr. Hedrick, both you and Dr. Anderson 

talked about the Shell investment, and I know that was on hold 

for, what, three or four years before they made the announcement? 

Mr. HEDRICK. They made the final investment decision within 

the last six months. They are on an 18-month string. At that point 

they actually started spending significant dollars in their terms 

with regard to a multibillion-dollar investment. I think they are in 

right now more than $100 million in prep for the site in engineering. 

Senator CAPITO. What would you point to that, kind of, was the 

tipping point for them to go ahead and make that final decision? 

I know they pulled out of Alaska on a very significant project they 

49 

had going there for, gosh, I think decades. I am going to ask you, 

Dr. Anderson, too, but, Mr. Hedrick, do you have any opinion? 

Mr. HEDRICK. I mean, as it often is, it was the assurance that 

they had predictability of supply for the raw material and predictability of demand for the product. I mean, those are the two key 

attributes that they had to have to make a multibillion-dollar investment without making the decision to put in pipelines just to 

supply themselves and the decision to latch onto long-term contracts, which I am not aware of their long-term contracts. I do not 

want to imply that I am. But without some assurance that they are 

going to have long-term supply for the raw materials, it is a hard 

decision to make, and they appear to have those locked down now. 

Senator CAPITO. Dr. Anderson, do you have anything to add? 

Dr. ANDERSON. Well, I agree with Steve’s comments. I would say 

that, additionally, Shell is investing in one step further downstream than just the cracker, and the final product is polypropylene pellets or small balls that they can sell directly to the 

market—— 

Senator CAPITO. For plastics? Is that what that—— 

Dr. ANDERSON. Plastics, yes, for people to directly mold. So that 

is one aspect of it. Additionally, you know, I would hate to say, but 

the Pennsylvania tax credit that they have was a pretty big carrot 

for them, which would amount to about $1.7 billion over the life of 

the plant in terms of feedstock and knowing that they have the raw 

materials that would be readily available to—— 

Mr. HEDRICK. And that comes down to creating predictability, 

right? Predictability in supply, predictability in cost, and for the 

tax base, predictability in revenue generation substituted with a facility. 

I think that the other states, you know, Ohio, West Virginia, 

Kentucky and Pennsylvania in fact would appreciate further predictability with regards to PHMSA and what they would do across 

the long haul with regard to our interstate pipeline system and 

specifically, as we talked about, you know, a pipe from Monaca, 

Pennsylvania, across West Virginia and Ohio down to Catlettsburg, 

Kentucky. There has to be predictability or a mix of investment for 

the very same reasons that we are talking about with regards to 

shale. 

Senator CAPITO. So that is refining into gasoline then you are 

talking about at Catlettsburg? 

Mr. HEDRICK. At Catlettsburg they do have a refinery. They also 

have a propane-to-propylene manufacturing facility. The—— 

Senator CAPITO. Do you want me to tell you the chemistry of 

that? 

Mr. HEDRICK. Yes, ma’am. [Laughter.] 

Senator CAPITO. I will let Senator Manchin do that. [Laughter.] 

Mr. HEDRICK. It is interesting that a very, very small underground storage facility in West Virginia that stores propylene and 

feeds that into Catlettsburg, Kentucky. It then feeds propylene 

back into Neal, West Virginia, to make polypropylene, which further goes into the market. I do not want to pretend that we have 

presented to you novel testimony really. It is proven that this 

works and it is proven that it is good for the Appalachian Basin 

and for the nation so—— 

50 

Senator CAPITO. Yes, thank you. Senator Manchin? 

Senator MANCHIN. It is frustrating, I know for myself and I am 

sure for Senator Capito at times, they believe because we come 

from West Virginia and we represent West Virginia that we do not 

care about the environment. You will have people, kind of pigeonhole you on that. We kept saying, listen, the bottom line is West 

Virginia produces coal and the rest of the world is still using it. 

There are utility people out here right now. I have not spoken 

to one utility person, whether it is in our region or around the 

country, that believes that electric generation they have the freedom to choose their portfolio. They believe that they have been 

forced because of Federal Government regulations to fuel-switch 

and put all their eggs in one basket, which could be detrimental 

to reliability but also, most important, to the cost of energy that 

keeps us competitive as a country. 

These are the things that we are talking about. Ninety-four percent of our electricity in West Virginia comes from coal. We are 

switching it rapidly, very rapidly. As we do that, how vulnerable 

does that make us from the standpoint to be able to create the stability that we would like to have in manufacturing bases? Why 

have we not expanded off of our chemical valley that we have? 

We have a tremendous chemical footprint in West Virginia, no 

pun meant here, but they are a shell of what they used to be. They 

are all operating at 50 percent less than their footprint. Why are 

they not expanding? I know we are starting to use now the new 

one we just talked about, Steve. 

Dan, I would then ask you, as far as on the work force, what are 

we doing to our work force? I am more concerned today than I have 

ever been in the State of West Virginia when we have under 50 

percent of the people that are eligible to be working as adults 

working and performing. 

Mr. POLING. Well, thank you for that question, Senator. In the 

trades, we are trying several programs to—— 

Senator MANCHIN. Your apprentice programs and all that, yes. 

Mr. POLING. Our apprenticeship programs, we have our returning vets. We get them in there. We try and develop technology to 

take those who at one time the job may have been too physical but 

to lessen that challenge so that people who have some minor handicaps can do something in the trade works and stuff so they can be 

productive instead of saying I am unable to work. 

But all of our programs have things like that in place that we 

try to work with those that have any disadvantage at all that can 

become a productive, successful tradesman. There are a lot of jobs 

nowadays with technology and stuff that are more using your 

mind, not your hands so much. You have to have the basic understanding of math and science and things like that, but there are 

prospects for those folks like that. So we are trying to get the 

trades to basically give those folks an opportunity not just saying 

because they are not 250 pounds, six foot tall, you cannot be an 

ironworker. That is not true in today’s world because of technology. 

So our trades are doing that, and we hope to bring more people in, 

and a few years ago, quite frankly, who did not have the opportunity. 

51 

Senator MANCHIN. Mr. Keffer, if I could ask you, on the Longview plant you were kind enough to have both of us and provide 

a tremendous tour of that facility. The Federal Government did not 

encourage you to build that plant, correct? 

Mr. KEFFER. Oh, no. No, not at all. 

Senator MANCHIN. If anything, they fought you every step of the 

way and probably increased the cost by ? 

Mr. KEFFER. We benefited from being located here in West Virginia. 

Senator MANCHIN. Yes. 

Mr. KEFFER. For sure. 

Senator MANCHIN. With that being said, you are saying you can 

gas-fire that plant also? 

Mr. KEFFER. We can gas-fire up to 20 percent of its heat—— 

Senator MANCHIN. So you can basically have a multi-faceted 

plant that produces off of gas, taking advantage of gas prices 

versus coal prices and is more reliable? 

Mr. KEFFER. That is exactly right. 

Senator MANCHIN. And that is not encouraged either? 

Mr. KEFFER. If it is a coal-fired plant and it has got a steam generator like ours, it could not be built at this point because of the 

regulation that is now in litigation. 

Senator MANCHIN. Got you. 

Mr. KEFFER. Yes, that is correct. 

Senator CAPITO. And that is the Clean Power Plan? 

Mr. KEFFER. Yes. 

Senator MANCHIN. And you are a merchant plant? 

Mr. KEFFER. We are a merchant plant. 

Senator MANCHIN. You might want to explain just for the record. 

Mr. KEFFER. Oh, sure. So yes, every day—— 

Senator MANCHIN. You are on the market. 

Mr. KEFFER.—we bid into the market in PJM, which is the area 

that includes West Virginia, Pennsylvania, New Jersey, a bit of Illinois and Indiana. And they are the—PJM then buys all of the 

power wholesale and then redistributes it to the utilities, to—— 

Senator MANCHIN. So you get no guaranteed pricing by the PSC 

or any of that? 

Mr. KEFFER. There is never guaranteed pricing. That is correct. 

Senator MANCHIN. And you are able to compete in the marketplace. What is your capacity now? What are you all producing, 

what capacity rate? 

Mr. KEFFER. We are producing more than what our—we have 

said our net is. 

Senator MANCHIN. I got you. 

Mr. KEFFER. We are 700 megawatts and during the hot days this 

summer, we have been—— 

Senator MANCHIN. You are able to sell all of your power? 

Mr. KEFFER. We are up to about 710 from time to time, just 

being able to get those extra dollars out of our generation, yes. 

Senator MANCHIN. Can I ask one more question? 

Senator CAPITO. Sure, go ahead. 

Senator MANCHIN. Dr. Deskins, the economy is what we are worried about and how in the world do we jumpstart this economy? 

Right now, I have been challenged by a lot by people saying I am 

52 

not sure you are going to have an ample work force. Do you see 

that as a concern that we may have, and how do we turn that 

around as quickly as possible? 

Dr. DESKINS. Well, the first part of that question is easy. That 

is a desperate concern. I constantly talk about we want good transportation infrastructure. We want a good tax climate. All these 

things are important, but if a firm is not confident that it can find 

the workers that it needs who are healthy, well-skilled, well-educated, well-trained, and drug-free, then all the good positive tax climate, infrastructure, all these other things are not going to matter 

if a business is not confident that it is going to find the workers 

that it needs. 

I think education, training, health, human capital, drug abuse, 

I think these are probably the most important concern that we 

have going forward, and I frequently cite this labor force participation rate or this employment-to-population ratio is the key concern 

for West Virginia going forward. 

But it is not easy. We have so many challenges with regards to 

the brain drain. You know, many of the young men and women 

who we have pulled out of high school in West Virginia who we 

give a good college education to, many of them just find that it 

makes more sense for them to take a job in Ohio or PA, Virginia, 

wherever. 

I mean, this all works together. We can create a healthier economy. Then, those young men and women will be more inclined to 

stay here, and that will help reverse many of our human capital, 

brain drain problems. 

There is no easy answer. We have to focus on the basics, but we 

do need to keep our attention on health, drug abuse, education and 

cultivating opportunities. And the clearest, most shorter-term opportunities are in energy to make more sense for our young people 

to stay here and for people to migrate here. There is no silver bullet because it is a daunting challenge with 53 percent of our adult 

population wanting to have a job, the lowest number in the nation. 

We have been dead-last in that statistic every year since 1976. It 

is a challenge. 

Senator CAPITO. Do you have any more questions? 

I have two quick questions. My first question is, I hear a lot of 

optimism about where we can go because we are blessed. We have 

these resources, we have a willing, I think, more entrepreneurial 

spirit now to try to look at different and new ways to use this. 

My concern is if we only talk about it and do not actually act on 

it in terms of the infrastructure. Getting back to the original topic 

of discussion, if we just say, yes, we do need some more pipelines 

but cannot attract the investment, yes, we need a storage area but 

we cannot attract the investment, my concern is, Dr. Anderson, I 

would ask you do you see a scenario where if we hesitate too long, 

we could again see our resource going somewhere else, being used 

all over like our coal basically has been for years? We use a lot of 

it here, but we export a heck of a lot of it all around the country. 

Can you speak to that? 

Dr. ANDERSON. Senator Capito, yes, I completely agree with you. 

If we do not act quickly in this region and in the state, then pipeVerDate Nov 24 2008 15:35 Apr 07, 2017 Jkt 021998 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21998\C21998.TXT C21998
53 

lines will be built to Philadelphia starting in Ontario and the Gulf 

of Mexico. 

And so in this region what we are trying to do to be active about 

turning this around is lowering all the barriers, having a predictable and consistent permitting environment. Those sorts of things 

are exactly what we need to do to lower the barrier for private industry. 

And then on the other side what we are trying to do is capitalize 

that private investment through showing where the opportunities 

are, and, as Dr. Deskins mentioned, we need to work on the work 

force challenge as well. 

But I completely agree with you. If we do not act now, then we 

will continue just to export our raw materials. 

Senator CAPITO. Right. I know there are some other opportunities in terms of a cracker. Obviously, the one in Parkersburg, which 

has been talked about for several years, is still on hold. But there 

is also, I think, great hope that across the Arch Moore Bridge in 

Moundsville in Ohio, FirstEnergy has cleared a site there of a 

former power plant, and I have great hopes that will develop. If we 

could grab those investments, I think some of these other things 

can follow. 

I do not have any other questions. 

Senator MANCHIN. Just out of curiosity, if you were in our position, if you could go back to Washington and make any type of a 

recommendation for a change and that change could happen, what 

would be your recommendation for us to do for not just West Virginia but for our country? Basically, if we are going back and looking at economic vitality, every part of the country wants more jobs. 

I do not think any other part of the country needs jobs as bad as 

we need them right now. So if you were going to recommend one 

thing to Senator Capito and myself and we could change that, what 

would we go back and change? What would you ask? What would 

your recommendation be for us to change? We will go down the 

line. Dan, do you have any comments? 

Mr. POLING. Yes. I would like to—and maybe part of this concept 

will not simply be about the wages and the drug testing and all 

that. I would like to somehow come up with something that says, 

when these projects come up, we put local workers on them. When 

Dr. Deskins was talking about competing with Ohio and Pennsylvania, that is true people go there to work because anybody will 

go to work where they can make more money. When we hold the 

wages down and expect more, then people want to go somewhere 

else. 

So I guess my question would be if there is enough money to invest in infrastructure from the government to make this state be 

in a position where it needs to be to bring all this together, then 

I think that is a good thing. And then if you put some caveat on 

there that we use local workers to do it and to be drug-free, I think 

that is a great start. 

I did want to make the comment, we talked about the trades and 

there was some question about drug-free workers. We have less 

than three percent failing our drug-testing programs, and when we 

go to these folks who need work, we have drug-testing prior to and 

randomly while they are there. And we have less than three perVerDate Nov 24 2008 15:35 Apr 07, 2017 Jkt 021998 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 C:\TARSHA\HEARINGS\21998\C21998.TXT C21998
54 

cent failing. The reason for that I believe is it is a risk and reward. 

These are good-paying jobs. People do not want to lose them. They 

do not want to get busted on a drug test and lose their jobs if you 

are paying them a good living. 

So I think the two kind of go together, and I would have to ask 

you two if you could to invest in West Virginia from the Federal 

and the infrastructure—— 

Senator MANCHIN. You are saying make sure that any jobs that 

we could bring here are going to be West Virginia jobs first? 

Mr. POLING. Local jobs for local people. I believe that—— 

Senator MANCHIN. Yes. 

Mr. POLING.—and I believe in the drug-testing requirement on 

the project. 

Senator MANCHIN. Yes. Jeff? 

Mr. KEFFER. I would hope that we could use the opportunity with 

a change in Administration, regardless of which direction it goes, 

to step in and settle the Clean Power Plan litigation, make changes 

to the framework of that allow us to get going on building new advanced coal plants but also deal with the issue, the very real issue 

that has been recognized in the country of climate control. 

Senator MANCHIN. Steve? 

Mr. HEDRICK. So sometimes I am known for a little bit of boldness as you have known me over the years, and when I was in the 

Army I had tanks, M1A1, great pieces of gear. And the tank commander has at his disposal or her disposal as we move forward the 

opportunity to grab a commander’s override it is called associated 

with that tank and pivot the turret on their own and make a decision to redirect the pathway of the gun if you will. 

So what I would advise, if it is even feasible and possible that 

the commander’s override be grabbed by the Federal Government 

to force state government’s involvement in this and pivot this. 

When you have 49 percent of this brought forward as part of the 

public investment associated with this, the private sector needs to 

come forward with 51 percent right now. And that is a bold shift 

in the manner of our thinking and what we want. 

But we are staring at adversity beyond that which we have seen 

in generations. Southern West Virginia and Eastern Kentucky are 

being crushed right now, and the social problems that come along 

with the declining education, increased drug problems and a lack 

of opportunity and pride to be able to work are very autumnal, and 

they go further and further and further. 

The amount of money that we are going to spend across the next 

20 years in supporting people who want to work but cannot and experience all of these problems I think is going to—we could dwarf 

that by a simple investment right now between the four states and 

the Federal Government. 

Senator MANCHIN. Chad? 

Mr. EARL. I think we are getting regulated out of business to 

some degree. From the people I have talked to, the rules or all the 

different regulations we have are not necessarily clear and there is 

a lot of overlap and who has jurisdiction over what. So I think that 

whole process could be streamlined. I mean, whenever it delays 

construction, construction costs in the wintertime go up approximately 15 percent, so they are banking on that because of different 

55 

permits and stuff that they have to have. So that is probably the 

biggest one for us to address. 

Dr. DESKINS. I would say—I think that question—by the way, 

this is a fantastic question and I appreciate you offering me the opportunity to weigh in. But I would say first off, of course any positive regulatory policy surrounding clean coal technology, natural 

gas policies, research and development and those areas of course 

are one of our most clear short-term ways to carry this state. 

But let me just say I really, really appreciated your comment at 

the very beginning about returning Vietnam veterans. I have never 

heard it put that way, but that is a great way to think about how 

West Virginia has supplied the nation’s energy for so many years 

but how we have not been thanked enough for our contribution to 

our fundamental—being able to pay it forward. 

So with that in mind, I would try to do what I can to really communicate the state that we really find West Virginia in, especially 

the great depression that we find in six counties. And I would call 

for any help that we can get from Washington with our drug crisis, 

with our health crisis, with our education crisis, and with our I 

would say significant infrastructure needs. All those are—well, 

those are essentially the problems. It is laughable for me to call it 

short-term issues, but those are—that is my answer. 

Dr. ANDERSON. I think with the raw materials we have in this 

region, there are really three ways to get it to the population centers where it is used. West Virginia does not have a lot of population but, as Steve mentioned, within one day’s drive is about twothirds of the population of the United States and a third of Canada. 

So the three ways to move those raw materials are either pipes, 

wires or roads. And so ultimately, what we want to do is upgrade 

the materials to where we end up stressing our road infrastructure 

because we are shipping so many end and finished goods. And so 

I think we see within the State of West Virginia the road infrastructure, a lot of wear and tear. And because of decreased tax revenues, we have seen a lot of wear on the road infrastructure. 

I would encourage one way to help spur the investment of your 

pipes, wires or roads is to lower the barrier for the regulatory environment. We have heard this message a few times of the unpredictability of the regulatory environment, which lends itself to the unpredictability and the ability to get capital. And so when you go to 

an investor and there is an unpredictable regulatory environment 

such as the one we see at the moment, that leads to a difficulty 

getting investment. Leveling the playing field and the predictability of the regulatory environment I think would be a huge barrier to cross. 

Senator MANCHIN. Let me make one final comment before Senator Capito wraps this up. 

The thing that I was most appalled by and why I am most upset 

about the present Administration under President Obama, there 

was no plan. There was no plan. What do you do when an area is 

absolutely economically destroyed knowing that this major policy 

shift of this moving away from fossil that he would like to do in 

such a rapid way by turning the EPA loose—and I know we have 

been criticized for saying ‘‘war on coal.’’ I do not know what else 

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to call it. I really do not because it has been singly targeted in the 

Appalachian region. So I am trying to be as respectful as I can in 

trying to get policies forward. 

I have come to the conclusion: The only way that we are ever 

going to succeed is follow the dollars, the tax credits, extenders. 

They have been pouring more and more tax credits and extenders 

into renewables, and the only thing I am going to say, if that is 

the policy direction, then we cannot collectively stop some of this 

other thing when you have an Administration desire to do something as they have done. We could at least say this that makes all 

the sense in the world: If you are going to use these tax extenders—they call them tax extenders—they are credits. They give 

them credits if they do certain things in certain fields. So if they 

are moving to solar or hydro or—— 

Senator CAPITO. Wind. 

Senator MANCHIN.—wind in all of this, those credits should only 

be used in a germane energy where the losses are. So if the losses 

came from areas such as West Virginia and southwest Virginia and 

Kentucky, those credits have to be used there. It makes all the 

sense in the world. I am going to do everything I can to shut this 

system down the next time because, trust me, they love tax credits. 

The wind people are not letting tax credits go. Solar is not letting 

tax credits go. 

I am asking how do you argue against at least using the credits 

if you are going to get them? We will build the best windmills, 

Danny. Our guys can build windmills. We can build solar. We can 

build anything you want. Just give us a chance. That is what I am 

most upset about is that there is no plan. There was no plan for 

a major policy shift in energy, and that is what we have got to correct, I think, as quickly as possible to give us all a chance to survive in this tough area. 

Senator, thank you so much again for this hearing. And we are 

having Secretary Moniz come visit. Right now, he is scheduled for 

September the 12th. 

Senator CAPITO. To Morgantown? 

Senator MANCHIN. Yes, we are going to do this because he needs 

to see NETL, what NETL is doing. He needs to see what you are 

doing, Jeff, at Longview and basically what we can do in a balanced approach. 

All of you will be invited, and we hope everybody shows up. 

Thank you. 

Senator CAPITO. Well, thank you. I know the last thing is only 

the last thing until it is the last thing so I am going to say one 

thing about something Senator Manchin was saying. I have been 

on an effort—and I believe Senator Manchin is on this so I will not 

speak for him, but I know Senator Portman in Ohio is—to try to 

even this tax credit thing. 

If you are going to go and build a coal-fired power plant and you 

can use carbon capture and sequestration, which Jeff has said is 

not occurring right now because it is not economically or probably 

technologically feasible, but when it gets there, let us put them on 

an even tax credit playing field so that fair is fair. It does not exist 

right now, and I think it would also get to some of the greater goals 

of cleaner, more efficient energy production. 

57 

With that, I would like to again thank Senator Manchin. As you 

can see, we work very well together and we have, I think, a unity 

of thought in this area. I would like to thank the witnesses, our 

hosts, and the committee. I would like to thank my staff, Jan Brunner and Kaylan Billingsley, for all their hard work of putting this 

together. 

I would also like to thank the Chairman and Ranking Member 

of the Full Committee, Lisa Murkowski from Alaska and Maria 

Cantwell from the State of Washington. We could not have this 

here in West Virginia without their consent, so I want to thank 

them and the Full Committee staff as well. 

Thank you all, and with that, I will adjourn this committee hearing. 

[Whereupon, at 3:41 p.m., the hearing was adjourned.] 

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