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[Senate Hearing 114-507]
[From the U.S. Government Publishing Office]

                                                        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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                       Printed for the use of the
               Committee on Energy and Natural Resources

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

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
SHELLEY MOORE CAPITO, West Virginia
                      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
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                            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

 
 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.
    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 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 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 once-in-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 decades. 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-demand 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.
    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 lowest-cost 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 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 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:]
    

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
     
    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, 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 laid-off 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, 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 requirements 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.
    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 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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    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 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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    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 
public-private 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 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.
    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 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 gas-fired power plants that are being built throughout the 
region taking 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, combined-cycle 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.
    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 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----
    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.
    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 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 pipelines 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 percent 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 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 two-thirds 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 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.
    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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