Energy Department Hires a Top Cheerleader for Petrochemical Hub Before Issuing Report Favoring It

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Near the end of 2018, the U.S. Department of Energy (DOE) hired the leading promoter within academia of a massive and multi-faceted petrochemical complexย proposed for West Virginia. A month later, the agency issued a report favoring the construction of such aย complex.

On November 9, the Energy Departmentโ€™s National Energy Technology Laboratory (NETL) named as its new director former West Virginia University Professor Brian Anderson.

NETL, which spearheads federal energy-related research and development (R&D) efforts, is currently deciding whether to grant $1.9 billion in R&D money toward building out the proposed petrochemical complex, known as the Appalachian Storageย Hub.ย 

The storage hub, say its proponents, will compete with the Gulf Coast-based petrochemical hub of Mont Belvieu and perhaps even have a pricing index forย traders.

Those alarmed by the prospect of the hub point to the fact that towns along the Gulf of Mexicoย have higherย rates of cancer.ย Some call that dense stretch of petroleum refineries and petrochemical plants near the Gulf the โ€œPetrochemical Corridor,โ€ while locals call it โ€œCancer Alley.โ€ย 

Criticsย also say the projectย could further drive up demand forย hydraulic fracturing โ€” or โ€œfrackingโ€ โ€” of natural gas within the nearbyย Marcellus Shale and Utica Shale basins.

As DeSmog has reported in an ongoing investigative seriesย titled โ€œFracking for Plastics,โ€ the Appalachian hub is just one piece of a broader planย for the petrochemical industry’s ambitions to transform the Appalachian region into a cutting-edge, fossil-fueled storage and refining epicenter. That could spellย serious consequences for worsening the impacts of climateย change.

Fracking for Plastics
Read Fracking for Plastics, aย DeSmog investigation into theย proposed petrochemical build-out in the Rust Beltย and the major players involved, along withย the environmental, health, andย socio-economicย implications.

Report toย Congress

Just a few short weeks after announcing Anderson’s hiring, the Energy Department published a report titled, โ€œReport to Congress: Ethane Storage and Distribution Hub in the United States,โ€ and mandatedย by the Energy and Water Development Appropriations Bill of 2017.

โ€œThe Department is directed to issue a report on the feasibility of establishing an ethane storage and distribution hub in the United States, given the increased production of natural gas liquids (NGLs) from shale developments and recognizing that ethane is the largest component of those NGLs,โ€ the 2017 bill reads. โ€œThe report should examine potential locations, economic feasibility, economic benefits, geologic storage capabilities, above ground storage capabilities, infrastructure needs, and benefits to energyย security.โ€

Moving NETLโ€™sย Needle

Anderson, during his tenure at West Virginia University, founded and headedย the schoolโ€™s Energy Institute. In the DOE press release announcing his new position with NETL, he did not mention his past promotion of the petrochemical hub โ€” which in large part is represented byย an $83 billion partnership between West Virginia and China โ€” though the release does callย out his involvement in โ€œpav[ing]ย the pathwayโ€ for a partnership between the twoย countries.

โ€œI am honored and humbled at the opportunity to serve as the director of the National Energy Technology Laboratory (NETL),โ€ said Anderson. โ€œThe work that is being conducted at NETL is critical to advancing technologies that will transform the use and production of our nationโ€™s vast coal, natural gas, and oil resources to protect our environment and enhance our nationโ€™s energy security. I look forward to working with the talented and dedicated team at NETL to continue the labโ€™s efforts as the gold standard in advancing energy research andย development.โ€

While Anderson did not mention hisย ties to the proposed petrochemical complex โ€” which include servingย as a formerย executive for the Appalachian Development Group, the firm which applied for the $1.9 billion Energy Department grant his office is now considering โ€” he did receive questions about his work promoting the hub from the Pittsburghย Post-Gazette.

โ€œAs the Appalachian storage hub keeps moving forward,โ€ he told the newspaper, โ€œIโ€™m certainly replaceable. Itโ€™s something that I still support, but Iโ€™m not involved in any of thatย anymore.โ€

But just a month after beginning his federalย job, Anderson nearly reneged on his statement about removing himself fromย involvement.

Credit: West Virginia Energy Infrastructureย Summit

A preliminary schedule for the January 10, 2019 West Virginia Energy Infrastructure Summit lists him as one of the speakers, slotted to speak about energy infrastructureย immediately after Steve Hedrick, CEO of the Appalachian Developmentย Group.

Hedrick,ย who spoke at the forum about the petrochemical hub, is currently under investigation by a special counsel,ย former U.S. Attorney Mike Carey. West Virginia Governor Jim Justice hired Carey to investigate Hedrickโ€™s potential use of state funds when he joined an official delegation to China. The investigation will probe whether he used the trip as a means of enriching himself and hisย business.

Ultimately, Anderson did not speak at the January event andย did not respond to a request for comment for thisย story.

DOE spokeswoman Kelly Loveย told DeSmog that the agency did a comprehensive background check and cleared Anderson, though he will also recuse himself from issues in which he carries a conflict ofย interest.

โ€œThe Department follows all federal laws and ethics requirements regarding onboarding new employees,โ€ explained Love. โ€œThe employee in question has been counseled regarding recusal from matters relating to pastย employers.โ€

Report Unveiled to Shadowย Lobby

The DOEโ€™s report touting the potential for a fossil-fueled petrochemical hub in Appalachia was unfurled where else butย in the belly of the beast of the oil and gas industry. That is, at the annual meeting in Washington, D.C., for the National Petroleum Council, a body overseen by the Energy Department and created in 1946 under President Harryย Truman.

The Petroleum Council, in essence, acts as a collective of oil and gas industry executives who distill their priorities during meetings in Washingtonย alongside top Energy Department officials. The council’sย office sits on K Street, the heart of lobbying within the nationโ€™s capital. One of the most recentย examples of its work, produced during the Obama era, was a report calling forย greenlighting offshore drilling in the Arctic.

โ€œThere is an incredible opportunity to establish an ethane storage and distribution hub in the Appalachian region and build a robust petrochemical industry in Appalachia,โ€ U.S. Secretary of Energy Rick Perry said at the National Petroleum Council meeting whileย introducingย the report on the potential petrochemicalย hub.

โ€œAs our report shows, there is sufficient global need, and enough regional resources, to help the U.S. gain a significant share of the global petrochemical market. The Trump administration would also support an Appalachia hub to strengthen our energy and manufacturing security by increasing our geographic productionย diversity.โ€

The Energy Department report explicitly points to the prospective Appalachian petrochemical hub as a complement toย the one along the Gulfย Coast.

โ€œ[M]arket analysis from the report emphasizes that the development of an Appalachian hub may offer a competitive advantage for the U.S. to gain global petrochemical market share while not being in conflict with Gulf Coast expansion,โ€ explains the press release outlining the paper. โ€œThe report explains that a new Appalachian hub would enhance the geographic diversity of the vital U.S. petrochemical industrial sector, supporting U.S. economicย security.โ€

While the report outlines the broad contours of a potential large-scale petrochemical storage and refining market โ€” refining which would transpire at what the industry calls โ€œcrackingโ€ plants โ€” some West Virginia and Ohio congressional delegates have called for additional studies to further detail what such a build-out would lookย like.

These calls have comeย through the sponsorship and introduction of theย Appalachian Ethane Storage Hub Study Act. The bill, which has yet to move far beyond the introduction phase, has received federal lobbying support from Shell and the American Chemistry Council, the former of which is building a major cracking facility to produce plastics in Pennsylvania and the latter is a collective of oil, gas, and petrochemical companies using their considerable lobbying prowess to push for the hub’sย creation.

The day that the DOE released its report, the American Chemistry Council released a glowing press statement about itsย contents.

โ€œWe welcome DOEโ€™s report, which affirms that the Appalachian region could become a major petrochemical and plastic resin-producing zone,โ€ said the American Chemistry Council in its press release. โ€œProximity to a world-class supply of feedstocks and to the manufacturing markets of the Midwest and East Coast have already led several companies to announce investment projects, and there is potential for a great deal more. Itโ€™s an exciting opportunity for the region and ourย nation.โ€

Deal Proceeds, Criticsย Decry

When President Donald Trump first launched the ongoing trade war against China, some observers thoughtย the impasse mightย lead to the demise of the storage hub. Those predictions, however, have not yet come to pass and Chinese powerbrokers have affirmedย that the deal lives on.

โ€œWe and the West Virginia government, and other related companies, have always been extremely aggressive in pushing forward this project,โ€ saidย Ling Wen, president and CEOย of the state-owned company China Energy Investment, at a media briefing on the companyโ€™s earnings, according to the business publication S&Pย Global.

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Though the billions of dollars in capital needed to create a petrochemical hub in Appalachia have yet to finalize, the Appalachian Development Group also has continued to march forward on the project. In August 2018, the company signed a $3.4 billion deal with the engineering firm Parsons Corporation to form a partnership and engineer theย hub.

โ€œParsons is honored to have been selected by ADG [the Appalachian Development Group] as a partner on this critically important project that will ultimately support the economic and energy security needs of so many communities and citizens, including economic revitalization of the Ohio River Valley states,โ€ Carey Smith, president of Parsonsโ€™ federal business unit, said in a press release about theย deal.

Not everyone remains pleased with these developments. One such entityย is Food and Water Watch, a Washington, D.C.-based advocacy group with chapters across the country, which opposes fracking and the creation of the Appalachian Developmentย Hub.

โ€œThe proposed storage complex may be a profit bonanza for industry, but it is a pollution pitfall for communities and ecosystems of the Appalachian basin,โ€ Food and Water Watch wrote in a September 2018 report titled โ€œAnother Petrochemical Sacrifice Zone.โ€ โ€œConverting the region into the second largest concentration of plastics and chemical manufacturing outside the highly polluted Gulf Coast will compound the Tri-State areaโ€™s alreadyย substantial exposure to industrial toxic emissions, while increasing plastic materials that largely end up polluting the earthโ€™sย oceans.โ€

Main image:ย Brian Andersonย Credit:ย Provided by West Virginiaย University

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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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