A program of the West Virginia Oil & Natural Gas Association

Officials: Major oil and gas investments planned despite current slowdown

CLARKSBURG — The oil and gas industry may have experienced a bit of a slowdown in West Virginia in 2015, but there are still major investments on the horizon, according to industry officials.

Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, pointed to the planned buildout of natural gas pipeline infrastructure to transport locally produced gas to new markets.

“There are billions of dollars worth of investments that will go forward in the next three to four years, and that’s equal to what would be spent on developing a factory,” DeMarco said. “And I’m not suggesting that one replaces the other or anything like that. The point is, the industry, no matter what you hear about frackers or downturns or those sorts of things — we are still doing projects that will ultimately allow us to drill more wells, because we’ll have more takeaway.”

Bob Orndorff, a senior policy adviser for Dominion, said there are six major natural gas transmission pipelines planned in the region, representing $5.7 billion worth of investments within West Virginia’s borders.

These projects include the Atlantic Coast Pipeline and Supply Header Project, both proposed by Dominion; Energy Transfer’s Rover Pipeline; the Mountain Valley Pipeline; and two projects from Columbia Pipeline Group — the Leach XPress and the Mountaineer XPress Pipeline Project.

In total, these projects would bring an estimated 17,000 jobs to West Virginia and generate around $54 million in property tax revenues during construction, according to numbers provided by Orndorff.

Orndorff said some of the jobs created by these construction projects would be supplied from out of state due to the high demand and specialized nature of the work.

“There has to be a number of them that have to be brought in from out of state, and that’s pretty typical of those jobs,” Orndorff said. “But we’ve been working with local career and technical colleges, with vocational schools, and I know the unions have been gearing up. They know this is coming. Everybody wants a piece of the pie, and there will be plenty of pie to go around.”

All interstate pipelines must be approved by the Federal Energy Regulatory Commission before they can begin construction. The approval process takes roughly two years. Projects such as the Atlantic Coast Pipeline and Mountain Valley Pipeline began the FERC pre-filing process last year.

Getting additional transmission pipelines online will likely lead to upward pressure on sagging natural gas prices in the region as local producers look to meet new demand in other parts of the country, according to Orndorff.

“It’s all supply and demand. There’s a glut of gas on the market now. And with all the retirements of the coal plants, there’s going to be additional need for natural-gas-fired power plants,” Orndorff said. “As demand goes up, typically what happens is your pricing will go up, and as pricing goes up, you’ll have an outlet for more gas and more drilling will occur.”

He added, “The pendulum will swing back. Production companies now have a plan that they can look at hopefully in the future once these pipelines are built.”

DeMarco echoed Orndorff’s assessment.

“We’ve got projects that are going to go west. We’ve got projects that are going to go into Virginia and into the Southeast,” DeMarco said. “The industry is alive and well and will continue to make investments, even though we’re in a little bit of a downturn in exploration and production right now.”

Staff writer Jeremiah Shelor can be reached at (304) 626-1409 or by email at jshelor@theet.com. Follow him on Twitter @JShelor

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