As President Donald Trump readies a strategy to bail out coal and nuclear power plants in part to help reinvigorate Appalachia’s struggling coal industry, West Virginia lawmakers are working to up the state’s participation in the natural gas business.

Their effort to clear a path for the federal government’s financial participation in a massive storage and trading hub for liquids extracted from natural gas could bring more than 100,000 jobs to the state, advocates say. Those liquids are used as feedstock for plastic manufacturing, so it could also turn the state into a major chemical and industrial center as manufacturers look for a steady supply of low-cost raw materials.

To achieve that, the lawmakers have launched a series of bills and administration lobbying to protect a Department of Energy loan guarantee program primed for the chopping block by conservatives who want to get the federal government out of the energy financing game.

But there’s no small irony in the approach: Such a hub is likely to bolster an industry that has been a source of woe for West Virginia coal miners. But jobs are jobs, and for West Virginia, natural gas would represent a new chapter in its storied energy resource production history.

“When natural gas development started, there was a lot of competition [with] coal. But you know they are both energy resources,” said Republican Sen. Shelley Moore Capito. “We know how to do energy in our state. And natural gas is more versatile than coal obviously, so all those rivalries have gone by the wayside.”

The proposed $3.3 billion Appalachian Storage and Trading Hub would centralize the burgeoning natural gas liquid extraction industry in the Utica and Marcellus shale formations. A network of pipelines extending into southeastern Ohio and Pennsylvania would lead to a central storage center at a to-be-determined location in the four-state area.

The aim, according to the developers, is to take advantage of the resources like ethane, propane and butane in the natural gas pulled from the shale shelf that can be processed out for use in chemical industries, among other uses. According to a December 2017 Department of Energy report, the extraction of such liquids from the Appalachian region is projected to increase over 700 percent in the 10 years from 2013 to 2023, hovering above 1 million barrels produced a day by 2020.

But to fully take advantage of that increase, a corresponding infrastructure build is needed, DOE argued.

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Jobs, jobs, jobs

The American Chemistry Council, the trade group representing major chemical companies like DowDuPont Inc., concluded in a May 2017 report that the creation of an Appalachian petrochemical trading and storage hub and related infrastructure could lead to an additional $36 billion in chemical industry investment in the region and more than a 100,000 new jobs.

“I’m fully confident that a healthy downstream petrochemical manufacturing sector that could locate here as a result of local abundant supply of natural gas could be a game-changing type of impact for the northwestern region of West Virginia,” said John Deskins, the director of West Virginia University’s Bureau of Business and Economic Research. “We are talking about a largely rural area. There are some elements of a Rust Belt profiling, and it could be a game-changing type of experience for that region. And of course, it could provide much needed tax revenue impacts that would benefit the state overall.”

Currently, most of the material from the region is shipped to the Gulf Coast for processing and refining, eventually winding up back in Midwest and Northeast manufacturing centers closer to more heavily populated areas. That costly movement can lead to modest returns as well as transportation problems.

There is also the question of processing capacity and storage. With most facilities located in the Gulf region, extreme weather like hurricanes knocking out production and raising prices is a concern for the industry.

“You have a major hurricane come up through the Houston channel, and Rick Perry and I have talked about this, it disrupts everything we do in America,” said Democratic Sen. Joe Manchin III. “So that’s critical for the defense of our country and for the liability of the energy we need.”

A separate processing hub could also free up more of the Gulf coast for products that can then be exported to countries where natural gas prices are higher. Recognizing it as an opportunity for more than just West Virginia, the Southern States Energy Board, a collection of southern state lawmakers, issued a unanimous resolution in support of the proposed facility.

The propose project is not without its opponents. Local environmental groups like the Ohio Valley Environmental Coalition fear the resulting industry buildout could lead to chemical spills and increased exposure to carcinogens. Those groups have also opposed more natural gas extraction activities, citing its environmental impacts.

Financing driving Washington action

According to Brian Anderson, who serves as a technology officer with the development group behind the project and is a director of WVU’s Energy Institute, the group would secure about 40 percent of its funding from the private sector. The developers are also seeking a $1.9 billion DOE loan guarantee — the intersection where Washington can make a significant impact.

A loan guarantee from the federal government can attract additional private sector investment because of its stringent methodology to ensure the viability of projects. Of the more than $30 billion loan guarantees across more than 30 projects issued by the Title XVII loan program, the federal government has an estimated loss ratio of 2 percent, according to a 2014 DOE accounting report.

“Having the DOE process is actually quite valuable,” Anderson said. “The process has as much rigor as any Wall Street equity fund debt financing that you would go after.”

In order to smooth that DOE approval process, Capito and Manchin, along with GOP Sen. Rob Portman of Ohio and GOP Rep. David B. McKinley of West Virginia, introduced legislation to direct the federal government to coordinate on a feasibility study of a storage hub in the region.

The West Virginia lawmakers also have a bill with Democratic Sen. Sherrod Brown of Ohio to amend the law behind the loan guarantee program to ensure “strategic energy infrastructure projects that are a regional project” qualify for the program. That bill moved out of the Senate Energy and Natural Resources Committee on a voice vote in March.

The storage hub’s application is currently in the second phase of the review process. DOE declined to comment on the review timeline, citing the business sensitivity of the process.

But the faster the better for the project, especially as conservatives and the Trump administration have proposed to ax the program to reduce federal spending. The White House called for its elimination in both of its budget requests for fiscal 2018 and fiscal 2019, and the rescissions package that passed the House earlier this month included language to take some $523 million from the Title XVII loan guarantee program.

That bill met resistance in the Senate, where it failed in the Senate last week, and both House and Senate fiscal 2019 Energy-Water spending bills maintained the program despite the administration’s request. Manchin was also able to attach language in the Senate bill to prevent the administration from using any money to shut the program down.

That doesn’t mean the program could not go through some changes, according to GOP Sen. Lisa Murkowski of Alaska.

“You have particularly on the House side folks who don’t really care for the loan guarantee program, and what I shared with [OMB Director Mick Mulvaney] is that loan guarantee is in my view an important program that needs to be reformed, so let’s reform it and let’s not get rid of it,” said the chairwoman of the Energy and Natural Resources Committee.