A new project from the Appalachian Regional Commission (ARC) should excite anyone who wants to see our country be more competitive, strengthen supply chains, and accelerate product and technology innovation to help reduce greenhouse gas (GHG) emissions. The project renews hope for significant manufacturing growth in the Appalachian region and nationally.
ARC’s plan is to set up a $5 million research project to support creation of an “energy hub,” with a focus on ethane storage and hydrogen production from natural gas. Companies in the region will be able to apply for annual grants. Funding was provided in the Bipartisan Infrastructure Law enacted at the end of 2021.
What is ethane?
Ethane is a natural gas liquid (NGL) derived from shale gas. It’s the main energy raw material, or “feedstock,” used in chemical manufacturing in the United States. Increased ethane storage and transport in the Appalachian region could help attract new chemical production capacity and support growth in hydrogen production using natural gas.
Economic benefits of regional ethane storage
American chemistry has long viewed the Appalachian region as an appealing location for expansion. One major draw is the abundant NGL resources from the Marcellus/Utica and Rogersville shale formations. Another is the region’s proximity to manufacturing markets in the Midwest and along much of the East Coast.
Several studies have analyzed the potential economic benefits of establishing an Appalachian ethane storage and distribution hub. These could include growth in employment, payroll, and tax revenue. There is also an opportunity to diversify America’s energy supplies and strengthen supply chains by making and sourcing inputs for more products in more places.
Energy innovation and climate benefits
The Appalachian energy storage project will help manufacturers use high-value ethane to create U.S.-made products – including those that help save energy and reduce GHG emissions. Solar panels and wind turbines, advanced battery storage, electric vehicles (EVs), lightweight vehicle parts, and high-performance building materials are on a long list of applications that rely on chemistry and plastics. These often start with natural gas as an energy source or feedstock.
Chemistry companies are among the leaders and participants in exploring the development and use of lower-emissions technologies in the industrial sector. As ACC explained in our white paper published in April, natural gas and feedstock are critical to the U.S. economy and climate progress.
Uncertainty around financing has been a barrier to the development of an ethane storage and distribution hub in the Appalachian region. That’s why many policymakers and stakeholders have advocated for policies to make NGL storage and distribution projects eligible for private-public financing programs. The ARC grant program is a great example of how this can work.
An outdated permitting process is another challenge. In the Appalachian region, better coordination among federal regulators and more timely reviews of project applications are sensible steps. This is part of a broader issue around the need to modernize the permitting process for energy infrastructure and manufacturing projects of all kinds.
A history lesson
While petrochemical manufacturing began in the Appalachian region in the 1920’s, the Gulf Coast region has been the center of the U.S. petrochemical industry since the mid-20th century. This is due to its abundant supplies of energy feedstock and vast network of pipelines and NGL storage structures. Indeed, much of the chemical industry’s shale-related investment (e.g., new facilities, expansions) has taken place in or is planned for Texas and Louisiana. The Appalachian region has also seen significant chemical industry investments in recent years. Building an ethane energy storage and distribution hub could support much more.
We’re looking forward to seeing how ARC’s promising project unfolds!