September 5, 2019

The State of West Virginia’s Natural Gas Extraction

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West Virginia is pushing natural gas. The former coal giant has shifted its focus from its legacy in the mines to the shale play, diversifying its economic mix and creating jobs.

West Virginia is home to both the Marcellus and deeper Utica shale basins, with an estimated 28 trillion cubic feet of shale gas reserves, the fourth largest of any state in the country. For the state that has stumbled in its response to the fall of coal, these reserves present a new opportunity, and it has capitalized.

With thousands of wells drilled and hundreds more permitted annually, the state has grown its natural gas industry in quantifiable ways. In 2018, West Virginia broke its record for annual natural gas production for the tenth consecutive year, with 17 percent higher production numbers than the year previous. Operators are not producing small amounts of gas, either, with 1.8 trillion cubic feet extracted in 2018. For perspective, Anne Blankenship, executive director of the West Virginia Oil & Natural Gas Association, explains that with the current production levels, natural gas would be able to power every home in the state in just one day’s work.

The increase in industry presence has other corollaries as well, such as decreased unemployment, increased income, and a substantial revenue stream heading for Charleston. In 2017 alone, unemployment fell by 1.3 percent while incomes rose by 2.75 percent. While other factors do come into play, these changes are largely driven by the increase in shale gas development. A key part of the rise in natural gas jobs comes from midstream development. From the first quarter of 2017 to the first quarter of 2018, West Virginia saw a 434 percent increase in midstream jobs. In the state with the fourth-highest unemployment rate as of 2018, these jobs are a welcomed development.

The state has also experienced a considerable amount of incoming revenue from the industry. West Virginia uses a severance tax, the same type proposed by Gov. Tom Wolf in Pennsylvania, to collect revenues from the industry to be used for public services. Since the beginning of the “shale boom” in 2008, the state has collected more than $1 billion in severance fees. From 2015 to 2018, $550 million in severance fees were collected, corresponding with the record-setting production numbers.

The Trump administration and U.S. Department of Energy have supported West Virginia’s development of the industry, and hope to do more to continue to build out the gas infrastructure to include gas liquids and end-product manufacturing in the Appalachian basin, further driving the area’s future.  

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