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Roundtable focuses on impact of oil, gas industry

April 19, 2012
By LINDA HARRIS - Business editor ( , The Herald-Star

BETHANY - The executive director of the Wheeling-based Regional Economic Development partnership says revenue-hungry border communities eventually may have to get creative to capture investment opportunities associated with the oil and gas industry.

Speaking at a roundtable discussion of the industry's impact on the region's business and economic development potential, R.E.D.'s Don Rigby said it's hard to find developable properties in the Tri-State Area big enough to house projects of the magnitude of, say, Shell Oil's planned multi-billion dollar ethane cracker. Shell's preferred site is minutes from the Northern Panhandle on an already developed 300-acre property in Monaca, Pa., with both river and rail access.

Hancock County had been in the running for the project, but fell short when the project's footprint grew beyond the original 250 acres Shell had asked for, encroaching on Mountaineer Casino, Racetrack and Resort's property.

Going forward, Rigby said development efforts at some point very likely will have to cross county and state lines if they are to be able to put together deals big enough to entice big-bucks projects like Shell's cracker.

"I think we're going to have to look at ways of sharing taxes, ways of sharing property across state lines," Rigby said. "We're going to have to find ways to creatively make land."

But while the Northern Panhandle couldn't land Shell's cracker, Rigby said it's seeing plenty of other gas-related development, including cryogenic plants where the natural gas is cooled to sub-zero temperatures to condense the natural gas liquids and fractionation plants that finish processing the liquid hydrocarbon into high purity propane, butane and natural gasoline.

Rigby was one of six panelists taking part in the roundtable discussion.

Also on hand were Mindy Walls, senior director of corporate development for Chesapeake Energy; Michael Koon, vice president of Workforce Development and West Virginia Northern Community College; Joe Eddy, chairman of the West Virginia Manufacturer's Association and Eagle Manufacturing's president and CEO; Pat Ford, director of the Business Development Corp. of the Northern Panhandle; and Ken Zapinski Sr., vice president of Energy & Infrastructure, Allegheny Conference on Community Development.

Wall said a regional perspective is key.

"It's very important to look at the regional nature of the opportunity," she said, pointing out that Monaca "isn't that far away and the Utica shale isn't that far away."

Chesapeake's presence in the Northern Panhandle is hard to overlook: Walls said the company paid almost $46 million in taxes in West Virginia last year, along with nearly $5.7 million in sales and severance tax payments to Marshall County last year as well. They've also paid out more than $206 million in bonus payments since they began operating in Hancock, Brooke, Ohio and Marshall counties, she said, and in 2011 paid out almost $12 million in royalties in Marshall County alone.

Walls said the company also spent $61 million on 150 miles of road in West Virginia and Southwest Pennsylvania in 2011, and expects that number to hit $95 million this year.

And in terms of corporate philanthropy, she said Chesapeake's pumped about $300,000 into the Northern Panhandle, about $42,000 of that in Brooke County during the past four months.

With natural gas prices plummeting, the drilling industry has shifted its attention and drilling rigs to the so-called wet gas areas in the Utica shale. Consequently, activity in liquids-rich shale areas like Jefferson, Harrison and Carroll counties has picked up significantly. She said those falling natural gas prices "are a real threat to the industry" since they reduce the industry's profit margins.

"It's important when you talk about shale development that you look at the region," she said.

But Walls, in response to questions, also said refueling stations for CNG-fueled vehicles should be showing up "pretty quickly."

"It's really going to become a reality, she said.

Eddy, who earlier in his career was a completion engineer and designed frac jobs and was involved in completion of more than 1,000 wells, said the Mountain State also can't afford to ignore coal's role in future opportunities.

"We can't turn our backs on coal, it's going to be a great supporting resource for anything that's to come," he said.

Koon pointed out that work force development has to be a priority, adding that there's "a lot of opportunity and a lot of challenges" associated with it.

"One of the big challenges is to get people into (training) programs," he added. "A lot of people don't see it as a glamorous job, but these are well-paying jobs that will be here a long time."

Koon said there's a misconception that the jobs will evaporate just as quickly as they opened up. "That's not true," he said. "This industry is going to be here, at least for our lifetime."

Ford said they've already been able to grow the local economy with nonshale-related business development, retention and expansion achievements, but going forward a priority has to be building relationships with the oil and gas industry and the Panhandle communities to foster a "quick turnaround" of information-sharing and opportunities.

Zapinski, meanwhile, said all was not lost when Shell announced its preferred site was in Western Pennsylvania, not Northern West Virginia.

"You're going to get the benefits of the cracker without getting the problems," he said. "Don't see it as a weakness, see it as an opportunity. You're close enough to take advantage of it from an economic standpoint."

The discussion, organized by the Brooke County Economic Development Authority, was held in Bethany College's Mountainside/Gresham Leadership Center. Co-sponsoring the event were Main Street Bank, the town of Bethany, the city of Weirton and the BDC.

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