The Future of Natural Gas in West Virginia
John Deskins, Ph.D. May 2015 Bureau of Business & Economic Research College of Business & Economics West Virginia University www.be.wvu.edu/bber Copyright ©2015 by WVU Research Corporation
Bureau of Business and Economic Research
Natural Gas and the Broader West Virginia Economy
Bureau of Business and Economic Research
A Tale of Two Energy Industries 170
Coal Production (Millions of Short Tons, Annualized)
160 150
Natural Gas Production (Billions of Cubic Feet)
Natural Gas
450 400 350
Coal 300
140
250 130 200 120
150
110
100
100
50
90
0
Source: US Energy Information Administration; WVU BBER Econometric Model
Bureau of Business and Economic Research
Average Natural Gas Price 11
2013 dollars per thousand cubic feet
Projection
9
7
5
Source: US EIA Notes: Projection numbers represent the US EIA projection under the reference case.
WV Oil & Gas Active Well Counts 30
Thousands of Wells
28 26 24 22 20 18 16 14 12 10
Source: WV Department of Environmental Protection
Bureau of Business and Economic Research
West Virginia Has Generally Outperformed in GDP Growth in Recent Years… 6
% change, annual
West Virginia U.S.
5 4 3 2 1 0 -1 -2 -3 -4
Source: US Bureau of Economic Analysis
Bureau of Business and Economic Research
Real GDP Growth 112
Index, 2007=100
110
West Virginia
108
106
104
102
US
100
98
96
Source: Bureau of Economic Analysis
Bureau of Business and Economic Research
Real GDP Growth 112
Index, 2007=100
110
West Virginia
108
106
104
West Virginia excluding extraction
102
US
100
98
96
Source: Bureau of Economic Analysis
Bureau of Business and Economic Research
Oil & Gas and Coal Employment 40
Employment, Thousands
35 30
Oil & Gas 25 20 15
Coal 10 5 0
Sources: US Bureau of Labor Statistics; WVU BBER Econometric Model.
Bureau of Business and Economic Research
Total Employment 720
West Virginia, Thousands
United States, Millions
West Virginia
142
140
710 138 700
136
U.S. 690
134
132 680 130
670
128
Source: US Bureau of Labor Statistics *Shaded regions indicate recessions
Bureau of Business and Economic Research
Per Capita Income Growth Has Outpaced the National Average… Index, 1998=100
190
West Virginia
180 170 160 150
U.S.
140 130 120 110 100 90 Source: Bureau of Economic Analysis
Bureau of Business and Economic Research
…Putting Relative Income Level at Its Highest Levels in Decades 85%
Percent of US
80%
75%
70%
65%
60% Source: Bureau of Economic Analysis
Bureau of Business and Economic Research
Regional Variation in Natural Gas Production Within West Virginia
Bureau of Business and Economic Research
Natural Gas Production by County, 2013
Natural Gas Production Growth, 2011-2013
Source: WV Department of Environmental Protection
Mercer
Braxton
Fayette
Clay
Preston
Calhoun
Putnam
Roane
Wayne
Jackson
Gilmer
Raleigh
Boone
Monongalia
Brooke
Lincoln
Barbour
Lewis
Wyoming
Kanawha
Logan
Mingo
McDowell
Upshur
Taylor
Tyler
Ohio
Marion
Ritchie
Marshall
Doddridge
Wetzel
Harrison
Millions
Natural Gas Production by County, > 1 bcf, 2013
180 Natural Gas Production (bcf)
160
140
120
100
80
60
40
20
0
Top 10 Gas Producing Counties, 2013
Employment Growth 108
Index, 2001=100
Top 10 Gas Producers
106
104
102
Rest of WV
100
98
96
Source: Bureau of Labor Statistics
Bureau of Business and Economic Research
Forecast Annual Employment Growth, 2014-2019
Hancock
Brooke
Ohio
Marshall
Morgan Berkeley Monongalia
Wetzel
Preston
Marion
Tyler
Jefferson Mineral
Hampshire
Taylor
Pleasants
Harrison Doddridge
Tucker
Barbour
Grant Hardy
Ritchie
Wood
Lewis Wirt
Gilmer
Upshur
Randolph
Calhoun Jackson
Braxton
Roane
Mason
Pendleton
Webster Clay
Putnam
Pocahontas
Cabell
Wayne
Nicholas
Kanawha
Lincoln
Greenbrier
Fayette Boone
2014-19 Average Annual Employment Growth < 0%
Mingo
Raleigh
Logan
Summers Wyoming Mercer
Source: WVU BBER County Econometric Model
0% - < 0.8% Monroe
0.8% - < 1.2% ≥ 1.2%
McDowell
Bureau of Business and Economic Research
Natural Gas and West Virginia’s Fiscal Stability
Bureau of Business and Economic Research
WV Severance Tax Revenue by Source 700
Millions of 2014 dollars
Other 600
Natural Gas Coal
500
400
300
200
100
0 2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: US Federation of Tax Administrators
Bureau of Business and Economic Research
Human Capital in West Virginia: Education and Health
Bureau of Business and Economic Research
75
60
Source: US Bureau of Labor Statistics
West Virginia Mississippi Alabama Arkansas New Mexico South Carolina Kentucky Tennessee Arizona Florida Michigan North Carolina Oklahoma New York Louisiana Delaware Oregon Hawaii Georgia California Pennsylvania Ohio US Washington Nevada Idaho Indiana Montana New Jersey Maine Missouri Rhode Island Illinois Texas Massachusetts Connecticut Virginia Maryland Vermont Alaska Colorado Utah Wyoming Wisconsin Kansas New Hampshire South Dakota Minnesota Iowa Nebraska North Dakota
Labor Force Participation Rate, 2014
Percent of Civilian Non-institutionalized Population
70
65
63
53
55
50
45
40
Bureau of Business and Economic Research
Share of People 25 Years or Older with a Bachelor’s Degree or Higher, 2013
AK
HI
Source: 2013 American Community Survey, US Census Bureau
Share of People 25 to 34 Years Old with a Bachelor’s Degree or Higher, 2013
AK
HI
Source: 2013 American Community Survey, US Census Bureau
All-Cause Mortality Rates, 2011 WA
ME
MT
ND MN VT
OR ID WI
SD
NY
MI
NH
MA CT
WY
IA
RH
NJ
PA
NE OH
NV UT
IL
MD DC
IN WV
CO
CA
DE
KS
VA
MO KY
NC TN OK AZ
AR
NM
SC
MS
TX
AK
AL
GA
Age-Adjusted Deaths per 100,000 Population
LA
821.9 - 956.1 HI
FL
756.0 - 821.8 722.8 - 755.9 690.7 - 722.7 584.9 - 690.6
Source: US Centers for Disease Control
Bureau of Business and Economic Research
Share of Population 18 to 64 Years Old with Disability, 2013 20
18.1
15
10.5
5
WV KY AR MS AL ME OK TN NM LA MI MO SC OR IN MT OH NC VT SD ID NV WA GA PA DE US AZ FL KS NH WY AK TX WI RI IO VA CO MA IL NE DC NY MD MN UT ND CA CT NJ HI
10
Source: 2013 American Community Survey, 2013
After A Brief Rebound, WV Sees Population Shrink during Past 2 Years 330
United States, Millions of Residents
310
West Virginia, Millions of Residents
U.S.
290
2.10
2.05
2.00
270 1.95 250 1.90 230
West Virginia 1.85
210 190
1.80
170
1.75
150
1.70
Source: US Census Bureau
Bureau of Business and Economic Research
With More Losses on the Way as Population Continues to Age in Place 3.0%
Average annual growth, %
2003-2013 2014-2019
2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% 0 to 17 yrs
18 to 44 yrs
45 to 64 yrs
65 and older
Source: US Census Bureau; WVU BBER Econometric Model
Bureau of Business and Economic Research
WV Oil & Gas Extraction Workers From Outside the State 20
Percent of all WV O&G workers
18.3 18 16.3 16 14 12 9.7
10
8.6
8 6 4 2
3.4
3.3
2008
2009
1.1 0.0
0 2006
2007
2010
2011
2012
2013
Source: US Census Bureau, ACS PUMS data
Bureau of Business and Economic Research
Where Does West Virginia’s Natural Gas Go?
Bureau of Business and Economic Research
Natural Gas Consumption in West Virginia Billion cubic feet 120
100
Electric Power 80
Industrial 60
40
Commercial
20
Residential 0
Source: US Energy Information Administration
Segments of WV’s Manufacturing Sector Expected to Perform Well Wood Products & Furniture Plastics & Rubber Transportation Equipment Food & Beverage Manufacturing Other Durables Chemicals Nonmetallic Mineral Products Fabricated Metals Primary Metals Other Nondurables -7%
-6%
-5%
Source: Workforce WV; WVU BBER Econometric Forecast Model
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Average annual growth, %
Bureau of Business and Economic Research
Coal versus Natural Gas in Electric Power Generation
Bureau of Business and Economic Research
12
$ per MMBtu
Average U.S. Cost of Fossil Fuels for Power Generation
10
8
6
Natural Gas
4
2
Coal
0
Source: US Energy Information Administration
Bureau of Business and Economic Research
Share of US Electric Power Generation by Fuel Type 60%
Share of generation
Coal 50%
40%
30%
20%
Natural Gas 10%
Source: US EIA Notes: Projection numbers represent the US EIA projection under the reference case.
