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
Natural Gas and the Broader West Virginia Economy
170 Coal Production (Millions of Short Tons, Annualized) A Tale of Two Energy Industries Natural Gas Production (Billions of Cubic Feet) 450 160 150 140 130 120 110 Coal Natural Gas 400 350 300 250 200 150 100 100 50 90 0 Source: US Energy Information Administration; WVU BBER Econometric Model
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
West Virginia Has Generally Outperformed in GDP Growth in Recent Years 6 % change, annual 5 West Virginia U.S. 4 3 2 1 0-1 -2-3 -4 Source: US Bureau of Economic Analysis
Real GDP Growth 112 Index, 2007=100 110 West Virginia 108 106 104 102 100 US 98 96 Source: Bureau of Economic Analysis
Real GDP Growth 112 Index, 2007=100 110 West Virginia 108 106 104 102 West Virginia excluding extraction 100 US 98 96 Source: Bureau of Economic Analysis
Oil & Gas and Coal Employment 40 Employment, Thousands 35 30 25 Oil & Gas 20 15 Coal 10 5 0 Sources: US Bureau of Labor Statistics; WVU BBER Econometric Model.
Total Employment 720 West Virginia, Thousands United States, Millions 142 West Virginia 140 710 138 700 136 690 U.S. 134 132 680 130 670 128 Source: US Bureau of Labor Statistics *Shaded regions indicate recessions
Per Capita Income Growth Has Outpaced the National Average 190 Index, 1998=100 180 West Virginia 170 160 150 140 U.S. 130 120 110 100 90 Source: Bureau of Economic Analysis
Putting Relative Income Level at Its Highest Levels in Decades 85% Percent of US 80% 75% 70% 65% 60% Source: Bureau of Economic Analysis
Regional Variation in Natural Gas Production Within West Virginia
Natural Gas Production by County, 2013
Natural Gas Production Growth, 2011-2013
Natural Gas Production by County, > 1 bcf, 2013 Millions 180 160 Natural Gas Production (bcf) 140 120 100 80 60 40 20 0 Harrison Wetzel Doddridge Marshall Ritchie Marion Ohio Tyler Taylor Upshur McDowell Mingo Logan Kanawha Wyoming Lewis Barbour Lincoln Brooke Monongalia Boone Raleigh Gilmer Jackson Wayne Roane Putnam Calhoun Preston Clay Fayette Braxton Mercer Source: WV Department of Environmental Protection
Top 10 Gas Producing Counties, 2013
Employment Growth 108 Index, 2001=100 106 Top 10 Gas Producers 104 102 Rest of WV 100 98 96 Source: Bureau of Labor Statistics
Hancock Brooke Forecast Annual Employment Growth, 2014-2019 Ohio Marshall Morgan Berkeley Monongalia Wetzel Marion Preston Mineral Hampshire Jefferson Tyler Taylor Wood Pleasants Ritchie Doddridge Harrison Barbour Tucker Grant Hardy Wirt Gilmer Calhoun Lewis Upshur Randolph Pendleton Mason Jackson Roane Braxton Webster Cabell Putnam Kanawha Clay Nicholas Pocahontas Wayne Lincoln Boone Fayette Greenbrier 2014-19 Average Annual Employment Growth Mingo Logan Wyoming Raleigh Summers Mercer Monroe < 0% 0% - < 0.8% 0.8% - < 1.2% 1.2% Source: WVU BBER County Econometric Model McDowell
Natural Gas and West Virginia s Fiscal Stability
WV Severance Tax Revenue by Source 700 600 Millions of 2014 dollars Other 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
Human Capital in West Virginia: Education and Health
Labor Force Participation Rate, 2014 75 Percent of Civilian Non-institutionalized Population 70 65 63 60 53 55 50 45 40 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 Source: US Bureau of Labor Statistics
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 Source: 2013 American Community Survey, US Census Bureau HI
All-Cause Mortality Rates, 2011 WA MT ND ME OR ID MN VT NH WY SD WI MI NY MA RH CT NE IA PA NJ NV UT IL IN OH MD DC DE CA CO WV KS MO KY VA AZ NM OK AR TN SC NC MS AL GA AK HI TX LA FL Age-Adjusted Deaths per 100,000 Population 821.9-956.1 756.0-821.8 722.8-755.9 690.7-722.7 584.9-690.6 Source: US Centers for Disease Control
Share of Population 18 to 64 Years Old with Disability, 2013 20 18.1 15 10.5 10 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 Source: 2013 American Community Survey, 2013
After A Brief Rebound, WV Sees Population Shrink during Past 2 Years 330 United States, Millions of Residents West Virginia, Millions of Residents 2.10 310 U.S. 2.05 290 2.00 270 1.95 250 1.90 230 210 West Virginia 1.85 190 1.80 170 1.75 150 1.70 Source: US Census Bureau
With More Losses on the Way as Population Continues to Age in Place 3.0% Average annual growth, % 2.5% 2003-2013 2014-2019 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
WV Oil & Gas Extraction Workers From Outside the State 20 18 16 Percent of all WV O&G workers 18.3 16.3 14 12 10 8 9.7 8.6 6 4 3.4 3.3 2 0 1.1 0.0 2006 2007 2008 2009 2010 2011 2012 2013 Source: US Census Bureau, ACS PUMS data
Where Does West Virginia s Natural Gas Go?
Natural Gas Consumption in West Virginia 120 Billion cubic feet 100 80 Industrial Electric Power 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% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% Source: Workforce WV; WVU BBER Econometric Forecast Model Average annual growth, %
Coal versus Natural Gas in Electric Power Generation
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
Share of US Electric Power Generation by Fuel Type 60% Share of generation 50% Coal 40% 30% 20% Natural Gas 10% Source: US EIA Notes: Projection numbers represent the US EIA projection under the reference case.