U.S. report touts Appalachia's coal, gas future despite concerns

WASHINGTON (Reuters) - A Trump administration report released on Tuesday touted a strong future for petrochemicals and coal in the U.S. region of Appalachia, despite concerns that supply gluts, waning demand and potential environmental regulation could limit growth in the industries.

FILE PHOTO: U.S. President Donald Trump tours the Shell Pennsylvania Petrochemicals Complex with Vice President of Shell Chemical Appalachia Hilary Mercer, Shell Oil Company President Gretchen Watkins, U.S. Secretary of Energy Rick Perry and others in Monaca, Pennsylvania, U.S. August 13, 2019. REUTERS/Jonathan Ernst

“There are tremendous opportunities on the horizon for Appalachia because of the shale gas revolution and the region’s abundant coal reserves,” Mark Menezes, the U.S. under secretary of energy, told reporters in a call about the report called “The Appalachian Energy and Petrochemical Renaissance.”

The administration of President Donald Trump has pursued a policy of boosting fossil fuel production while slashing environmental regulations. But if Democratic candidate Joe Biden wins the election in November, the fossil fuel industry will likely see new regulations.

The Trump administration has also promoted development of a petrochemical hub in Appalachia, a region including West Virginia and parts of Kentucky, Ohio and Pennsylvania, to complement Houston’s energy complex.

Trump said last year at a Royal Dutch Shell plastics project in Pennsylvania, a state he won by less than 1 percentage point in 2016, that his administration was “clearing the way for other massive ... investments” in the region.

But the petrochemical business in the region has been rocky.

Thailand’s PTT and South Korean partner Daelim this month indefinitely delayed an investment decision on a $5.7 billion plastics plant project in Ohio.

Meanwhile, U.S. coal consumption last year fell 15% to the lowest level since 1964.

This month a group of academics and former policy makers warned the region’s governors that an oversupply of plastics plants means that the region is unlikely to see a sustained boom in petrochemical jobs.

A Department of Energy official said on condition of anonymity that energy projects will continue to grow in Appalachia because of its abundance of natural resources and proximity to markets in the U.S. East Coast and Midwest.

The 63-page report only briefly mentions renewable energy saying it has a small but growing role in the region and that natural gas plants are a buffer for intermittent wind and solar electricity.

Reporting by Timothy Gardner; Editing by Aurora Ellis