Letter from the Governor
EnErGy stands as onE of the                   The state’s Alternative and Renewable
traditional strengths of West Virginia’s      Portfolio standard requires that 25
economy. The state has long been —            percent of the state’s energy production
and remains today — one of America’s          to be alternative or renewable sources by
leading electricity producers.                2025.

Two-thirds of the electricity West Virginia   West Virginia advances small- and large-
generates is exported to the rest of the      scale renewable energy systems. Virtually
country. We rank third in the country         all hydropower resources are either
in net interstate sales of electricity and    being used or under development, and
remain a leader in low-cost electricity.      the state is home to one of the largest
Our industrial rates are among the            wind farms in the eastern United States.
lowest in the east.
                                              We have made substantial investment
West Virginia is taking a lead in meeting     in new technologies. More investment is
the country’s energy needs through            required to continue this progress. I feel
traditional resources and advanced            confident that working with the West
technology. Today we are capitalizing         Virginia Legislature we will continue to
on the opportunities presented by our         move forward in energy production and
Marcellus Shale deposits, which can           resource efficiency.
be the cornerstone to new industrial
development.                                  Sincerely,

Our energy blueprint calls for
the environmentally responsible
development of all forms of feasible
energy technologies, from clean coal to       Earl Ray Tomblin
coal liquefaction, natural gas, biomass,      Governor
hydrogen, hydro, wind and solar power.
Letter from the director
WEst VirGinia is bLEssEd with many           While coal is and will continue to
natural resources that provide energy for    be the principal energy resource for
not only the almost 2 million residents of   making electricity in West Virginia, wind
our state, but millions more around the      energy is also becoming a player. West
country and the world.                       Virginia is home to five commercial
                                             wind generators, and more are in
West Virginia leads the nation in            development. The wind power in West
underground coal production, with 87         Virginia is some of the strongest in the
percent of the more than 144 million         east.
tons in total 2009 production produced
by this method. Coal is mined in 28          West Virginia has been recognized as
counties, and citizens in the remaining      a Champion of Energy when it comes
27 counties benefit from coal severance      to energy efficiency, and remains a
taxes. Nearly half of the nation’s           national leader in Industries of the Future
electricity is generated from coal. In       programs. This partnership between
West Virginia, 96% of the generated          the state Division of Energy and West
electricity comes from coal, and around      Virginia University started in 1997.
the country, coal provides the majority of   Since its inception, the program has
electric power in 32 states.                 worked closely with energy-dependent
                                             companies including those that produce
West Virginia’s oil and gas industry has     aluminum, glass and steel. The goal
shaped the way we live today and will        is to assess the energy use of these
continue to significantly impact our         companies and find ways to use it more
future. We are one of several states that    efficiently, therefore helping companies
are home to the Marcellus Shale, which       compete in a global economy.
some geologists estimate is enough
natural gas to supply the entire East        West Virginia’s solar potential is yet
Coast for more than 50 years. The goal       untapped, but many homeowners are
of the state’s Marcellus Shale task force    debunking the myth that solar doesn’t
is to research and develop economic          work in West Virginia.
opportunities related to the production
of the natural gas and value-added           The only thing constant in life is change,
products.                                    and there’s no exception in the energy
                                             industry. We look forward to West
West Virginia is taking a bold and           Virginia’s industry growing and thriving,
progressive approach toward                  and maintaining our position as an
hydropower to help reduce our                energy leader in the years ahead.
dependence on foreign energy supplies.
Glen Ferris, Hawks Nest and New              Sincerely,
Martinsville are all examples of plants
producing thousands of megawatt hours
per year of renewable power for the West
Virginia electricity market.

                                             Jeff Herholdt
                                             Director, West Virginia Division of Energy

Energy Blueprint                                                                           i
     This report was prepared by:

     Supporting documentation provided by the following:

     Data sources:

       • Consumption: United States Department of Energy, Energy Information

       • Electricity Prices and Production: United States Department of Energy, Energy
         Information Administration

       • Coal Production: West Virginia Office of Miners’ Health Safety and Training

       • Natural Gas Production: West Virginia Department of Environmental Protection

       • Marcellus Production: West Virginia Geological and Economic Survey

       • All Other: United States Department of Energy, Energy Information

     The information was compiled and presented by:
     West Virginia Department of Commerce, Communications and Marketing

ii                                                            West Virginia Division of Energy
table of Contents
introduction ........................................................................................................................................... 2

Energy Use by type of Fuel.............................................................................................................. 3

WV total End-Use Energy Consumption ................................................................................... 5

WV Energy Flow .................................................................................................................................... 6

Coal ............................................................................................................................................................. 8
            WV Coal Production ............................................................................................................10
            WV Coal Consumption .......................................................................................................11
            Domestic Distribution of WV Coal .................................................................................12
            Power Plant Consumption of WV Coal .........................................................................13

Electricity ...............................................................................................................................................14
         WV Electricity Production .................................................................................................15
         Average Retail Price of Electricity by state..................................................................16
         Electricity Exporters by state ...........................................................................................17
         WV Utility Power Plants .....................................................................................................18
         Net Electricity Trade ............................................................................................................20

oil & Gas .................................................................................................................................................22
        WV Natural Gas Production ............................................................................................24
        WV Natural Gas Consumption ........................................................................................25
        Natural Gas Working Capacity ........................................................................................26
        Natural Gas Storage Capacity ..........................................................................................27
        Regional Natural Gas Transportation Corridor ..........................................................28
        West Virginia is a Natural Gas Exporter ........................................................................29
        Appalachian Shale Gas Development ..........................................................................30
        WV Crude Oil Production ..................................................................................................32
        WV Petroleum Consumption...........................................................................................33

renewables ...........................................................................................................................................34
      WV Renewable Electricity Production..........................................................................35
      WV Wood Consumption ....................................................................................................36

West Virginia’s Leadership in Energy development .........................................................37

Energy Blueprint                                                                                                                                                       1
                     WEst VirGinia is a nationaL EnErGy LEadEr. While we supply eastern
                     energy markets, we demonstrate to the nation our commitment to using domestic
                     and secure energy resources to fuel our factories and heat and cool our homes. West
                     Virginia’s coal and electric generation capacity helped build this nation and power it
                     through two world wars. Coal continues to be the leading energy resource in West
                     Virginia. Coal mining provided 20,476 direct West Virginia jobs in 2010 at an average
                     wage above $79,000, generating more than $1.6 billion in wages.
    West Virginia
         is the      West Virginia is finding new and better ways to use its coal. There is a balance
    third-leading    between coal and the environment and West Virginia works hard to find that balance.
                     Our 2009 Alternative and Renewable Energy Portfolio Standard requires 25 percent
      electricity    of the energy consumed in our state to come from an alternative or renewable
       exporter      energy source by the year 2025.
    in the nation.
                     Other technologies being developed include recovery and water treatment
                     technologies associated with new natural gas resources from Marcellus Shale
                     formation. A hydrogen fueling station recently concluded its two-year operation at
                     Yeager Airport in Charleston as established by the U.S. Department of Energy. The
                     purpose of the project was to demonstrate that coal-based electricity could produce
                     hydrogen as a competitive transportation fuel. More than 1,000 megawatts of wind
                     power are in service or in development. West Virginia is home to one of the largest
                     wind farms in the East.

                     West Virginia is committed to industrial energy efficiency. Our Industries of the Future
                     — WV program was recognized as a Champion of Energy Efficiency by the American
                     Council for an Energy Efficient Economy (ACEEE).

                     Energy production, especially when it is diversified across the energy spectrum, can
                     boost a state’s economic health. Of the eight states without budget shortfalls in fiscal
                     year 2012, according to the Center on Budget and Policy Priorities, six are electricity
                     exporters. As one of the states in the black, West Virginia is also the third-leading
                     electricity exporter in the nation, a truly powerful place to be.

2                                                                               West Virginia Division of Energy
                                             Marcellus Shale
                                             in West Virginia

                                                                                           West Virginia’s
                                                                                            natural gas
Energy Use by type of Fuel                                                                    accounts
                                                                                              for about
                                                                                              6 percent
Fossil energy                                                                             of the U.S. total.
West Virginia is working on such priority projects as emission-compliant coal
plants, more productive oil and gas fields, and the continuing readiness of federal
emergency oil stockpiles. A key natural gas development in the state is the
6,000-foot-deep Marcellus Shale rock formation, believed to contain more than 50
trillion cubic-feet of recoverable natural gas. West Virginia’s underground natural
gas storage capacity accounts for about 6 percent of the U.S. total. In addition to
West Virginia’s natural gas production, state infrastructure handles three times that
amount from other sources.

The state keeps you warm during the winter months, storing natural gas until it is
shipped and supplying the Northeast when demand peaks for natural gas.

Marcellus shale is a fine-grained sedimentary rock that is part of a rock unit from the
Devonian age. It lies beneath much of West Virginia, Pennsylvania and New York, as
well as portions of Ohio, Kentucky, Tennessee and Maryland. Marcellus is present
below the surface throughout much of West Virginia, except in the extreme eastern
or western areas. It varies in thickness across the state and occurs at varying depths,

Energy Blueprint                                                                                           3
    and crops out at the surface in eastern West Virginia. The
    Marcellus Shale has attracted a great deal of attention in the
    last few years as oil and gas operators explore for new sources
    of natural gas in locations close to the large markets in the
    northeastern United States.

    West Virginia, with substantial quality coal reserves, abundant
    water, an established energy infrastructure and trained work
    force, is in a position to capitalize economically on advanced
    coal technology such as carbon capture and storage (CCS).

    Coal, via proven technologies, can also be used in liquid and
    gas form. West Virginia coal-to-liquids facilities could provide
    up to 13 million barrels of fuel annually. Coal gasification can
    supply pipeline-quality gas for chemical feedstock purposes or
    transportation fuel.

    Renewable energy
    The W.Va. Division of Energy advances the use of West Virginia’s
    wind and other renewable resources. The division supports
    technical assistance to commercial power developers,
    technology projects involving liquid fuels developed from
    biomass and provides information to the general public on
    renewable energy applications.

    Alternative fuels
    The clean-burning characteristics of alternate fuels contribute
    to improving the nation’s air quality, and, thanks to the state’s
    energy resources, the economic development potential of West

    Clean Cities deploys technologies and practices including idle-
    reduction equipment, electric-drive vehicles, fuel economy
    measures, and renewable and alternative fuels, such as natural
    gas, liquefied petroleum gas (propane), electricity, hydrogen,
    biofuels, and biogas.

4                                       West Virginia Division of Energy
West Virginia End-Use Energy Consumption
By Sector, 2000-2009

Transportation                Residential

                                                                                                                                                      [trillion BTUs]
     23%                         23%



                                                              2000    153.9                113.2               321.3              186.0               774.4


            se                                                2001    152.8                110.0               353.8              183.0               799.6

               Ene        um
 Industrial       rgy Cons                                    2002    156.4                108.4               379.5              182.2               826.5
    38%                      Commercial
                                16%                           2003    157.6                110.4               346.6              169.1               783.7

totaL End-UsE EnErGy consumption                              2004    160.2                109.9               364.4              179.5               814.0
figures for West Virginia are U.S.                            2005    170.7                113.1               346.7              180.9               811.4
Department of Energy estimates.
End use energy consumption is used                            2006    162.6                109.5               343.5              180.0               795.6
to distinguish between energy used
to conduct business and maintain                              2007    169.4                112.4               362.4              179.2               823.4
households within the State versus
larger figures that also include energy                       2008    170.8                113.2               359.4              162.6               806.0
used to produce exported electricity.                         2009    165.2                111.3               274.0              165.1               715.6
End-use energy consumption includes
direct consumption of coal, natural
gas, petroleum products, renewable
sources and electricity, including                            900.0
losses associated with generation and
transmission of electricity to in-state                       800.0
customers. Consumption of these
resources is disaggregated for each                           700.0             transportation
major end-use sector of the economy:
residential, commercial, industrial and                       600.0
transportation. For some sectors and
commodities, consumption figures are                          500.0
                                              trillion BTUs

estimated because actual consumption                                            industrial
data is not available. This applies largely                   400.0
to consumption of petroleum products
in the residential, commercial and                            300.0
industrial sectors and to consumption
of natural gas by the industrial sector.                      200.0             Commercial
Petroleum consumption for these
sectors is based on sales data for the                        100.0
state, which is closely tied to actual use                                      residential
of the commodity. Industrial natural gas                        0.0
consumption is based on both deliveries                            2000                 2002                2004                2006                2008
and actual consumption data.

Energy Blueprint                                                                                                                                                        5
West Virginia Energy Flow
WEst VirGinia EnErGy FLoW describes the production,
delivery and consumption of energy resources in terms of
energy value, expressed in trillion Btus (British Thermal Units),
the common denominator for all types of energy resources. The
energy content by category of fuel is shown on the left side of
the graphic.

The right side shows purchases of production, including electricity,
gas and coal exports and in-state consumption by sector.

West Virginia produced 3,794 Tbtu of energy commodities in
2009, of which 91 percent was the energy value of coal. Natural
gas comprised close to six percent of the total value, with the
remaining three percent from petroleum, natural gas plant
liquids (such as propane, ethane, butane, etc.) and renewable
energy produced from wood, wind and water.

Like most states, West Virginia is a net consumer of petroleum
products and had to import 95 percent of what it consumed
in 2009. Of the imported petroleum, about 63 percent is from
non-US sources based on the US ratio of gross imports to
consumption. A small amount of ethanol is also consumed as a
fuel additive and is included in consumption of renewables.

Of total supply including petroleum imports, West Virginia
consumed about 18 percent in 2009. A majority of the rest was
exported as raw coal to domestic and international markets.
Additional exports were natural gas and electricity, generated
largely from coal.

                  The balance between gross
                production and consumption is
            called net production. When a state
          produces more of a commodity than
    is consumed the remaining production is
    exported, making the state a net exporter of
    that commodity. When a state consumes more
    of a commodity than is produced the remaining
    quantity demanded is imported, making the
    state a net importer of the commodity.

6                                                                      West Virginia Division of Energy
Energy Blueprint   7
8   West Virginia Division of Energy
annUaLLy in WEst VirGinia, the coal mining industry generates approximately
$8.8 billion in industrial output and accounts for $831 million in state and local taxes.
(November 2007)

West Virginia coal is crucial to our nation’s security and reducing our dependence
on foreign oil. It is economically viable, reliable and affordable and can be
environmentally responsible through investment in technology.
                                                                                            West Virginia
                                                                                             is the largest
                                                                                            coal producer
                       Top Coal Producing States [2010]                                        east of the
                        5                                                                      River and
                                                                                             accounts for
                                                                                               more than
                            1                                                                one-tenth of
                                                                         4                  total U.S. coal

Worldwide, compared to all other fossil fuels, coal is the most abundant and is widely
distributed across the continents. The United States accounts for 27.5 percent of
global coal reserves, the largest in the world.

Energy Blueprint                                                                                              9
                   West Virginia Coal Production
                                                                                     Coal Production
                   thE LarGE majority of coal                        year
                                                                                       (in tonnage)
                   production in West Virginia is directly
                   tied to electricity production. In 2009,          2000              169,370,602
                   about 86 percent of coal produced in
                   the state was distributed for electricity         2001              175,052,857
                   production. Historically, coal has
                   provided about 50 percent of electricity          2002              163,896,890
  West Virginia    in the U.S. but that share has declined
    leads the      somewhat as natural gas has become a              2003              145,899,599
 nation in coal    more competitive fuel.
   production                                                        2004              151,683,473
       from        As a storable commodity, coal
                   production trends also reflect changes            2005              159,498,069
  underground      in stockpiles such as the increases
    mines. Its     experienced in 2009 with reduced                  2006              158,835,584
   recoverable     electricity demand. 2010 production was
  coal reserves    the lowest seen since 1993, reflecting            2007              161,237,538
  at producing     lower demand from power plants due
                   to a combination of reduced electricity           2008              165,750,817
  mines are the    demand, larger coal stockpiles and
 second largest    competition from natural gas-fueled               2009              144,017,758
  in the nation.   power producers. Non-market factors
                   such as increased regulatory scrutiny             2010              143,247,932
                   of mine operations have also impacted





                                                               130       Coal Production
                                                                         in million tons
                                                                  2000      2003      2006      2009

10                                                                          West Virginia Division of Energy
                West Virginia Coal Consumption

                LikE most oF thE CoUntry,                                                                                                             Industrial
                demand for coal in West Virginia is                                                                                                      6%
                comprised primarily of coal used for
                power generation. Direct consumption
                of coal by the industrial sector has
                declined steadily for decades. Industrial
                consumption includes coal used for coke                                                                                               Electric Power


                                                                                                           Co             se

                production and coal used to produce                                                          nsu                                           94%
                electricity for manufacturing processes,                                                        mption by
                and is estimated based on deliveries.
                Direct consumption of coal by the
                residential and commercial sectors is

                                                                                                                                                                         totaL [trillion BTUs]
                estimated based on the amount of coal
                distributed to those combined sectors.

                                                                                                                                                       Electric Power


                                                                                               2000          0.6           5.0           81.1         891.2             977.9
                                                                                               2001          0.1           1.1           75.9         789.5             866.6

                                                                                               2002          0.1           0.7           77.0         915.7             993.5
trillion BTUs

                                                                                               2003          0.1           0.9           71.2         906.1             978.3
                              Electric Power
                                                                                               2004          0.1           1.2           70.7         865.0             937.0
                                                                                               2005          0.2           1.8           59.6         898.0             959.6

                                                                                               2006          0.1           0.6           55.9         902.3             958.9
                                                                                               2007          0.2           1.5           65.8         915.8             983.3

                              industrial                                                       2008          0.0*          0.0           63.8         891.9             955.7
                                                                                               2009          0.0*          0.0           47.4         695.5             742.9

                                                                                             * Residential coal consumption is assumed to be 10 percent of
                                                                                             commercial and institutional coal consumption, which was published
                                                                                             by EIA as zero for 2008 and 2009. Thus, residential coal consumption is
                                                                                             published as zero when it is likely to be non-zero but very small.

            Energy Blueprint                                                                                                                                                                     11
domestic distribution of WV Coal

                                            < 500,000 tons
                                            500,000 to 1 million tons
                                            1 million to 5 million tons
                                            > 5 million tons



        * 2010 data is preliminary

12                                             West Virginia Division of Energy
Power Plant Consumption of WV Coal
                          2008 by County

                                                2009 by County

                              2010* by County

                                                    < 100,000 tons
                                                    100,000 to 500,000 tons
                                                    500,000 to 1 million tons
                                                    > 1 million tons

 * 2010 data is preliminary

Energy Blueprint                                                                13

14      West Virginia Division of Energy
West Virginia Electricity Production
ELECtriCity ProdUCtion in West                                                                          Percentage
Virginia is closely tied to both state
                                                                                         mWh            of Electricity
and national demand trends. Due
to a portfolio of power plants with                        year       total mWh        from Coal         Generated
generation capability in excess of in-state               2000        92,865,176       91,202,309          98.2%
demand, West Virginia’s utilities have
historically supplied 60 to 70 percent                    2001        81,836,725       80,214,404          98.0%
of their generation as wholesale power
to several neighboring utilities whose                    2002        94,761,751       92,951,316          98.1%
customers demand more than their
capability. Geographically, West Virginia                 2003        94,711,554       92,468,983          97.6%
is in a unique position to provide power
to large metropolitan areas in the eastern                2004        89,749,562       87,584,598          97.6%
U.S. that must import electricity.
                                                          2005        93,626,285       91,417,003          97.6%
Until 2009, both state and national
consumption of electricity had increased                  2006        93,815,804       91,473,321          97.5%
steadily for several decades. The
recession-induced decline in demand                       2007        93,933,109       91,866,265          97.8%
for electricity affected West Virginia
somewhat disproportionately, as power                     2008        91,123,097       89,113,480          97.8%
generation fell by about 22 percent
compared to a decline in national                         2009        70,782,514       68,079,900          96.2%
demand of just under five percent. This
difference is partly explained by the fact                2010        81,024,000       78,394,000          96.8%
that West Virginia’s demand fell by nearly
12 percent, led by industrial decline. The
difference also is due to coinciding large
unit outages at some of the state’s larger                 100
plants due to ongoing installments of
major emissions control equipment
required to be in place by the end of                          80
                                                Thousand GWh

                                                                                   From Coal
                                                               40                  From Other Sources
                                                                2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Energy Blueprint                                                                                                     15
average retail Price of Electricity
2010 by State [cents/kWh]
Percentage of Power by Coal Generation

              6.7¢                                                            14.8¢
                               7.9¢                                      13.3¢ 14%      12.9¢
                                         7.1¢    8.4¢                     0%             1%
         7.6¢                  62%       82%
         8%                                      52%
                     6.5¢                7.8¢           9.8¢                16.4¢       14.3¢ 19%
                     1%         6.2¢     33%            63%    9.9¢         10%         14.1¢ 0%
                                89%               7.7¢         59%      10.3¢           17.4¢ 8%
              9.7¢                        7.5¢
              20%                        64%      72% 9.1¢ 7.7¢ 9.1¢ 48%                14.1¢ 12%
      13.0¢             81%       9.2¢                   47% 90% 82% 7.5¢               12.0¢ 46%
                                  68%      8.4¢     7.8¢         6.7¢ 97%               12.7¢ 54%
       1%                                  68%      81%          93%                     8.7¢ 35%
                                14.7¢        7.6¢          8.6¢ 53% 8.7¢ 56%
                      39%                    44%    7.3¢               8.5¢
                                71%                 46% 8.6¢ 8.9¢ 8.9¢ 36%
                                         9.3¢            25% 41% 53%
                                         37%                              10.6¢
                                                      23%                 26%

                                                                        6.2¢ – 7.5¢
                                                                        7.6¢ – 8.4¢
                                 9%                                     8.5¢ – 13.0¢
                                                                        13.1¢ – 25.1¢


                     One kWh represents the amount of energy needed by a
                     1000-watt device such as a clothes-iron or a microwave
                     oven to operate for one hour. The average American
                     household uses about 10,000 kWh yearly.

16                                                                           West Virginia Division of Energy
Electricity Exporters
2010 by State [MWh]
Net Interstate Trade of Electricity Ranking

                        24                                                                                      11
                                                                                                          22         19
                                      8            7
                   16                                         40
                             41                                         37    23                           38             42
                                                   31                                                                     25
                                                                                                      1                   21
                                                    18         13
                        26                                                          44                                    46
                                 14                                      4    17                                          35
              51                              34                                             3
                                                    20             29                                 50                  48
                                                                                   32                                     39
                                                                              49                      45
                             5                           12        15
                                          10                                                     9
                                                                         30    2        43
                                                   33              36


                                                                                                      < -50 million MWh
                                                                                                      -50 million to -25 million MWh
                                          28                                                          -25 million to 0 MWh
                                                                                                      0 million 25 million MWh
                                                                                                      25 million to 50 million MWh
                                                              27                                      > 50 million MWh

Energy Blueprint                                                                                                                 17
West Virginia Utility Power Plants
                                     Capacity                                   Primary secondary
     Plant name                        [MW] City               County             Fuel     Fuel
 1 Albright                             283   Albright         Preston            Coal      Oil
 2 Fort Martin Power Station          1,107   Maidsville       Monongalia         Coal          Oil
 3 Grant Town Power Plant              80     Grant Town       Marion             Coal          Gas
 4 Harrison Power Station             1,954   Haywood          Harrison           Coal          Oil
 5 John E Amos                        2,900   St Albans        Putnam             Coal
 6 Kammer                              600    Captina          Marshall           Coal
 7 Kanawha River                       400    Glasgow          Kanawha            Coal
 8 Longview Power LLC                  695    Maidsville       Monongalia         Coal
 9 Mitchell                           1,560   Captina          Marshall           Coal
10 Morgantown Energy Facility          50     Morgantown       Monongalia         Coal
11 Mountaineer                        1,310   New Haven        Mason              Coal
12 Mt Storm                           1,571   Mount Storm      Grant              Coal        Jet fuel
13 Philip Sporn                       1,020   Graham Station   Mason              Coal
14 Pleasants Power Station            1,278   Willow Island    Pleasants          Coal          Oil
15 Rivesville                          125    Rivesville       Marion             Coal          Oil
16 Willow Island                       235    Willow Island    Pleasants          Coal          Gas
17 Big Sandy Peaker Plant LLC          300    Kenova           Wayne              Gas
18 Ceredo Generating Station           450    Huntington       Wayne              Gas
19 Pleasants Energy LLC                292    St Mary’s        Pleasants          Gas           Oil
20 Belleville                          42     Belleville       Wood              Hydro
21 Dam 4                                2     Shepherdstown    Jefferson         Hydro
22 Dam 5                                1     Hedgesville      Berkeley          Hydro
23 Gauley River Power Partners         80     Summersville     Nicholas          Hydro
24 London                               7     Handley          Kanawha           Hydro
25 Marmet                               6     Marmet           Kanawha           Hydro
26 Millville                            2     Millville        Jefferson         Hydro
27 New Martinsville Hannibal Hydro     14     New Martinsville Wetzel            Hydro
28 Winfield                             9     Winfield         Putnam            Hydro
29 Beech Ridge Energy LLC              100    Rupert           Greenbrier        Wind
30 Laurel Mountain                     98     Belington        Randolph          Wind
31 Mountaineer Wind Energy Center      66     Thomas           Tucker            Wind
32 NedPower Mount Storm                264    Mount Storm      Grant             Wind
33 Pinnacle                            55      Keyser          Mineral           Wind

18                                                                        West Virginia Division of Energy
     West Virginia Utility Power Plants – map

                                                     9        6
                                                                               2         8
                                                         27                         10                                    22
                                                                                              1                                21
                                                                       4                                33
                                          14    19
                                               16                                                                              26
                                                                                             31    12

                  11                                                                         30

17                      5
      18                                  24
                                 25                      23


                                                                                                  Natural gas-powered




                                 A typical 500 megawatt coal power plant produces 3.5 billion kWh per
                                 year. That is enough energy for 4 million of our light bulbs to operate
                                 year round. To produce this amount of electrical energy, the plant burns
                                 1.43 million tons of coal.

     Energy Blueprint                                                                                                     19
net Electricity trade
High Voltage Transmission Lines in WV
oUr nEiGhbors dEPEnd on us for electricity. West Virginia is the third-leading electric exporter, putting
energy into the grid for use by other states.

                                                MWh                           MD
            OH                                                             MWh
        KY                                                  MWh

20                                                                            West Virginia Division of Energy
Energy Blueprint   21
22     West Virginia Division of Energy
amonG WEst VirGinia’s rEsoUrCEs are abundant natural gas and oil, with gas
being more common than oil. They were formed in a geologic process as organic-
rich sedimentary rock was subjected to heat and pressure, transforming the organic
material into hydrocarbons. Gas and oil are formed in a source bed and may move
upward through the overlying rock until they reach the surface or, more commonly,
accumulate in a reservoir under the ground. Reservoirs consist of two types:
conventional and unconventional. A conventional reservoir consists of permeable
rock topped by an impermeable seal. If migrating natural gas or oil encounters a seal,
it will fill the underlying reservoir, resulting in an accumulation. An unconventional
reservoir is one in which the source rock also acts as the reservoir. Accumulated
gas and/or oil from these “self-sourced” reservoirs is released via natural or induced
                                                                                           Half of the
In West Virginia, the most common source beds are the organic-rich Devonian shales.       natural gas
They are located throughout the subsurface of the western part of the state, and           consumed
they outcrop in parts of the Eastern Panhandle. Natural gas is much more commonly           today is
encountered than oil, and is found throughout the state west of the Allegheny Front.     produced from
The most common conventional reservoirs are the thin sandstones of the Upper
                                                                                          wells drilled
Devonian and Lower Mississippian geologic periods. Other conventional reservoirs
include the Lower Devonian Oriskany Sandstone and the Mississippian Greenbrier           within the last
Limestone. Unconventional reservoirs include the Devonian shales, most notably             3.5 years.
the Marcellus Shale, and the older, Ordovician Utica Shale. Coalbed methane is
also designated as an unconventional reservoir. Oil is limited to reservoirs located
primarily in northern and central West Virginia.

First found in the Kanawha and the Little Kanawha river valleys in the 18th century,
West Virginia’s oil and gas have long been important economic resources. Early in the
19th century, the Ruffner family found both oil and gas while drilling for salt brine
near present Malden along the Kanawha River, and the Lemon and Creel families
found oil and gas along the Hughes River, a tributary of the Little
Kanawha. The extraction of oil was facilitated by tools first used by
the Ruffners in salt-well drilling.

In the 21st century, oil and gas are still major industries in the
Mountain State. They employ thousands of people and help to
keep the state among the nation’s major suppliers, storers, and
transmitters or energy.

In 2010, West Virginia produced more than 285 billion cubic
feet of natural gas, an annual volume that has
been increasing over the past several years.
Production occurs in just about every county
west of the Allegheny Front. Oil production
declined steadily through the latter part of
the 20th century and is generally between 1.5
million and 2 million barrels per year. Active oil
fields, where drilling is still being done, occur
primarily in parts of Wetzel and Tyler counties.
Gas wells are still being drilled in many parts
of West Virginia. The oil and gas industry drills
about 800 to 1,000 wells per year.

Energy Blueprint                                                                                       23
West Virginia natural Gas Production
sinCE 2001,                                        all                       horizontal           % all   % horizontal
natural gas                            mcf     marcellus                     marcellus           marcellus marcellus
production in
                         2001 198,983,718
West Virginia
has increased
                         2002 202,130,029
43 percent. The
state is part of a
                         2003 202,290,182
gas producing,
consuming and
                         2004 210,478,567
region that
                         2005 219,411,397         853,565                                 —          0.4%            0.0%
extends from
the dominant
                         2006 223,200,593       4,555,266                                 —          2.0%            0.0%
production zone
in and around
                         2007 235,853,451      10,065,002                              8,972         4.3%            0.0%
Texas to the
large consuming
                         2008 259,665,182      19,325,834                           2,140,077        7.4%            0.8%
zones of the
                         2009 257,177,563      33,640,837                    12,609,507            13.1%             4.9%
U.S. West Virginia
produces about 2.5
                         2010 285,379,375      74,439,147                    54,865,245            26.1%           19.2%
times as much gas
as is demanded
by its residents and businesses. The rest  300
is delivered to neighboring states to the
east and northeast.                        250

Nationally, demand for natural gas by
                                                              natural Gas Production
                                           billion CF

households, commercial buildings and                    150
manufacturing industries has been fairly                      in billion cubic feet [bcf]
constant over the last decade. Most new                 100
demand has been for power generation.                                                       from marcellus shale
The volume of natural gas produced                 0
from the Marcellus Shale, alone or                  2001 2002 2003                  2004 2005 2006 2007 2008 2009 2010
commingled with other pay zones, has
risen to more than 26 percent of total gas
production in West Virginia, when including production figures                      70
from horizontal wells without completion data available at this                     60
time. Gas produced from horizontal fracturing of the Marcellus                      50           all marcellus
                                                                       billion CF

Shale has risen to more than 19 percent of total production.                        40
The year 2005 is shown to illustrate the changing nature of                         30     horizontal
                                                                                    20     marcellus
production due to horizontal drilling, even though gas has
been produced from vertical wells in the Marcellus Shale for                        10
                                                                                      2005 2006 2007 2008 2009 2010

24                                                                                              West Virginia Division of Energy
                West Virginia natural Gas Consumption
                2000-2009                                                                       Pipeline
                natUraL Gas ConsUmPtion in                                                        17%                                 2009                                 Residential
                West Virginia has trended downward for                                                                                                                        25%
                more than a decade, led by decreasing                                       Electric Power
                industrial and transportation use.                                                1%


                Residential and commercial use has

                also declined, but less dramatically. Gas                                    Industrial                                                                Commercial


                                                                                                35%                                sC           b                         22%
                consumed by the industrial sector is                                                                                 onsumption
                estimated from the sum of gas delivered
                to the sector plus gas consumed as lease
                fuel and plant fuel. The transportation

                                                                                                                                                                              [trillion BTUs]
                sector’s use of gas is almost entirely for



                operation of natural gas pipelines. Gas

                used for power generation peaked in

                2007, at three percent of total demand,
                but remains a small portion of overall use
                for the state.
                                                                                             2000      33.8             28.0          60.7           0.5       35.0           158.0

                                                                                             2001      34.1             29.6          51.6           2.7       32.5           150.5

                180                                                                          2002      32.7             26.3          58.5           2.0       36.1           155.6

                                                                                             2003      34.3             28.4          50.7           2.2       19.7           135.3
                                                                                             2004      32.1             26.6          49.0           1.5       20.1           129.3
                             Pipeline                                                        2005      31.8             26.8          43.0           2.4       21.0           125.0
                120                                                                          2006      29.2             26.3          45.8           3.8       21.2           126.3
                                                          Electric Power
                100                                                                          2007      28.5             24.3          45.2           4.0       22.4           124.4
trillion BTUs

                             industrial                                                      2008      29.6             27.2          41.4           2.0       19.7           119.9
                                                                                             2009      28.3             25.7          39.5           1.2       19.2           113.9
                             Commercial                                                     * includes natural gas consumed by vehicles



            Energy Blueprint                                                                                                                                                               25
                     natural Gas Working Capacity
                     WEst VirGinia’s Gas storaGE FiELds have a combined maximum annual
                     delivery capability of 262 Bcf. Storage is located largely in the northern and central
                     parts of the state in depleted, former production fields. This area is part of a string of
                     storage fields that extends northward into Pennsylvania, Ohio and New York.

 Gas companies
     natural gas
   in thousands
    of cubic feet
  (Mcf), millions
    of cubic feet                                                                     Bcf
     (MMcf), or
     billions of
 cubic feet (Bcf),
   and estimate
 such as original                                                          Bcf
    gas-in-place                             OH
   in trillions of                           225.1
 cubic feet (Tcf).                                                                       18.3
      There are
    about 1,000                                            WV
       BTUs in                                              261.5
                                                             Bcf             VA
  one cubic foot
  of natural gas                     KY                                        5.4
      delivered                       Bcf
to the consumer.

26                                                                                West Virginia Division of Energy
natural Gas storage Capacity
natUraL Gas storaGE CaPaCity                            2009           2009
is closely tied to historical gas                      max daily    Working Gas
production. West Virginia presently has                delivery      Capacity
about 262 billion cubic feet (Bcf ) of       state       [bcf]         [bcf]
underground working storage capacity,
which represents the maximum amount          Pa          9.5            431
of stored natural gas available to be
delivered on an annual basis. The state’s    oh          5.0            225         A Tcf is one
maximum daily delivery capability is 3.8                                             billion Mcf
Bcf. Storage capacity is important for the   WV          3.8            262       and is enough
region as it supplies high demand areas                                           natural gas to:
that lack significant storage capability.    ny          2.8            129       heat 15 million
Except for New York, none of the
                                             ky          1.9            103       homes for one
northeastern states have underground
gas storage capability and rely almost                                            year; generate
entirely on pipelines for delivered gas.     md          0.4             18          100 billion
                                             Va          0.3              5        of electricity;
                                                                                  fuel 12 million
                                                                                    vehicles for
                                                                                      one year.

                                                                                          10 Bcf

                                                                                          50 Bcf
                                                       VA                                100 Bcf

Energy Blueprint                                                                                   27
regional natural Gas
transportation Corridor
WEst VirGinia is Part of a large
interconnected gas transportation
system that supplies gas to itself but
primarily supplies large demand centers
on the East Coast. The direction of gas
flow is predominately southwest to
northeast, as large demand centers
in the northeast are net consumers of
gas and also lack underground storage
capability. As of 2008, West Virginia had
3,758 miles of natural gas pipelines
within its borders, including both
interstate and intrastate lines. The state’s
network includes high capacity lines
with net deliveries from Kentucky and
Ohio and to Pennsylvania and Virginia.

28                                             West Virginia Division of Energy
West Virginia is a natural Gas Exporter

sUrroUndinG statEs are all net natural gas importers,
and consumed more natural gas than they produced in 2009.
West Virginia is the only state in the region that is a net natural
gas exporter.


                                                                        PA                     NJ
                                                                         -530                  -621
                                                                          Bcf                   Bcf
                                                -650                                   MD
                                                 Bcf                                    -197
                                                              WV                               Bcf
                                                                 Bcf      VA
                                        KY                                    -178

                               TN                                      -245

Energy Blueprint                                                                                      29
appalachian shale Gas development
What Lies Ahead . . .and Below?
marCELLUs shaLE underlies most of West Virginia. The most
favorable region for production is in the northern part of the
state, where it is thickest and over-pressured. Although the                                           hale
                                                                                                   us s
state has produced gas from other Devonian Shale for many                                    arc
decades, the Marcellus Shale became the target for new wells
once engineers demonstrated the effectiveness of horizontal
drilling and large hydraulic fracturing.

The Marcellus Shale development is important for our state
because of the state’s proximity to markets in the eastern states.
Because the state has produced oil and gas for 150 years, there
is a resident knowledge base and experienced workforce.

Marcellus has the potential for being the largest shale gas play
in the United States. However, what we are seeing today from
                                                                                                Geology.com/U.S. Geological Survey
the Marcellus is only the first step in a sequence of natural gas     Geographic extent of the Marcellus Shale play
plays. The second step is starting in the Utica Shale.                in the Appalachian Basin.

The Utica Shale is a rock layer below the Marcellus Shale that is
developing into another incredible source of natural gas. The
Utica Shale, located a few thousand feet below the Marcellus
Shale, is as yet unproven in West Virginia. Although it underlies
much of the state, present knowledge is insufficient to evaluate
the geographic extent of a Utica Play in West Virginia. The most
favorable area is the northern part of the state, specifically the
northern panhandle, where drilling is taking place in adjoining
Pennsylvania and Ohio.                                                                         Marcellus Shale

Most of the major rock units in the Appalachian Basin are
thickest in the east and thin towards the west. The rock units
that occur between the Marcellus Shale and the Utica Shale
follow this trend. In central Pennsylvania, the Utica can be up to
7,000 feet below the Marcellus Shale but that depth difference
decreases to the west. In eastern Ohio the Utica can be less
than 3,000 feet below the Marcellus.

The Utica Shale is thicker than the Marcellus, it is geographically                            Utica Shale
larger and it has already proven its ability to support
commercial production. It has the potential to produce even
more natural gas than Marcellus. But it is impossible to say at
this time how large the Utica Shale resource might be because
it has not been thoroughly evaluated. Little public information
is available about its organic content, the thickness of organic-                                            U.S. Geological Survey
rich intervals and how it will respond to horizontal drilling         Geologic cross section through the
and hydraulic fracturing. However, the results of early testing       Appalachian Basin at Wood County,
indicate that the Utica Shale will be a very significant resource.    West Virginia.

30                                                                                  West Virginia Division of Energy
Marcellus Shale Gas Play
West Virginia
WhEn thE yiELd of Marcellus Shale
wells start to decline, new wells might be
drilled down to the Utica to continue a
stream of natural gas production. Drilling
for the Utica will be more expensive
because of the greater depth, however,
the infrastructure of drill pads, right-of-
                                                                               Completed wells with
ways, pipelines, permit data and other                                         a Marcellus pay zone
investments will reduce development                                            Permitted wells —
costs for Utica Shale wells.                                                   Marcellus/Devonian shale
                                                                               and deeper
                                                                               Marcellus outcrop

Utica Shale Gas Play
Ohio, West Virginia, Pennsylvania

                                              Producing wells
                                              Permitted wells

                                                                West Virginia Geological and Economic Survey

Energy Blueprint                                                                                        31
     West Virginia Crude oil Production
     2000- 2010
     ProdUCtion oF CrUdE oiL in West              2,500
     Virginia has increased by 40 percent
     since 2001 to nearly 2 million barrels
     per year, a level not seen since the         2,000
     early 1990s. Overall, the state is a small
     producer and production declined
     throughout the 1990s. Employment of
     secondary recovery via water flooding        1,500
     has allowed production to expand.
     During the past decade, as much as 40
     percent of oil produced in the state has     1,000
     been from water flooding, although that
     level has fallen in recent years.
                                                             oil Production
     Oil production is concentrated in the                   in thousand
     northwestern part of the state. Many
     wells co-produce both oil and natural                   barrels
     gas.                                            0
                                                      2000 2002 2004 2006 2008 2010

                                                          2000                  1,400

                                                          2001                  1,226
                                                          2002                  1,382

                                                          2003                  1,334

                                                          2004                  1,339

                                                          2005                  1,563

                                                          2006                  1,749

                                                          2007                  1,574

                                                          2008                  1,593

                                                          2009                  1,864

                                                          2010                  1,967

32                                                               West Virginia Division of Energy
                West Virginia Petroleum Consumption
                ConsUmPtion oF PEtroLEUm                                                                                            2009                                         Residential
                in West Virginia is dominated by                                                                                                                                     2%
                the transportation sector, at a fairly                                      Transportation
                predictable level. But the ups and                                               67%                                                                         Commercial


                downs of consumption are shaped by

                the industrial sector. Consumption of


                                                                                            Electric Power                         Con         b                                  Industrial
                petroleum products, with the exception
                                                                                                  1%                                  sumption                                       29%
                of electric power, is based on sales data
                for the state.

                Nearly half of state consumption is

                                                                                                                                                                                    [trillion BTUs]
                motor gasoline, with distillate consumed

                in both industrial and transportation


                sectors the second largest. In 2009,
                more than 104 trillion BTUs of motor
                gasoline and more than 79 trillion BTUs
                of distillate were consumed. Other
                                                                                            2000      7.6             3.2             50.1            2.6      151.0 214.5
                petroleum products used in 2009 include
                asphalt/road oil, 8.8 trillion BTUs; fuel
                                                                                            2001      8.5             3.6             99.3            2.5      150.5 264.4
                ethanol, 5.9 trillion BTUs; jet fuel, 1.1
                trillion BTUs; and kerosene, .5 trillion
                                                                                            2002      6.6             2.9            118.2            2.6      146.1 276.4
                350                                                                         2003      6.5             2.8             99.3            2.5      149.4 260.5

                                                                                            2004      8.0             2.8            116.7            2.7      159.3 289.5
                                                                                            2005      6.1             2.3            114.6            2.0      159.9 284.9
                250                                                                         2006      6.4             2.0             85.7            1.4      158.8 254.3
                                            Electric Power
                                                                                            2007      5.3             1.8             88.3            1.9      156.7 254.0
trillion BTUs

                                                                                            2008      5.3             1.8             90.8            1.4      143.3 242.6
                150                         Residential
                                                                                            2009      4.7             2.6             63.5            1.8      145.9 218.5




            Energy Blueprint                                                                                                                                                                     33

34     West Virginia Division of Energy
                West Virginia renewable Electricity Production

                oVEr thE Last dECadE,
                West Virginia’s production of electricity
                using renewable resources has ranged                                                 Hydro Power                                                    Wind Power
                from 1.1 to 3.4 percent of total energy                                                 59%                                                            41%
                generation. The majority of that


                generation is hydro power with the

                remainder wind. The state’s hydroelectric                                                                         ab


                generating facilities are among the                                                                                 les            by
                oldest in the nation, with two units more
                than 100 years old. The youngest of the
                hydroelectric facilities came online in
                2001 and additional facilities are under

                                                                                                                                                                              [megawatt hours]


                The first wind power facility in the

                state came online in 2002. This class of

                generation will expand in the near-term
                as additional facilities permitted and
                under construction are completed.                                                       2000                                 1,150,903            1,165,335
                In 2011, West Virginia’s first landfill gas-                                            2001                                    951,943              967,470
                to-energy project began generating
                power. This project adds a new category                                                 2002                  9,023          1,065,736            1,080,341
                of commercial renewable-based
                electricity produced in the state.                                                      2003              169,762            1,356,031            1,530,001

                                                                                                        2004              161,191            1,318,279            1,481,541
                                                                                                        2005              153,892            1,447,566            1,602,171
                                                                                                        2006              173,757            1,572,433            1,746,190
                 2.0                                                                                    2007              167,588            1,254,397            1,421,985
thousand GWhs

                                                                                                        2008              391,910            1,248,037            1,639,947
                                                                                                        2009              742,439            1,645,927            2,388,366
                                                                                                        2010              939,172            1,367,361            2,306,533

                 0.5                                                                                * Wood-fired generation comprises the difference for years where total production
                                                                                                    exceeds wind and hydro generation.


            Energy Blueprint                                                                                                                                                                     35
                West Virginia Wood Consumption

                LikE othEr statE-LEVEL                                                                                                            77%
                consumption estimates, these figures
                are estimates of wood and wood waste
                consumption based on national and
                select state-level Residential Energy                                                                                      Commercial
                Consumption Survey (RECS) data. After                                                                                         12%


                a slow increase in residential wood use


                beginning in 2001, use shot up in 2009                                                 nsu        ys
                                                                                                          mption b                              Industrial
                likely due to higher energy prices and                                                                                             11%
                to tax credits available for purchase of
                wood-pellet stoves, which corresponded
                with a jump in purchases of pellet stoves
                in 2008.

                                                                                                                                                               [trillion BTUs]

                Wood and wood waste consumption


                estimates are based on the number of

                occupied housing units that use wood as
                primary heating fuel from the American
                Community Survey. The figures for West                                     2000      3.5           0.6            1.4                0.1          5.6
                Virginia are allocated in proportion
                to Census Bureau data on housing                                           2001      2.3           0.4            2.0                0.2          4.9
                units. Commercial wood consumption,
                outside of combined heat and power                                         2002      2.3           0.4            1.4                0.1          4.2
                and electrictity generating facilities, is
                allocated in proportion to residential                                     2003      2.4           0.4            1.4                0.1          4.3
                consumption. Industrial use is allocated
                using state and industry-level data                                        2004      2.5           0.4            1.4                0.1          4.4
                series for fuel consumption in wood and
                wood-related products sub-industries                                       2005      9.3           1.5            1.5                0.1        12.4
                from the U.S. Department of Commerce’s
                Economic Census of Manufacturing.                                          2006      8.5           1.4            1.3                0.0        11.2
                                                                                           2007      9.3           1.5            1.3                0.0        12.1
           10                                                                              2008      9.8           1.6            1.3                0.0        12.7
trillion BTUs

                8                                                                          2009      9.3           1.5            1.3                  0        12.1

                36                                                                                                                  West Virginia Division of Energy
WEst VirGinia’s LEadErshiP
in EnErGy dEVELoPmEnt
West Virginia’s roles in national and                   • Promote clean and alternative coal
global energy trends and challenges                       technologies and projects such as
                                                          coal liquefaction, carbon capture and
West Virginia is an important U.S. Energy Rich            sequestration, and cofiring biomass with coal
Region (ERR), with responsibilities, advantages,          in existing power plants
challenges and opportunities similar to those of
the world’s other ERRs. For example, West Virginia      • Focus on Innovation in all aspects of energy:
must continue to provide the region and nation            In an era of heightened global competition,
with low-cost energy in the near- to medium-              creativity and innovation are ingredients for
term while recognizing implications for the state         distinctiveness and indicators of vitality and
of longer-term national and international trends          dynamism
and challenges such as local and global economic
development, and affordable and secure sources of       • Position the state to create and host
energy.                                                   major demonstration projects such as (i) a
                                                          sustainable energy system and (ii) Smart grid
   West Virginia competitive advantages:

   • Energy heritage: once led in oil production,     Prescriptions for West Virginia’s role
     a major coal producer, emerging player for       in the nation’s energy future
     gas, potential for renewables such as biomass,
     wind, solar, and geothermal                      West Virginia is a fundamentally key player in the
                                                      nation’s energy sector, providing disproportionally
   • Energy expertise: strong academic and            more coal, electricity and natural gas than
     national laboratory energy expertise in the      most other states. The state’s energy sector is
     region                                           a viable group of industries, regulatory bodies,
                                                      and academic institutions that has the task of
   • Location: accessible to large energy markets     producing energy, engaging in conservation,
     and population centers of the largest Eastern    supporting energy security, and developing flexible
     U.S.                                             strategies for coping with an evolving energy
                                                      future. West Virginia is well positioned to be an
   • natural amenities: attract environmentally       energy supplier in any energy future, and our
     conscious creative class in energy/              fundamental position may be summed up as:
     environment sector
                                                      “West Virginia’s energy sector: We are great for you
   niche opportunities for West Virginia:             now. In the future, we will be even better.”

   • Make the state a viable choice as a regional     A quick summary of West Virginia’s place in the
     test bed to explore, study, and implement        nation’s energy sector is underscored by some
     TransTech, and clean energy initiatives          relative comparisons:
     pursued by federal government
                                                        • West Virginia is the fourth largest total energy
                                                          exporter, behind only Texas, Wyoming, and
                                                          Louisiana. (2008)

Energy Blueprint                                                                                         37
                   WEst VirGinia
                      • the nation’s largest producer of bituminous coal
                      • has the country’s second largest recoverable coal reserves
                      • the second largest natural gas producer east of the Mississippi River

     • West Virginia is the second largest producer                 • Shifts in energy consumption patterns are
       of coal in the country behind only Wyoming,                    necessary, and will ultimately occur as the
       and the largest producer of bituminous coal.                   result of market forces, even if not mandated
       (2009)                                                         by federal policy.

     • West Virginia’s recoverable coal reserves are                • Imported petroleum reductions will be
       the second largest in the nation, after only                   accomplished by conservation and energy
       Wyoming. (2009)                                                efficiency standards; market prices; energy
                                                                      substitutions (e.g. coal-to-liquids) and alternate
     • West Virginia leads the nation in coal                         fuels (electric, CNG)
       production from underground mines. (2009)
                                                                    • West Virginia should strive to see that its
     • West Virginia is third in the U.S. for interstate              position in energy prices is advantageous
       sales of electricity. (2010)                                   relative to its competitors, rather than simply
                                                                      attempt to hold market forces at bay.
     • West Virginia has the second lowest residential
       electricity rates east of the Mississippi River at           • Increased competition for energy from China
       8.70 cents/kWh. (2010)                                         and India alone dictate that prices will rise for
                                                                      petroleum, and this will increase markets for
     • West Virginia is the 13th largest producer of                  fossil fuel substitutions, and attendant price
       natural gas, producing 2.5 times as much as it                 increases.
       consumes. (2009)
                                                                Prescriptions (actions) for West Virginia:
     key national and international drivers:
     environment, energy security, and the                          • Incentivize manufacturing and job creation in
     economy                                                          renewable energy technologies and clean coal
     • Energy security requires that we reduce or
       even eliminate oil imports from countries
       outside North America.

38                                                                                              West Virginia Division of Energy
   • Promote technologies that increase large
     boiler efficiencies, or enhance environmental
     compliance of combustion processes. This may
     well make West Virginia coals more attractive
     due to the higher heat rate, and lower
     transportation costs.

   • Promote technologies such as integrated
     gasification combined cycle (IGCC) and
     oxy-fuel combustion that provide increased
     environmental protection, while burning
     higher sulfur coals and allowing for easier
     means of carbon capture and storage.
     Such technologies increase the market
     attractiveness of West Virginia coal and reduce
     carbon emissions, at least per BTU delivered.

   • Promote power generation using coal
     gasification (e.g. IGCC) to provide options                   top coal industry linkages
     where the lower carbon emissions couples                      with suppliers and buyers
     with production of high-value chemical
     feedstocks increases the attractiveness of        A study of the backward linkages (suppliers) for the
     eastern coal.                                     West Virginia coal industry suggests that:

                                                         • Industries providing the materials and
Industrial development opportunities                       supplies necessary for coal production have
for West Virginia’s coal industry                          a smaller presence in the state compared to
                                                           similar linkages for the U.S. coal industry.

                                                         • Due to their smaller West Virginia presence,
                                                           out-of-state producers of those materials and
                                                           supplies also depend on West Virginia coal for
                                                           a major part of their business.

                                                       Some of these underrepresented industries might
                                                       be targeted for future economic development,
                                                       so that more of the industry’s materials and
                                                       supplies could be provided by in-state companies.
                                                       Among the manufacturing activities might be
                                                       heavy equipment components, bits, rock drills,
                                                       construction and surface mining equipment, land
                                                       preparation machinery, rollers, and shovel loaders.
                                                       Support activities for coal mining that might be
                                                       developed include services (on a contract basis)
                                                       such as tunneling, blasting, training, overburden
                                                       removal, site development, exploration, shaft
                                                       sinking, pumping or draining of coal mines. More
                                                       detailed analysis could reveal which of these
                                                       industries would be the best prospects.

Energy Blueprint                                                                                             39
An analysis of forward linkages (customers and              • extending the economic viability of West
buyers) indicates that:                                       Virginia’s fossil fuel base in a carbon
                                                              constrained future
     • The vast majority of West Virginia coal leaves
       the state to become a part of the total US           • economic growth through innovation and
       export coal and energy supply, thus                    efficiency

     • West Virginia is a vitally important producer of     • creation of new jobs and businesses based on
       coal and energy used not only for export but           TransTech innovation
       also within the US, especially in electric power
       generation and iron and steel production.          TransTech energy technologies provide a “best
                                                          way forward” solution of the seeming dichotomy
These results emphasize that the West Virginia            between the economy and the environment.
coal industry is integrally related to the rest of US
economy, not only as a source of its energy but also      An exciting thing about the TransTech Energy area
in terms of inter-industry sales and purchases.           is that it presents opportunities for innovative
                                                          start-up companies and commercial projects to
                                                          partner with fossil energy and existing industry to
Opportunities for TransTech energy                        achieve environmental and economic development
technologies                                              benefits. Plans are being developed for a TransTech
                                                          Business Development Symposium to link investors
TransTech energy technologies provide a                   with TransTech energy initiatives and partnerships.
mechanism to leverage West Virginia’s rich resource
base and industrial infrastructure to create new          TransTech Energy technologies are particularly
jobs and businesses that are aligned with an              important for states like West Virginia, Kentucky,
increasing emphasis on environmental stewardship          Ohio, Indiana, and Illinois whose economies are
and sustainability. Our state has the opportunity,        heavily dependent on production and use of
expertise, and assets to establish leadership on          fossil fuels. TransTech Energy technologies do not
the national and international stage, and provide         replace fossil fuels. In fact, they involve the fossil
a focus of efforts around TransTech, not unlike           fuel industry in innovative ways to reduce CO2 and
movements in CleanTech and GreenTech, but with            other Greenhouse gas emissions while improving
an industrial focus that works with, instead of           competitiveness of manufacturing companies that
against, all links in the energy chain.                   are some of the very largest customers of fossil-
                                                          based power.
TransTech is a set of technologies and opportunities,
with near-term potential, where economic interests        Examples of TransTech energy technologies for
and environmental protection align, such as co-           which West Virginia has competitive advantages
firing of biomass and coal, waste heat recovery,          and a head start with on-going research and
energy efficiency, productive uses of CO2, and            deployment projects:
others. An emphasis on TransTech will build on
an ecosystem of entrepreneurs, companies, and               • Energy recycling such RED’s waste heat
innovation to transform our state’s energy and                recovery project in Fayette County
industrial base into an engine for economic growth
and job creation. This focus creates the following          • Hybrid fossil-renewable energy systems such
benefits for West Virginia:                                   as cofiring coal and biomass

     • enhanced manufacturing competiveness                 • Capture and beneficial use of methane such as
                                                              the Charleston landfill gas project
     • reducing potential job loss in fossil fuel and
       related sectors                                      • Energy efficiency programs such as the WVU
                                                              Industrial Assessment Center

40                                                                                  West Virginia Division of Energy
   • Capture and beneficial       Wind and hydro energy comparisons for West Virginia
     use of CO2                   and five regional states
                                                       WV         Pa          oh    tn       ky      md
   • Energy storage for peak
     demand reduction             2011 wind
                                                       528*      751          67     29       0      120
                                  capacity (MW)
   • Smart grid with              Wind resource at
                                                       1,883     3,307   54,920     309       0     1,483
     expanded net metering        80M (MW)
     and time of day pricing      2009
                                  Hydropower           264       747       101     2,614    824      590
   • Advanced materials           capacity (MW)
     for efficient power
     generation                  * Does not include Pinnacle wind facility.

   • Alternative
     transportation fuels for                             • A 2004 study by the US Department of
     regional energy independence                           Energy’s Idaho National Laboratory found that
                                                            the undeveloped hydropower potential in
   • Renewable energy technologies including                West Virginia is about 2,500 MW.
     geothermal energy
                                                          • West Virginia has 4.75 million tons of wood
                                                            residues available for fuel and power
West Virginia renewable energy                              generation purposes and has the potential to
opportunities                                               produce approximately 41,000 tons of crop
   • Wind energy production in West Virginia has
     gone from 66 MW in 2007 to 528 MW in 2010,           • According to a 2009 Pew Report, in 2007 West
     an 800% increase. Another 370 MW has been              Virginia had 332 clean energy companies
     permitted and/or is in development. Electricity        and 3,065 related jobs in the following
     from only one of the wind projects is sold in          categories clean energy, energy efficiency,
     West Virginia.                                         environmentally friendly production,
                                                            conservation and pollution mitigation and
   • West Virginia currently has more than 1,000            training and support.
     MW of undeveloped commercial wind
     potential on privately owned lands. According
     to a 2006 report by Marshall University,           Recent West Virginia Legislative
     potential wind resources are estimated to          energy related actions
     have an annual wholesale value of $330
     million from power generation. If wind were        hb 103     alternative and renewable Energy
     also developed on federal and State lands                     Portfolio act of 2009
     the potential value would be nearly triple this
     amount.                                            In HB 103, the 2009 West Virginia Legislature
                                                        recognized that, “The nation is on a rapid course
   • Researchers at Southern Methodist                  of action to produce electrical power with ever
     University’s Geothermal Laboratory conducted       decreasing amount of emissions;” and that, “The
     a study funded by Google that estimates            development of a robust and diverse portfolio of
     18,890 megawatts of power could be available       electric generating capacity is needed for West
     from a resource recovery rate of 2%; this is       Virginia to continue its success in attracting new
     greater than West Virginia’s current power         businesses and jobs.”
     generation capacity.

Energy Blueprint                                                                                             41
     • West Virginia’s Alternative and Renewable             • Tax credits for conversion to alternative fuel
       Energy Portfolio Standard mandates that 10%             motor vehicles.
       of electricity sold to customers in the state
       come from alternative and renewable fuels by          • Tax credits for alternative fuel vehicle refueling
       2015; 15% by 2020; and 25% by 2025.                     infrastructure (Includes home refueling
     • West Virginia is one of a few states that include
       alternative energy technologies such as carbon        • Evaluation, for state property taxation
       capture and sequestration technology, coal              purposes, of certain capital additions to
       gasification and liquefaction, natural gas              manufacturing facilities is based on salvage
       (limited to 10%), and other non-renewable               value (5% of original cost) of certified property
       sources to count toward the portfolio standard.         additions.

     • The state’s portfolio law gives incentives for        • Expanded tax credits for strategic research and
       coal-to-liquid technologies, as well as carbon          development.
       capture and storage. Both of these could
       provide new markets for coal in the state.            • Expanded tax credits for manufacturing
     • West Virginia is one of a few states that
       recognize the environmental and economic            sb 518    Enhancing the roles of the
       benefits of Recycled Energy (capture and                      West Virginia division of Energy
       reuse of industrial waste heat, waste pressure
       drop, and waste or flared gases) and identify       The 2007 Legislature created the West Virginia
       it as a renewable resource for purposes of the      Division of Energy and the 2010 Legislature
       portfolio standard.                                 expanded duties of the Division. Responsibilities of
                                                           the Division include, among others, the following:
     • The West Virginia Portfolio Standard includes
       credits for energy efficiency or demand               • Provide leadership for developing energy
       side management, and for each ton of CO2                policies emphasizing the increased efficiency
       equivalent reduced or offset.                           of energy use, the increased development
                                                               and production of new and existing domestic
sb 465      marcellus Gas and manufacturing                    energy sources, the increased awareness
            development act of 2011                            of energy use on the environment and
                                                               the economy, dependable, efficient and
During the 2011 Session, the West Virginia                     economical statewide energy systems
Legislature found that “facilitating the development           capable of supporting the needs of the state,
of business activity directly and indirectly related           increased energy self-sufficiency where
to development of Marcellus shale serves the                   the ratio of indigenous to imported energy
public interest of the citizens of this state by               use is increased, reduce the ratio of energy
promoting development and improving economic                   consumption to economic activity and
opportunities for the citizens of this state.” Among           maintain low-cost energy.
other purposes, SB 465 provides for:
                                                             • Promote collaboration between the state’s
     • Tax credits for purchase of alternative fuel            universities and colleges, private industry and
       vehicles (Definition of alternative fuels               nonprofit organizations to encourage energy
       includes virtually all fuels not derived from           research and leverage available federal energy
       foreign oil.)                                           research and development resources.

42                                                                                 West Virginia Division of Energy
• Promote initiatives to enhance the nation’s        hb 2776 Providing a residential renewable
  energy security through research and                       energy tax credit
  development directed at transforming the                   for West Virginia taxpayers
  state’s energy resources into the resources that
  fuel the nation.                                   Any taxpayer who installs a residential renewable
                                                     energy system (solar, biomass, geothermal, hydro,
• Work with the President of the United States       or wind) on residential property located in the
  and his or her administration to develop a plan    state after July 1, 2011 and before June 30, 2015,
  that would allow West Virginia to become the       is allowed a tax credit in the amount of 25% of
  leader in transitioning the United States to a     the cost to purchase and install the system up
  new energy future.                                 to a maximum of $3,000.Such credits are to be
                                                     apportioned equally over a five-consecutive tax-
• Determine the best way for West Virginia to        year period. Carryover credit is allowed.
  utilize its resources and any federal funding to
  develop the technologies that are necessary        sb 350    amendments to the alternative and
  for such a transition.                                       renewable Energy Portfolio standard

• Articulate West Virginia’s position on an          The intent of this bill was to re-categorize recycled
  energy solution for the United States that         energy as a renewable energy source for the
  encompasses clean coal, natural gas, transtech     purpose of purchasing energy resource credits.
  energy technologies and renewable energy           The amendment also removed a restriction that
  technologies.                                      required ethanol to be produced from sources other
                                                     than corn in order to be classified as a renewable
• Develop and distribute an informational            energy resource.
  program and policies that emphasize the
  importance of West Virginia energy resources
  and their positive impact on the eastern
  seaboard and the nation.
      1900 Kanawha Boulevard East
            Capitol Complex
          Building 6 Room 620
       Charleston WV 25305-0311
           Fax: 304-558-0362


This publication was printed in March 2012.
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