Oil industry finds a friend in Democrat
WASHINGTON — Natural gas is a booming business in West Virginia, and when the state’s gas producers started getting nervous about President Joe Biden’s climate policies earlier this year, they put in a call to the last Democrat holding statewide office in West Virginia.
Sen. Joe Manchin, the newly appointed chairman of the Senate Energy and Natural Resources Committee, took their questions for an hour, discussing topics such as pipeline construction and industry tax breaks, said Charlie Burd, executive director of the Independent Oil & Gas Association of West Virginia.
“We talked about issues like intangible drilling costs and percentage declines. He is very well versed,” Burd said. “Everyone gets a visit, but he welcomes us.”
Since last year’s election turned him into a critical swing vote in the closely divided Senate, Manchin has used the spotlight to advocate aggressively within his party for climate change policy that allows the continued use of fossil fuels — or as he likes to describe his position, “innovate, not eliminate.”
Facing off against Biden and other members of his party call
ing for a rapid reduction in greenhouse gas emissions, Manchin has emerged as one of the last Senate Democrats willing to go to bat for the fossil fuel industry, whether it’s West Virginia’s still sizable coal mining sector or oil and gas drillers in states such as Texas.
“Sen. Manchin has a lot of power and has wielded it,” said Matthew Davis, legislative director at the environmental group League of Conservation Voters. “He’s shaping the way things are running.”
Manchin’s office declined interview requests for this story. But the senator has not been shy in publicly expressing his displeasure with his party’s approach to climate change.
Trying to navigate his way through a scrum of reporters in the Capitol this summer — all eager to get his take on Democrats’ $3.5 trillion budget proposal — Manchin issued a stern warning to Democrats looking to use the budget to shift the nation away from fossil fuels.
“I know they have the climate portion in here, and I’m concerned about that,” Manchin told reporters. “Because if they’re eliminating fossils, and I’m finding out there’s a lot of language in places they’re eliminating fossils, which is very, very disturbing.”
Already a hurdle
Nine months after Biden took office, the administration’s efforts to start the nation on the path to net-zero greenhouse gas emissions by midcentury have barely begun. But Manchin already has proven a hurdle to passing more aggressive climate policies.
In March, Biden announced plans to rebuild America’s infrastructure, including an energy efficiency and clean electricity standard that would shift the nation’s power grid from fossil fuels. The plan also included funding for a half-million electric vehicle charging stations.
But Manchin, with his controlling vote in the Senate, insisted infrastructure be negotiated on a bipartisan basis, forcing Democrats to make concessions.
Working with Republicans including Sens. Mitt Romney of Utah and Lisa Murkowski of Alaska, Manchin helped pass a $1 trillion infrastructure bill without a clean electricity standard and far less funding for electric vehicle chargers. Instead, tens of billions of dollars were devoted to scaling up technologies considered critical to the future of the oil and gas industry, such as carbon capture and clean hydrogen.
“By insisting it be bipartisan and a deal be struck with conservatives, that’s going to radically change the bill,” said Rich Powell, executive director of Clear Path Action, a conservative group advocating for clean energy. “We’ve seen what the progressive only approach looks like, an expansive definition of infrastructure that looks a lot more like the Green New Deal.”
Manchin’s centrist approach not just on climate change but also social issues such as voting rights has drawn backlash from progressive members of his party. Manchin favors the filibuster, which requires a super-majority to move most bills in the Senate, narrower voting rights legislation and less spending than proposed in Democrats’ budget. Progressives say his desire to restore bipartisanship to Congress comes at the expense of fixing long-term inequities in the country.
For Manchin, who has held almost every political office in West Virginia from mayor to state legislator, fossil fuels are an existential issue.
A recent study by West Virginia University found that coal employs more than 15,000 people in the state, down more than 30 percent from the early 2000s, but still a mainstay of the economy in the southern portion of the state, where other jobs are hard to come by. In a region that has few other industries to fall back on, the result has been a steady exodus of people out of the area, said John Deskins, director of West Virginia University’s Bureau of Business and Economic Research.
“The people who tend to move away are younger, healthier and better trained for the modern workforce,” he said. “That makes the area less attractive to outside businesses, so it creates a downward spiral.”
While West Virginia’s coal counties are still reeling, with some of the highest rates of opioid addiction in the country, the broader state economy has to some degree absorbed the losses from coal through a natural gas boom driven by the same hydraulic fracturing wave that swept through Texas.
Over the past decade, natural gas output has increased sevenfold in West Virginia, reaching 2 trillion cubic feet in 2019, making the state the sixth largest gas producer in the country, according to the Department of Energy. This year, West Virginia collected more than $117 million in taxes from the oil and gas industry, just $26 million shy of revenues collected from coal, according to state figures.
“It has provided an offsetting effect to the decline in coal,” Deskins said. “The revenues would be way worse without the gas boom.”
Rising tide
The hope of West Virginia political leaders is to develop a petrochemical industry around their natural gas fields, much as the Gulf Coast built a massive petrochemical complex through its proximity to gas producers. Natural gas is a feedstock for plastics and other chemicals.
In 2017, following a meeting with Chinese President Xi Jinping, President Donald Trump announced the Chinese planned to invest $100 billion in U.S. energy projects, including a complex of natural gas and chemical projects in West Virginia. But the investment never materialized, prompting Manchin to lash out at a Senate hearing in 2019, saying he could
not get a straight answer from the Chinese or from the Trump administration.
Manchin and other West Virginia officials continue to search for investors to build an ethane cracker, to process the state’s natural gas, said Burd, of the West Virginia oil and gas trade group.
“A rising tide lifts all ships. You build that (cracker) there and there’s going to be lots of suppliers come in,” he said. “There’s enough natural gas here for three world-class crackers.”
But under Democrats’ plans, the future of natural gas is unclear. The details of their $3.5 trillion budget proposal are still under debate, but they are considering a Clean Electricity Payment Program that would expand subsidies for clean energy, likely to push natural gas off the power grid.
For oil lobbyists working in Washington, the growing anti-fossil fuel momentum among Democrats has made Manchin a point person, the guy to introduce your CEOs to when they’re in town, said Anne Bradbury, president of the American Exploration & Production Council, a lobbying group representing oil and gas companies.
“There are still a number of Democrats who understand the short-sightedness of eliminating fossil fuels, but they certainly aren’t as vocal as they were in the Obama administration,” she said. “Sen. Manchin is very willing to have conversation. It’s not always a love fest, but he’s very direct with the industry about where he is really supportive.”
So far, Manchin has produced. Rep. Lizzie Fletcher, D-Houston, a Manchin ally in the House, said a lot of “educating” is needed on the role fossil fuels play in powering the U.S. economy, but she believed the message that climate policy needs to have a place for fossil fuels was getting through.
She added that making policy proposals, such as Biden’s support for cutting tax breaks for the oil and gas industry, is far different than passing them into law. “You can say anything in Washington, but in the end it’s about what comes out of the House and Senate,” she said.
Much of the climate policy that comes out of Congress will have to go through Manchin, who as chairman of the Senate Energy Committee controls the flow of energy bills to the floor and money to the Department of Energy, which directs research and development that will help determine the energy sector of the future.
So far, he’s kept quiet on specific proposals in the Democrats’ budget plan. But the hope in oil and gas country is that he can convince Democrats that fossil fuels have a place in the U.S. energy system over the long term.
Whether that plays out remains to be seen. But for now, industry officials believe if anyone can pull it off, it’s Manchin.
“One of the real strengths of Joe Manchin is he can get people to collaborate when others can’t,” Burd said. “He may be the most powerful Democrat in the United States.”