Chinese looking for opportunities at WVU

From an Article by Kate Mishkin, Charleston Gazette, June 23, 2018

A nonprofit law firm has filed a lawsuit against West Virginia University after the school failed to hand over public records about a deal between West Virginia and a Chinese energy company.

The $83.7 billion investment deal, forged in November 2017 between the state and China Energy, was the largest of several agreements China made with the United States. At the time, Gov. Jim Justice called the memorandum of understanding “the largest investment in our state’s history.”

WVU President Gordon Gee touted the deal as a “culmination of years of relationship building, both by West Virginia University and the state.”

Details about the deal remain murky, though. Appalachian Mountain Advocates asked for more information about the deal in November, asking for a number of documents from the WVU Energy Institute or its staff, including a copy of the agreement and emails that discussed the deal.

The university declined that request in December, saying the documents weren’t public, and they included trade secrets and information about economic development. Plus, a Freedom of Information Act officer for the university wrote, there were more than 15,000 emails that fit the description, and that parsing through those emails would be too great a task.

The lawsuit, filed Thursday, names WVU as a defendant and seeks to unveil some of the details about the agreement.

WVU said in November it would work with state government to coordinate the investment, and the university had been researching coal liquefaction with Chinese government-owned coal mining company Shenhua Group and energy company Guodian Group. WVU, the state Department of Commerce and the Appalachian Development Group have been working to secure a loan from the U.S. Department of Energy for an Appalachian Storage and Trading Hub.

See also: Appalachian Mountain Advocates

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For all the $83B in China Energy — what do we really have?

Newspaper Editorial, Morgantown Dominion Post, June 25, 2018

“Promise of big foreign investment in gas industry starting to look nebulous”

No, eight months don’t make two decades. But the size of the headlines in November, heralding an $83 billion investment in West Virginia over 20 years by China Energy, have shrunk. That’s not to say they disappeared, but lately they look to be a lot less sensational.

Last week, executives from China Energy failed to show for a regional petrochemical conference, quelling hopes for news about their plans. Those plans included projects focused on power generation, chemical manufacturing and underground storage of natural gas liquids and derivatives. Since then there appears to be growing reason for concern whether this investment will ever live up to its promise.

Two of the first announced projects — proposed gas-fired power plants in Harrison and Brooke counties — were initially said to be among the first of China Energy’s investments. The company behind those plants later said it’s not expecting any China Energy backing.

Then this year, in what started with tariffs on Chinese-made solar panels and washing machine, accelerated in March with tariffs on Chinese aluminum and steel, became an all-out trade war. In mid-June the Trump administration slapped tariffs on $50 billion of Chinese goods, which Beijing has matched in a tit-for-tat showdown.

The governor discounted the recent resignation of the state’s Commerce secretary, who signed the memorandum of understanding with China Energy representatives. But we cannot help but think he was probably better acquainted with these plans than anyone.

Then China Energy officials cancelled their visit at the Northeast U.S. Petrochemical Construction Conference, in Pittsburgh. And all this comes on the heels of still no details about this investment or the sites being looked at for investment. So, where does the China Energy memorandum of understanding stand today? That’s a good question and rest assured it’s probably better than the answer you’ll get.

The governor would have us believe that this deal is safe because of his relationship with the president. WVU Energy Institute’s director assessed these developments as a “speed bump,” not a “road block.”

We hope this optimism is not misplaced, because our state looks to be on the rebound as this fiscal year ends. A small budget surplus looks to even be in the picture. It’s about time, too. But if this impasse continues for long our economic recovery may be on a slow boat to China.

See also: $83 Billion West Virginia Petrochemical Deal with China on Skids Due to Trade War, Corruption Probe | DeSmogBlog

Secretary Thrasher removed from Commerce

From an Article by Brad McElhinny, WV MetroNews, June 19, 2018

CHARLESTON, W.Va. — Executives from China Energy who had been set to attend a petrochemical conference canceled their visit because of ongoing strain over trade, said Brian Anderson, director of the WVU Energy Institute.

Weeks ago, those involved with the potential $83 billion Chinese investment in West Virginia natural gas projects had hoped the executives would be able to make a specific project announcement during their visit, Anderson said.

“Backing up a couple months we really were hoping we could have a project to be announced on this visit. It wasn’t a cancellation of an announcement, but it’s not at the point a project can be announced with the leadership canceling their visit,” Anderson said today on MetroNews’ “Talkline.”

Anderson first described the cancellation of the visit by China Energy executives during his own presentation at the Northeast U.S. Petrochemical Construction Conference in Pittsburgh. His comments were picked up by trade journalists who were covering the conference.

The comments also set off a buzz among those in attendance, said Curtis Wilkerson, president of Orion Strategies, which performs communications and marketing services for West Virginia’s natural gas industry. Wilkerson is attending the conference.

“That’s probably the buzz that’s going on the most here,” Wilkerson said this morning. “People then questioning the total investment and how that’s going and what are the possibilities. They’re not exactly saying it’s not happening. They’re just raising questions.”

State officials made a splash last November by announcing the possibility of an $83 million investment in West Virginia over 20 years.

Then-Commerce Secretary Woody Thrasher traveled to China to sign a memorandum of understanding with China Energy while President Donald Trump looked on.

Gov. Jim Justice spoke with excitement about the sheer amount of the potential investment. “For crying out loud, it absolutely takes your breath,” Justice said.

But the investment has also been shrouded in mystery. State officials have been unwilling to release the memorandum of understanding, and they also said they could not elaborate on specifics of the projects, saying they would evolve over the 20-year span of the agreement.

The current tit-for-tat over tariffs lays more uncertainty onto the agreement. President Trump on Monday threatened to impose additional tariffs on $200 billion worth of Chinese goods. That followed last week’s announcement of a 25 percent tariff on $50 billion in Chinese imports.

Chinese officials accused the United States of “extreme pressure and blackmailing” and vowed to retaliate.

West Virginia’s deal with China Energy was hatched during President Trump’s trade mission to China, when the president was advocating for greater investment.

Last week, while being questioned about state Commerce Secretary Thrasher’s forced resignation, Justice said the deal would be safe because of the governor’s own good relationship with Trump.

“I can tell you just as simple as mud how it happened,” Justice said. “It happened through a friendship with myself and Donald Trump. Donald Trump realizes wholeheartedly that we have a terrible trade imbalance with China and he is on those people and on those people like stink on you-know what.

“And absolutely he is pushing them to invest and do things to bring that trade imbalance in line. So how does West Virginia come into being. I mean, do we really think it came into being with our Commerce department? Of course it didn’t. It came into being because of the relationship between the two of us and the president really trying to help his friend and help what he loves and he loves West Virginia. That’s how it came in line. Well, we haven’t lost one thread of that. We’ve still got a president, we’ve still got your trade imbalance and you’ve still got your governor.”

But the current situation has made moving forward with decisions a challenge, Anderson said. “It’s certainly not a road block. Right now it’s a bit of a speed bump. If it lasts too long it could certainly be a hurdle,” Andersons said on “Talkline.”

He said China Energy is continuing on due diligence such as project identification and site selection. But, because the company is partially state-run, its executives would find it difficult right now to give a project official approval or to appear at an American petrochemical conference.

“These issues surrounding the pending trade war are causing some concern among the leaders of China Energy,” he said.

“It has not slowed the development. The development teams are still pursuing the project. However, the timing of the leadership of China Energy and that coinciding with the trade war was going on was just not something the leadership of China Energy was going to do.”

Anderson believes the project still has great potential in the long-term. “I’m still optimistic. In the end, I think economics win out,” Anderson said. “West Virginia is still the right place on the globe for them to invest.”

Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, hopes that’s true. “We’re obviously disappointed to hear that it’s been put on hold, I think is the most positive light to put on it,” Blankenship said this morning in a telephone interview.

She hopes that once international relations straighten out, the deal with China Energy will continue moving forward. “Clearly that’s what we would want,” she said. “Things will continue to progress but that large amount of investment money is the best case scenario to move forward. That is encouragement to private investors to come to the table as well, which all needs to happen as well.”

FOIA request for MOU rejected by State of WV

From an Article by Ken Ward, Jr., Charleston Gazette-Mail, June 15, 2018

PHOTO: Then-West Virginia Commerce Secretary Woody Thrasher (seated at left of table) meets last November in Beijing with China Energy President Ling Wen (seated at right of table) in front of President Donald Trump and Chinese President Xi Jinping. From: W.Va. Department of Commerce

A member of West Virginia’s negotiating team on the $80 billion natural gas investment deal with China was asked to repay $23,000 in travel expenses after the Justice administration raised questions about a potential conflict of interest, the governor revealed Friday.

Last November, President Donald Trump and Chinese President Xi Jinping looked on in Beijing as officials from the Mountain State and a Chinese energy company signed what was hailed as a landmark deal for West Virginia.

Under the deal, China Energy Investment Corp. would invest more than $80 billion over the next 20 years in West Virginia’s natural gas industry.

Gov. Jim Justice and other state leaders have been banking on the China deal, predicting it will create tens of thousands of additional jobs in the state. It also was described as a victory for Trump, the largest in a series of Chinese investments in the United States that totaled $250 billion.

But on Friday, Justice revealed an ethical cloud over the China deal: At least one member of the state’s trade delegation — an industry executive — was also working to help his private company.

Brian Abraham, the governor’s general counsel, said the state was “using someone who probably shouldn’t have been involved in the negotiations” as part of its trade delegation.

“People that were there in China maybe representing their own special interests, we didn’t think was right,” the governor added.

West Virginia officials are eager to see the fruits of the China Energy investment, as a cornerstone to the natural gas industry’s continued growth in the state. But along the way, some lawmakers and watchdogs are questioning whether the state is putting the industry’s interests ahead of the public concerns about broadening the state’s economic base. This year, ProPublica is partnering with the Charleston Gazette-Mail to examine those issues.

At a news conference Friday, neither Justice nor Abraham would name the individual or his company. In an interview later, Abraham confirmed that the man was Steven B. Hedrick, who is CEO of Appalachia Development Group LLC and also CEO of the Mid-Atlantic Technology, Research and Innovation Center, or MATRIC, a nonprofit that partners with industry on various research and development efforts.

Appalachia Development Group has been seeking a loan guarantee from the U.S. Department of Energy as part of an effort to build a natural gas “storage hub” for various natural gas liquid byproducts that can be used in a wide variety of manufacturing.

Abraham said the state Commerce Department paid for Hedrick’s travel for the China negotiations because it considered him acting as a state official, part of a special Commerce Department program in which certain executives are “loaned” to the state.

The Governor’s Office, though, discovered later that Hedrick had not joined the program and when asked to do so after the trip, he declined, Abraham said. Had he joined the program, Hedrick would have been required to sign an agreement to abide by the state ethics law’s prohibition on using public office for private gain.

“Why is this person behind the curtain at Commerce if they’re an individual on the outside?” Abraham said. “That created an ethical dilemma.”

Also, Abraham cited an incident in which state officials were later told that Hedrick asked China Energy officials to specifically target some of their investment in his company’s natural gas storage hub. Abraham said that, on one trip, Hedrick stayed an extra day to pitch his project.

Abraham said Hedrick was asked to repay the state $23,000 in travel expenses and that the repayment had been made.

A spokeswoman for Hedrick said he was not available for comment, but she issued a short email statement that said Hedrick was “grateful to respond to the request of the state of West Virginia to support the Commerce Department’s mission to attract business to the state.”

The statement said MATRIC “promptly paid any expenses invoiced by the state.”

Although officials signed a memorandum of understanding in China, the state has refused to release the text of the agreement and few details have been made public. The China deal and the natural gas storage hub are considered by many state officials as key and related economic development projects for West Virginia’s future.

The state’s natural gas industry has already greatly expanded, and backers of the China deal say it will provide huge amounts of capital that could fund processing plants, pipelines and other facilities that will turn natural gas byproducts into crucial ingredients for a wide variety of plastics manufacturers. These kinds of “downstream” developments will allow West Virginia to capture far more jobs and economic growth than just drilling for gas and shipping it out of state.

The revelations about the China deal came just one day after Justice asked for and received the resignation of Commerce Secretary Woody Thrasher, whose agency bungled the state’s implementation of a federally funded flood-relief program.

Thrasher was the top state official who traveled to China last November as part of the trade delegation.

Justice said Friday that discussions toward realizing the Chinese natural gas investments are ongoing, and repeated his earlier statements that the deal “came into being” because of his personal friendship with Trump.

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The Charleston Gazette-Mail and ProPublica want to tell the story of the changing landscape in West Virginia, and how coal and natural gas are impacting it. West Virginians: Tell us how your community is changing. Call or text us at 347-244-2134, or email us: changing wv@wvgazettemail.com.