January 14, 2014

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Article

Energy Boom

Changing the Game for Utah’s Rural Economies

By Gaylen Webb | Illustration by Mark Jarman

January 14, 2014

A development 10 miles north of Delta called the Western Energy Hub could help alleviate concerns regarding IPP’s electrical generation. Magnum Gas Storage LLC is constructing four underground caverns in the only gulf-style salt dome in the Rocky Mountain region, where the company will store 54 billion cubic feet of natural gas. The commercial-scale storage caverns will be interconnected with the interstate natural gas pipeline system by a newly constructed 61-mile-long header pipeline. When completed, the company will be able to rapidly cycle natural gas in and out of the caverns multiple times per year to meet the fluctuations of consumer demand. This will also support the expansion and utilization of renewable energy technologies—IPP could be a potential benefactor of that storage as it becomes necessary for the power plant to retrofit for power generation using natural gas.

Farther east, Emery Refining, LLC has plans to construct a $225 million crude oil refinery near Green River that will process oils from regional wells. The company entered into a 12-year, post-performance EDTIF tax credit agreement with the Governor’s Office of Economic Development wherein the company will create 125 jobs and pay over $99 million in new state wages. The jobs will pay at least 100 percent of Emery County’s average annual wage including benefits. Houston-based Rock River Resources, LLC, a division of Emery Refining, LLC will design, construct and operate the refinery, which will be the first refinery constructed in the United States in nearly four decades.

“This project is a game changer for Green River and will be a positive influence in the community for decades,” says Emery County Economic Development Director Mike McCandless. “Emery County has been working for nearly a decade to bring industrial development into Green River. This project is the culmination of that effort.”

The Economic Heartland

The beauty of the energy developments in Utah’s rural counties lies in the direct and indirect jobs that they create, the tax revenues produced and the land-lease payments to private property owners or to SITLA, the latter of which directly benefits Utah’s school children, says Samantha Mary Julian, director of the Utah Office of Energy Development (OED). “In over half a dozen rural Utah counties, energy development-related property taxes account for 40 to 80 percent of all property taxes paid. This industry is clearly essential to the economic life of these and other counties,” she adds.

Julian says future energy production in almost any state will come from the rural areas. It doesn’t matter if it is renewable energy, nuclear, oil shale, oil, gas or coal. “The entire nation is going to depend on the rural communities producing it,” she says. “With ample sunshine, Utah has the potential to be one of the top solar power producers in the United States, with vast amounts of rural open space that could be suitable for large photovoltaic installations. These projects will provide direct benefits to rural Utah, whether through the creation of construction-related or ongoing jobs, or through dramatic increases in property tax values on lands formerly used for grazing. The future of energy is in the rural United States.”

Further, Julian says recent studies have shown that if anything is going to repair the economy, it will be energy production, and that bodes well for rural Utah. “It will be selling our transportation fuels, it will be our technology for energy—how to get solar and wind harnessed better—and it will come from people out in the field in the rural places experimenting with all kinds of technology,” she explains. “Our energy is going to come from rural Utah and that is where the jobs will be. That is where the technology is going to be and the ground-breaking projects.”

Jeffrey Barrett, infrastructure and incentives manager in the OED, adds that energy production in rural Utah not only contributes to a strong economy, but also drives down energy prices and the state’s uniquely low unemployment rate. “We have an unemployment rate that is close to 4 percent,” he says, “while the national unemployment rate is 7.2 percent. That speaks to how important energy production is to Utah.”  

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