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Roundtable: Energy & Natural Resources

Every month, Utah Business Magazine partners with Holland & Hart and Big-D Construction to host roundtable events with industry insiders. This month we invited the top legal minds to discuss energy and natural resources. Moderated by Rob Simmons, Deputy Director at the Governor’s Office of Energy Development, here are a few highlights from the event:

With some representation from different parts of the energy and mining sectors, what’s the overall outlook for your industry?

Ryan Creamer | CEO at Sustainable Power Group

Things across the country are good. We had some turmoil last year, uncertainty caused by tax reform, tariffs put on solar panels, but I think we’ve weathered the storms pretty good. From a standpoint of growth, sPower was one of the fastest-growing IPPs in the country and will continue to be. We’ll actually double the size of our company in the next 20 months.

Josh Brown | Government Relations Manager at Rio Tinto

The last couple of years have been a pretty trying time for the mining industry. We are now seeing an uptick in price. What we’ve seen industry-wide is good. You look at the wind-type projects and there’s four to six times more copper involved in the production of wind power versus traditional fossil fuels. So we’re very much focused on copper production, as well as copper’s use in the technological growth of the nation and the world.

Jared Jackson | Mine Manager at Simplot

For the phosphate industry, the outlook appears to be stable for us. A lot of what we do goes into crop nutrients. So, the outlook is positive in the fact that, with the growing population we have, the amount of people that need to get fed in the world, and reduced acreage of farming that goes on, it becomes an increase in demand for the crop nutrients, making sure you can maximize your yield out of the farmers’ crops. So that’s positive. The issue that we’re facing currently is we’re starting to see some foreign pressure in the phosphate industry. We’ve got a lot of phosphate being produced overseas in countries that have very low labor costs, low regulatory costs. And with the low costs associated with ocean freight, we’re starting to see a lot of those phosphates starting to come into the US and starting to work their way from the east towards the west.

John Cox | Vice President of Government Affairs at Rocky Mountain Power

For Utah families and Utah businesses, a key input is cost of energy and electricity. In Utah, we’re fortunate to have very affordable electricity, approximately 20 percent less than the national average, despite the fact that we’re one of the ten least dense states as it relates to population, and we believe that’s important. We’ve been through a period of significant infrastructure build-out. We’ve made a rate pledge to our customers that we would not raise rates through 2020. And it’s a priority for our organization to find ways in which we can continue to keep rates low. We believe that’s important to continue Utah’s economic development.

Christine Watson Mikell | Principal at Enyo Renewable Energy

The future is bright. Thanks to sPower, we had a couple of projects that we developed under our previous company, Wasatch Wind. Those are the two only operating wind projects that have been built in the last seven years. Now, we’ve taken a slightly different focus. We’re looking at wind and solar. But now we have tech companies who want to locate in Utah and want to be 100 percent renewable. We have municipalities that want to be 100 percent renewable. And we want to be a part of that solution.  So demand dynamics are changing.

How has the new administration impacted your company’s ability to succeed, in particular here in Utah?

Jon Cox | Vice President of Government Affairs at Rocky Mountain Power

Tax reform has been tremendously valuable to our customers. Effective May 1, 2018, Rocky Mountain Power announced what amounts to a 4.7 percent price decrease for our customers thanks to tax reform. We’re passing along all of those benefits to our customers.

Jared Jackson | Mine Manager at Simplot

One of the things we are starting to see with the new administration is more of a willingness to partner and work with industry. The president has asked for a federal strategy to ensure secure and reliable supplies of critical minerals and putting together a list of all the minerals that we need to make sure that we are not relying upon foreign interests. For our industry, the phosphate and the crop nutrients are not on there, but we feel they are critical for the future of this country to make sure that we have a food supply that is sustainable and long-term.

What are the most significant changes you’ve seen in the energy and minerals landscape in Utah over the past five years?

Christine Watson Mikell | Principal at Enyo Renewable Energy

As these tech companies look to locate here, they are going to create immense jobs right here on the Wasatch Front for construction and employment. But our rural economies are suffering. What we see, just by looking through the interconnection to Rocky Mountain Power, of our 29 counties, 16 of them have some type of renewable energy project. So, when you think about those companies that want to build these great big data centers here, they are going to create economic development in our rural counties. So our rural counties will be able to host those projects, which will then be able to bring those jobs here.

 John Cox | Vice President of Government Affairs at Rocky Mountain Power

Historically, with renewable energy, it’s been sort of a push factor. There have been mandates by cities pushing entities toward renewable energy. I would say that has changed in the last few years. I think now we’re seeing much more of a pull by the customer saying that we want this energy. And as prices have continued to decline and subsidies start to come off the books, we’ll continue to see the customers demanding more and more of that energy. We’re pleased that here in Utah our legislature and the governor have supported initiatives like a green tariff for companies that want to come here and pursue 100 percent renewable energy, that they can. That we can work together to accomplish that. We’re also working with cities who would like to pursue similar initiatives. And because of the innovative nature of Utah, we’re able to do that, and we believe that we’ll see more and more of that.

What are the greatest challenges that your industry is facing?

Mark Walker | Vice President of Marketing & Media Relations at EnergySolutions

I know in the nuclear industry, the aging workforce is a real issue. You’ve got these individuals that are 65 to 75 years of age that are still involved heavily in the nuclear industry because you don’t have this push of college kids going into engineering programs. It’s something that we need to address, pushing these engineering programs and letting these kids know that there’s great opportunity for people who get an engineering degree and go into these fields.

Ryan Creamer | CEO at Sustainable Power Group

I think the other issue that we’re facing as a generation, is how much technology has changed both in solar and wind, and where it used to be the most expensive power out there, today it is some of the most economical power that you can possibly buy. Having that technology change and shift, and only watching those technology curves continue amazes me. And the challenge that that’s going to create is that they have a defined lifetime. You almost have to question if it’s sustainable. It’s a question of balance between existing assets and what could be stranded assets, old tech versus new tech, and the cost of how all that goes together.

John Cox | Vice President of Government Affairs at Rocky Mountain Power

Infrastructure. Later this summer we’ll be proud to announce that the entire I-15 corridor from Idaho to Arizona will be fully electrified for electric vehicles. By the end of 2019 we’ll announce that all interstates in the state of Utah will be fully electrified. We had the former energy secretary who said, If you want to solve these problems, look towards electrification. So, first and foremost, electric vehicles. But I would also say the second leading source of emissions here along the Wasatch Front, as we talk about air quality, is area sources. One potential solution is electrification.

What do you need from Utah to help connect the resources we have with growing markets?

Josh Brown | Government Relations Manager at Rio Tinto

As we look at critical minerals, we’ve looked at opportunities to say, besides copper, molybdenum, gold, and silver, can we take other elements out of our ore? Most of these critical minerals are in smaller quantities; you can’t pick where the resources are. There are technology aspects where we can look at new ways to extract these types of materials, as well as ways to make it more streamlined or easier for us to look at options. And that can even go into E-Scrap and say, ‘can we process E-Scrap through a smelter and create products that traditionally wouldn’t have done because of regulatory hurdles, emission requirements, and those types of things?’

What can Utah do for the industry that would make a difference? Are there any infrastructure needs that you are aware of that might help your business model?

Ryan Creamer | CEO at Sustainable Power Group

Something that we need, whether it’s transportation of goods leaving Utah or serving ourselves here on the electrical system, it’s being able to connect to the grid and maximizing some of the rural resources that we have from solar and wind. Being able to interconnect and being able to transport that energy to where the load is being absolutely critical.

John Davis III | Partner at Holland & Hart

There has been a lot of discussion about either a pipeline or a rail line out of the Uintah Basin, either to the refineries here or elsewhere. I spend a lot of time on 40 going out to the basin, and the number of oil trucks—the increase over the past six or seven years is just dramatic. I feel sorry for communities like Heber that have to put up with that. I know the costs are incredible, and so far, they don’t seem to pencil out, but I think it’s something that everyone needs to take a really hard look at.

Mark Walker | Vice President of Marketing & Media Relations at EnergySolutions

I was with Steve Petersen, owner of Petersen, Incorporated. Their biggest concern is how are they going to transport this stuff. He was talking about proposing rail lines going into Colorado, because it’s so difficult to get anything to come this way. You hate to see that happen if they go, you want to have them build that infrastructure to come this way with that rail line. I know that that’s one of the obstacles.

In the next year or two, what are the most significant opportunities your company and/or sector is looking at?

Jared Jackson | Mine Manager at Simplot

One of the biggest opportunities that Simplot is looking at as a company is trying to leverage and consolidate our spending with our vendors. Instead of having this facility in Vernal that’s ordering parts or materials or contractor assistance, and then each of the other Simplot facilities doing their own thing as far as purchasing, we are consolidating all our procurement together to where we can leverage all the quantity we have for better pricing from our vendors.

John Davis III | Partner at Holland & Hart

You know, because of the tax reform, there are a lot of opportunities for a lot of US companies that are expanding in their industries, from mining, oil, and gas. They’ll have the ability to fund those projects, where in the past they didn’t have the ability to do it. So there is a lot of expansion in most of the facilities that we have there. Coal needs to be a big portion of our energy portfolio going forward, and with the administration being more advocating, coal needs to be a viable option. The coal facilities are able to do the necessary upkeep to the coal facility so they can be a viable option going forward, and especially reducing their emissions. They haven’t traditionally put a lot of money into it during the last administration because they looked at an end of life that was not out far enough to create that need for that investment.

Josh Brown | Government Relations Manager at Rio Tinto

As we look to be more technically advanced, technology expanding globally, copper needs will increase by millions of tons in just the automotive industry in the next ten years. So copper will be in a deficit globally in the next decade and we need to look at new opportunities, new mines, as well as other elements, such as lithium, that will continue to be a need for batteries.

Christine Watson Mikell | Principal at Enyo Renewable Energy

I certainly appreciate the low cost of energy that we have from our coal resources. As Wayne Gretzky said, you need to go where you think the puck is going to be, right? As a state, we need to be anticipating that. And I heard Governor Herbert say that coal has been a part of our history, but it’s not always going to continue to be our legacy. We are changing rapidly with technology. A lot of industries will change radically. It doesn’t mean that life is over because your part became obsolete. It just means that you have to change or get left behind. Is it scary? Yeah, but it’s supposed to be unnerving. Fear motivates us to get off our butts and try something else.

What would you like people reading Utah Business Magazine to know?

John Davis III | Partner at Holland & Hart

One, energy independence is an important goal for this country, and Utah can play a huge role in that. Two, we seem to forget that everything comes from the earth. The energy industries are the mechanism that we bring that out of the earth and put it to use.

Christine Watson Mikell | Principal at Enyo Renewable Energy

I worry about coal. We have to think about those rural economies. And if we are going to see a decline in coal, how do we work with these communities to ensure that they are going to have these jobs. If we are looking out in the future and anticipating that things might be changing, we can use dollars as we transition to clean energy to invest in those communities. We have opportunities here and now is the time that we should be looking out into the future and anticipating those things and not get caught at a cliff.

Ryan Creamer | CEO at Sustainable Power Group

If we’re going to help be a driver in the state of Utah, we need to figure out how to get some of the Fortune 50 here and doing it, because they are driving this change in other places. There is a change coming, and it’s refreshing from someone that sells power, because for the first time, energy efficiency has been so good in reducing some of our costs and load. From a power perspective, you would like there to be more, and I see that wave of change with the technology coming down the pipe at us. I don’t want to just be here to catch it. I want to be here to drive it.

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