The energy sector fuels $21 billion in economic activity for Utah, eclipsing outdoor recreation and tourism, Gov. Gary Herbert announced Thursday at his annual Energy Development Summit.
A new report, prepared by Applied Analysis of Las Vegas, found petroleum refining represents the largest share of Utah’s energy industry at $7.2 billion, followed by oil and gas production valued at $5.2 billion and $4.2 billion in electricity generation.
“The energy sector is the 15 percent of the economy that fuels the other 85 percent,” Herbert in a prepared statement. “It is a critical industry we must work to grow, which is why it has been one of the four cornerstones of my administration and will continue to be.”
Utah’s fossil-fueled energy industry — which includes exploration, extraction, refining and power generation and transmission — directly employs 10,600, with another 29,000 jobs in indirect and induced employment.
That contrasts with the 129,000 jobs supported by tourists who spent $7.4 billion in Utah in 2012, according to the University of Utah’s Bureau of Economic and Business Research.
The Outdoor Industry Association reports $12 billion in consumer spending associated with recreation on Utah’s scenic mountains, deserts, rivers and canyons.
That’s somewhat less than the value of the electricity, coal, natural gas, oil and finished fuels produced in Utah, according to the new study commissioned by the governor’s office.
Herbert touted the report during his energy conference at the Salt Palace, while Salt Lake City environmentalists gathered outside to denounce what they see as the governor’s heavy emphasis on a dirty industry which leaves a big footprint on the landscape.
“Continuing to promote fossil fuel exploration and development in Utah to power the majority of Utah’s future energy needs will take even more of a toll on our native wildlife,” said Allison Jones, Wild Utah Project’s executive director. “Sage grouse are being driven off mating leks by drill rigs. Fishing grounds are impacted by spills and dewatering for extraction operations. And prize elk-hunting grounds are degraded and riddled with oil and gas wells and access roads.”
Protesters deployed street humor to make their point Thursday. Peaceful Uprising gathered around fire barrels to greet conference-goers in the morning. In the afternoon, a dozen college students posing as the living dead staged a “zombie march” across downtown Salt Lake City.
Jones and other activists want to see greater focus on emission-free and renewable energy from Utah’s leaders.
“In the wake of our driest and warmest winter ever, we need to move beyond a heedless rush to wring every ounce of fossil fuels out of Utah lands,” said HEAL Utah executive director Matt Pacenza.
Cody Stewart, director of the Utah Office of Energy Development, conceded fossil fuels are a big part of the conference, but noted many of its breakout sessions were devoted to renewables and efficiency.
“When 85 percent of our energy as a state is fossil fuels, that’s where the emphasis is going to be,” said Stewart. But he argued solar and wind are advancing under the governor’s “all of the above” energy strategy.
While utility-scale solar has yet to take root in Utah, numerous projects are in the works in southern Utah, all on private and state trust lands. For example, SunEdison is developing 22 solar projects in Iron and Beaver counties. They will be on line by fall of 2016, according to Bryan Harris, a Beaver-based project manager for SunEdison.
The utility is investing $1 billion in the projects that are projected to employ 800 during the 16-month construction window. Collectively, they represent 565 megawatts in generating capacity and the power will be sold to Rocky Mountain Power, Utah’s largest utility.
Oil and gas was a big piece of Utah’s energy picture in 2013, yielding a record $4.6 billion in production and accounting for 4,000 direct and indirect jobs.
But the new report is based on data from that peak year. Oil prices have since fallen below $50 a barrel and drilling has dropped off. Production in the coming years will slide, both in terms of value and volume.
Today, just four to six rigs are operating in Utah — down from a high of 36 two years ago.
Most of the oil and gas activity occurs in the Uinta Basin, whose two counties enjoy the highest average monthly incomes in the state, slightly ahead of Salt Lake County, according to Uintah County Commissioner Mike McKee.
“This is because of our extractive industries. There are good paying jobs,” McKee said. “We have a treasure chest of natural resources. We have great opportunities.”
Tax revenue from Utah’s energy sector was $655 million, mostly from federal royalties and property taxes. State trust lands pulled in $77 million. And severance taxes raised $59 million.
But critics say Utah leaves a lot of revenue on the table by charging only a 3-percent severance tax on oil and gas — far less than other energy-producing states.
“We give away our non-renewable resources to for-profit polluters at bargain-basement prices,” said Ingrid Griffee of Utah Moms for Clean Air. “This discount isn’t free, though. It’s given on the backs of our own children as smog engulfs playgrounds, landscapes are destroyed and schools are funded at the lowest level in the nation.”