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This month, Utah Business partnered with Holland & Hart to host a roundtable event featuring Utah’s energy leaders. Moderated by Blair Blackwell, manager of corporate affairs at Chevron, they discussed what Utah’s energy future looks like, the challenges and opportunities that lie ahead, and the evolving conversation around climate in the industry. Here are a few highlights from the event.
What do we, as an industry, want Utahns to know about our energy future?
Matthew Anderson | Deputy Director | Utah Office of Energy Development
We’re really excited about the State Energy Plan. Our office believes that more is going to happen in the next 10 years in the energy space than what’s happened in the last 15, so it’s important we have a guiding document to move us along. We went out and listened to Utahns in 22 of the 29 counties—ones that had energy production—and met with elected officials, energy producers, and people on the ground to get to know them. I will note here that for the first time ever, climate was mentioned in our energy plan. We believe that climate change is real and that we need to be engaging with the market and creating market-driven solutions to address it.
Josh Brown | Director of Government Affairs | Rio Tinto
About two weeks back, Rio Tinto Kennecott announced the production of tellurium, a byproduct of our product stream. We will be producing about 20 tons per year, which isn’t a lot in the mining sense, but in the tellurium sense, we’re one of the top two producers in the US now. There are a lot of opportunities for mining companies, as they go forward, to see if there are things that can help augment the overall production of materials from our ore body. At Rio Tinto Kennecott, I believe we have roughly 12-13 of the 35 critical minerals on our list. We’re seeing which ones are viable, and we’ll continue to do that.
Brian Somers | President | Utah Mining Association
It’s really important that this tellurium, from the extraction through the processing and manufacturing, is all contained in North America. Currently, we’re 95 percent dependent on foreign sources for tellurium. This is a really important step to make sure that we can extract things here. If [these materials] have to be sent to China or some other place to be processed or manufactured, it doesn’t really help us in our mineral and energy independence. In many cases, these are fairly small pieces of a product stream, but ones that are very important.
Steven Ridge | VP & General Manager, Western Gas Distribution | Dominion Energy
One of the projects I’m most proud of our company for pursuing is our rural expansion project. The plan talks about rural constituents, and I think the pandemic highlighted a great divide in terms of broadband connectivity and other resources in particular. Our first community was Eureka. They’ve got about 300 water utility customers. We got approval to go build a mainline up that canyon from the valley, and we’re in the process now of installing gas meters.
It seems like a small thing, but one of the best days I’ve spent since I’ve [moved to Utah] was with their former mayor, Mayor Castleton. He told me in his eight years as mayor, the thing he was most proud of was the fact that he brought natural gas to the community of Eureka. They were running propane-powered boilers at the high school. And with the money they’re going to save just by converting to natural gas, they’re talking about getting a new school bus and funding after-school programming. For these small communities, the ability to count on an abundant, affordable, and reliable resource—like our natural gas—makes a difference, especially when you compare it to propane.
Matthew Anderson | Deputy Director | Utah Office of Energy Development
We are very excited about the Utah hydrogen hub. Earlier this year, the city of Utah entered into a Memorandum of Understanding (MOU) with New Mexico, Colorado, and Wyoming to compete for $8 billion for up to six hydrogen hubs across the country. We’re working diligently with this group right now and are hoping to get it. Our state is so well positioned for this, and we can’t wait to see it happen. We have our salt domes down in Delta where we can store it, but these other states have a lot of resources to provide, too—specifically creating hydrogen out of natural gas from New Mexico and the west slope of Colorado.
Thomas Holst | Senior Energy Analyst, Kem C. Gardner Policy Institute | University of Utah
I see three unique things that Utah provides regarding the project you’re talking about, Matt. You mentioned storage. The idea that a salt dome here in Utah is right next to the intermountain power plant—that’s unique. Most salt domes are down on the Gulf Coast. Second, Utah provides demand, and that demand is with the neighboring Intermountain Power Plant. There will be a fuel switch in 2025—it will be 30 percent hydrogen, 70 percent natural gas, and then there will be a subsequent fuel switch to where it’s 100 percent. I don’t know that the other states have that demand component or offer it, but Utah does. Those things make me optimistic about Utah’s future.
What are the challenges and the opportunities in our industry moving forward?
Rikki Hrenko-Browning | President | Utah Petroleum Association
We’ve got to have a regulatory framework that supports sequestration as part of how we address these climate challenges going forward. And giving the state an opportunity to have that regulatory jurisdiction, as opposed to having that sit with EPA, is incredibly important. It plays very much into Utah’s energy future to have some control of our own destiny and to be proactive. Sales tax was a big issue for us and something that I think will continue to be an issue to ensure that upstream production, as well as midstream pipeline, have the same tax treatment as every other wealth-generating industry in the state. The legislature has done a lot to reduce taxes on business inputs and remove tax pyramiding for mining, refining, and manufacturing…upstream oil and gas is pretty much the only industry that doesn’t yet have that same tax treatment. So I think that’s a long-term issue for us and something that will be on our radar going forward.
Brian Somers | President | Utah Mining Association
We’ve got to get away from these “colors” of hydrogen. If we want hydrogen that has no carbon impact, that’s fine. If we want to use fossil fuel and carbon capture, that’s great. But I think that some of the discussions around green hydrogen can be a little bit problematic. Here in Utah, we’ve got gobs of natural gas, and we’ve got gobs of coal you can use to produce hydrogen. The thing we don’t have a lot of, frankly, is water. And I know that there are a lot of questions about water usage in creating hydrogen, but regardless, we’ve got to get away from the colors.
California has decided they only want green hydrogen as opposed to blue hydrogen, which can come from coal and natural gas with carbon capture. That becomes an issue because if you’re in a state where you don’t have that feedstock and abundance, how do you provide for that market if that’s the only color of hydrogen that they’re going to accept? That’s going to have to be a fight between some of the states that are producing the hydrogen and some of the states that want to consume it.
Josh Brown | Director of Government Affairs | Rio Tinto
There’s not enough copper in the pipeline post-2025 being mined or explored to meet the needs for the electrification future. So these types of “mineral runways” will need to be addressed. It’s generally a three- to five-year timeframe to permit a mine. We have a project in the US that’s going on about 20 years with probably eight to 10 to go. It becomes very cost advantageous for larger mines if they can withstand that, but the smaller mines that are looking at some of these smaller quantity minerals don’t have the ability to go through that regulatory process. There really needs to be an opportunity to make our regulatory process more streamlined. It’s not an effort to be unsafe or skip the regulatory process, I just think there’s a way we can expedite.
Ashley Peck | Partner, Environment, Energy and Natural Resources | Holland & Hart
From a regulatory perspective, we focus a lot on critical minerals. We have sort of an expectation from our clients that the regulatory process will be different because of a critical mineral. It’s really not at this point. We are representing developers of nickel mines around our footprint and lithium mines, and then over on the other side, still representing coal—the permitting process is the same. We’re facing the same appeals by environmental groups that are tying up these processes, and it’s a challenge for a state trying to support these projects. The delegations under federal law are a dual regulatory process. It’s just a huge impediment that environmental groups are making the same arguments, regardless of whether it’s a lithium mine or a coal mine. The permit process and the appeal process can tie up a project for 10 years. We don’t have any more time to waste on a 10-year challenge to get a project to market.
Rikki Hrenko-Browning | President | Utah Petroleum Association
It’s a well-worn phrase already, but capital is coward. When you have to allocate capital dollars across jurisdictions, projects, and resources, it’s a reality that really limits a lot of players and entrants that might bring innovation into the energy space. Oftentimes, the folks that want to see innovation in the energy space are cutting off their nose to spite the face, unfortunately, and not looking long-term at the implications of some of those legal challenges brought forward.
Thomas Holst | Senior Energy Analyst, Kem C. Gardner Policy Institute | University of Utah
I bought an EV recently, and one of my friends came to me and said, “Do you know that your EV battery was likely recharged by electricity that was 90 percent coal?” I said, “Okay, that’s fine. But I have confidence the utility is moving in that direction.” On the utility side or on the energy provider side, I noticed that tier three fuels were rolled out by Chevron and the other four refiners here in North Salt Lake. With those refineries supplying tier-three motor fuels, 80 percent fewer emissions are given off by automobiles. And this is a case where many people own automobiles that are older than 2017, so the industry—or the utilities of the refineries, in this case—have moved forward, and the consumers have to catch up. Energy consumers and energy suppliers are moving in the same direction, but they won’t be in lockstep.
Brian Somers | President | Utah Mining Association
The thing that I love about the tier three fuel example is that you’re solving an emissions problem with better and newer technology, as opposed to trying to mandate your way out of it or trying to force consumers to use something they don’t want. Most consumers didn’t see any kind of disruption in their lifestyle or quality of life as a result of that, and yet, their tailpipes are putting out much fewer emissions. I think that’s the model we need to look to for a lot of these challenges. What technological advancements can we bring to mitigate some of the environmental impacts and not try and force consumers to diminish their quality of life or to accept something that’s less useful to them or more expensive to them?
Do you think the climate is becoming a larger part of the dialogue here in Utah?
Matthew Anderson | Deputy Director | Utah Office of Energy Development
During this legislative session, there were a number of pieces of legislation that included the term “climate change.” I don’t know if that would’ve happened 15 years ago, and I think that’s a step in the right direction. Right now, we’re looking at what used to be the Great Salt Lake. People drive past it every day, and they see that we are being impacted. People who depend on the land are seeing it more as well.
Josh Brown | Director of Government Affairs | Rio Tinto
Three or four years ago, Rocky Mountain Power, Rio Tinto Kennecott, Utah Clean Energy, and various non-governmental organization (NGO) groups worked to help pass a resolution to recognize that the climate was changing. At that time, the legislature was very adamant about not saying that man had any input one way or the other. Only four years ago, it was still pretty contentious. Now, in multiple discussions and pieces of legislation, people are recognizing that there is a difference. So it’s a great first step, and the industry sees it. We have to be responsive and agile. I think the population as a whole has not changed their life in any fit, form, or fashion. If that happens, it’s going to be a different world.
Ashley Peck | Partner, Environment, Energy and Natural Resources | Holland & Hart
It sounds a little “kumbaya,” but it’s important to find common ground. Things are so divisive, often unnecessarily so. In dealing with environmental groups and mining companies, I think we have more in common than we know at the end of the day. If we don’t solve climate change or put a dent in it, we won’t have anything else to worry about at a certain point. We are counseling our clients to do the counterintuitive thing: Identify your opponents, reach out to them, and sit down with them early on and try to resolve those issues so that we’re not five years down the road fighting about it in federal court or before an administrative tribunal.
Is there anything else you’d like to add?
Matthew Anderson | Deputy Director | Utah Office of Energy Development
[I’d like to say something] to those entering the industry: You’re going to make a lot of money. Everybody thinks that Utah’s tech industry has the highest-paying jobs on average in the state. That’s not true—it’s the energy industry. We expect that to grow. My office is engaged in going to universities and schools across the state and informing students about the opportunities there are in the energy sector. For those entering the energy industry, there are a lot of upsides right now.
Thomas Holst | Senior Energy Analyst, Kem C. Gardner Policy Institute | University of Utah
This is an exciting time to be in the energy industry. When I entered the energy workforce, it was a couple of decades ago. I was a linear programmer for Mobil Oil, and I was allocating what was considered to be scarce resources to refineries within Mobil’s network. There was something called the “peak oil theory” that said at a certain date, we would run out of fossil fuel resources. Now that whole conversation has changed, and we’re talking about renewable resources that will never run out. The good message is that Utah has abundant renewable resources. There are good challenges, and it is an exciting time to be in the energy industry.
Steven Ridge | VP & General Manager, Western Gas Distribution | Dominion Energy
I’d like to compliment the state, the government, and the industry. I’ve spent most of my career in New York and Virginia, and I would just say that it’s remarkably refreshing to come to a state where there seems to be a real sense of problem-solving and being pragmatic and collaborative. It speaks to the concept of having seats at the table. I think the Governor’s Office does a really good job of making sure they’re staying close to the market, and the proof is in the pudding. Utah is number one—or at least in the top three states—to do business in every published study on that topic. I think that’s a testament to the quality of the pragmatic Utah way of putting aside differences and trying to figure out solutions that serve people.
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