Energy News: Utah Returns to Being a Net Energy Importer
by Michael D. Vanden Berg
Utah is fortunate to have abundant and diverse energy resources including large reserves of conventional fossil fuels and several areas suitable for renewable resource development. Producing these resources has always been a priority for Utah—not only does responsible development provide good high-paying jobs, mostly in rural areas of the state, but it also contributes significant tax revenue. And of course, this energy also drives our modern way of life. For the past 40+ years, Utah has enjoyed the status of being a net energy exporter, meaning Utah produced/generated more energy than needed and was able to export the excess energy to surrounding states (and sometimes to other countries). Energy production in Utah began decreasing in 2015 and continued to drop until it crossed the consumption line in 2020, flipping Utah back to being a net energy importer. This new situation continued into 2021, with an even larger differential, and is predicted to continue in the near term.
In the late 1960s and throughout most of the 1970s, energy production in Utah could not keep up with energy consumption. Then in the early to mid-1980s, two interesting things happened: Utah’s energy consumption plateaued, and energy production skyrocketed—these events flipped Utah squarely into net energy exporter status. The consumption plateau was probably related to the late-1970s to early-1980s recession; individuals were simply not using as much energy during this time. The large increase in energy production was specifically tied to increased fossil fuel production related to high commodity prices in the early to mid-1980s. Utah experienced a near doubling of coal production during this time, some to feed the newly built Intermountain Power Plant near Delta, Utah, and more to feed a growing domestic export market. Crude oil production ramped up to what was a record high at the time, near 41 million barrels in 1985, and production of natural gas also greatly increased due to similar high prices.
Starting in the late 1980s, energy consumption in Utah resumed a steady climb, averaging about a 2 percent annual increase. Energy production remained high based on the continued success of fossil fuel production. Single-year fluctuations in production can typically be tied to specific events, such as the temporary closure of the Skyline coal mine in 2004 (and subsequent dip in the production curve), which removed about 4 million tons of coal from the market.
Several events led up to the significant production decline that started in 2015 and continued into 2021, shifting Utah back to net energy importer status. Natural gas prices never really recovered after the 2008 Great Recession but stayed particularly low after the oil and gas downturn in 2015. Natural gas production peaked in 2012 at about 490 billion cubic feet (Bcf) and then steadily dropped to just 240 Bcf in 2021. Coal production in Utah was already in decline since about 2008 but dropped a significant 3.4 million tons between 2014 and 2015, and continued to slide, reaching only 12.5 million tons by 2021. Crude oil production reached a near record high in 2014 of 41 million barrels, but quickly collapsed after the 2015 price shock, down to only 30.5 million barrels. Oil production has since been volatile, going up to 37 million barrels in 2018 just to crash again down to 30.5 million barrels in 2020. Renewable energy production has been on the rise, more than doubling from 2015 to 2021 with the development of significant wind and solar resources, but still only represents about 7 percent of total energy production, which is still mostly drowned out by the massive decreases in coal and natural gas production.
Although it is attractive for the State of Utah to be “energy independent” and have the luxury of exporting energy to other states, Utah enjoys good relationships with surrounding states and will not be deprived of the energy needed to keep its economy and way of life moving forward. However, the significant decrease in production, mostly natural gas and coal, does have impacts in the rural communities that rely on related jobs and economic contributions. Consumption of energy in Utah will continue to march forward, increasing about 2 percent every year as population increases and as individuals use more energy each year. This ever-increasing energy demand will need to be supplied from somewhere, whether from increases in renewable generation, or an increase in fossil fuel production, or both. Luckily, Utah has the diverse energy landscape needed to fulfill energy demands well into the future.