Posted: October 09, 2013
The impact of Colorado’s energy diversity
Good news for our economyCasey Grosscope
Colorado has one of the most diverse energy economies in the U.S., and is a national leader in both fossil and cleantech. It ranks fourth in fossil fuel and seventh in cleantech employment concentration out of the 50 largest metro areas in 2012.
This balanced energy approach allows the state to benefit from technological advances across the energy sector. We are a top-10 wind state, a top-five solar state and the national leader in LEED-certified energy efficient building space per capita.
According to the Metro Denver Economic Development Organization’s report “Energy, Metro Denver and Northern Colorado Industry Cluster Profile,” cleantech job growth is on the rise. The sub cluster directly employed 18,750 people in metro Denver in 2012, and the region’s cleantech employment increased 36.8 percent between 2007 and 2012, versus a 13.8 percent increase nationwide over the same period.
In fossil fuels, we can also boast our positions as a top-10 oil-producing state and a top five natural gas-producing state, with 10 of the nation’s 100 largest natural gas fields and three of the nation’s 100 largest oil fields located in Colorado, as noted by the Colorado Energy Coalition.
Innovation in the energy industry is shifting energy leadership and the economic landscape in the United States. This shift is most apparent in the natural gas industry. New technologies in horizontal drilling and hydraulic fracturing (fracking), allow for increased U.S. oil production, as well as increased production of oil and gas from tight shale formations.
According to the International Energy Agency (IEA) the U.S. is on track to become the number one oil producer in the world by 2020. Furthermore, a recent national survey conducted by the Denver-based Western Energy Alliance confirms 87 percent of U.S. voters want domestic production and 78 percent favor increased development of our own oil and natural gas to meet our nation’s growing demand for additional sources of energy. Denver, the hub of the West, can expect to be economically impacted in a positive way by this growth.
While the majority of Colorado’s natural gas reserves and organic-rich shale deposits are located in the Western Slope and Weld County, there is no question that fossil fuels have a direct impact on the Denver metropolitan region. This sub-cluster directly employs more than 26,000 people in the metropolitan Denver/Northern Colorado region, and Denver is home to roughly 54 percent of fossil fuel sub-cluster employment.
As with cleantech, employment in this sub cluster increased 29.3 percent between 2007 and 2012, as compared with a 14.3 percent increase nationally. The initial impact of this growth can been seen in an increase in occupied office space, a trend that has the commercial real estate industry taking notice.
Recent and future growth in the oil and gas sector equates to almost 1.6 million square feet of positive absorption, with nearly 300,000 square feet posted in 2012 in the CBD. Current tenants taking full-floor or multiple floor expansions within Denver’s Central Business District (CBD) include Newfield Exploration, Anadarko Petroleum Corporation, EOG Resources, Noble Energy and Williams Exploration & Production. Antero Resources executed a lease for 92,643 square feet at One Union Station, a five-story office being built at the northeast corner of 16th and Wynkoop streets, with anticipated completion by December. While this demand for office space is concentrated in Denver’s CBD, the trend can be seen throughout the metropolitan area, including Denver, Arapahoe and Douglas counties.
As many of the economic benefits of hydraulic fracturing are emphasized, so too are the potential environmental, legal and community concerns. This on-going dialogue has led to growth in the businesses serving the fossil fuel sub sector. The fast-growing energy law firm, Burleson LLP, recently opened a Denver office to service companies involved in the development of shale formations in the Rocky Mountain region.
RETTEW, an Engineering News-Record (ENR) top 200 design firm, just opened a Denver office this past September—their first office outside the Appalachian region—to service drillers in other shale plays. IMA, a recognized leader in providing innovative insurance solutions to the complex needs of the oil and gas industry, is building a new headquarters in Denver. The $32 million, five-story building with street-level retail near Union Station will house 200 IMA employees.
Denver, after surviving the worst of the Great Recession, is entering the next development cycle, and our energy industry is well-positioned for further growth. Our state offers abundant natural resources, coal, natural gas, oil; access to clean energy resources, including wind and solar; proximity to higher education programs and research centers, such as the Colorado School of Mines and the National Renewable Energy Laboratory (NREL); and an environment that attracts and retains senior management and scientific talent.
The energy industry’s growth across the West plays a far reaching and beneficial role to Colorado and local economy— from output, jobs, wages and benefits, to tax revenue, public works and community development. As well as its direct economic impact, this industry’s continued diversification and current resurgence offers Denver a unique opportunity to capitalize on significant indirect impact on the state, regional and local economies.
Casey Grosscope is an Associate Director at Newmark Grub Knight Frank, Denver's premier resource for commercial real estate services. In his role at the firm, Mr. Grosscope aligns the specific financial and operational goals of his clients with current market conditions, integrating solutions to support his clients’ initiatives and long term profitability.