October 4, 2011

Brownback asks energy industries to cooperate for growth

Gov. Sam Brownback urged leaders from the energy industry on Tuesday to work together to help spur job growth and ignite economic opportunities powered by wind and fuels that are rich in Kansas.

Executives representing some of the largest players in that potential growth agreed they could do that — as long as the state was willing to provide the proper tax incentives.

"We need to produce more energy here and bring less of it in from abroad. And we can do that," Brownback said at his energy summit Tuesday in Wichita.

Brownback said competition between different energy industries held back growth in the past and needs to be put aside, and that cooperation would push Kansas into the future as a leading energy provider.

"We need renewable energy. We need coal. We need oil and gas," Brownback said. "We're in the top 10 states in each of these fields, and we need to grow all of them."

Brownback's summit came a day after BP announced plans to build Kansas' biggest wind farm.

But in the wide open spaces of the state, there's even more room to grow, officials told a crowd of about 250 people at the Hyatt Regency.

Kansas, for example, ranks second in the nation in potential for wind energy but 14th in production, said Dave Lucas, vice president of energy and sales for Siemens Energy, which runs a wind turbine manufacturing plant in Hutchinson.

Lucas, and others, said Kansas needs to invest in infrastructure to help move generated power into the national grid, and that's not easy.

An eroding power infrastructure is one of the main concerns of the energy industry, said Steve Rus, executive vice president of Black & Veatch, a utilities engineering and consulting firm in Overland Park.

The company has surveyed utility executives, managers and technical support staffs at U.S. utility services over the past five years. This year's survey, Rus said, showed "aging infrastructure" as the top issue in the energy business.

The top environmental concern, Rus said, is water supply and management.

Water is a key factor in producing energy. It's needed for cooling in power plants and, in some cases, to generate the electricity itself.

Finding water is one of the tasks currently facing Shell Oil, which is back in Kansas for the first time in two decades, said Erik Bartsch, an exploration and appraisal manager for the company.

"We have an entire team of about eight to 10 people out looking for water," Bartsch said.

Bartsch said Shell is trying to find ways of taking less water out of the environment by recycling it or by using water otherwise unfit for drinking. He said each well uses about the same amount of water daily to fill four Olympic-sized swimming pools.

"Water is always a very emotional issue," he said. "And we think it's important that Shell continue to reduce its footprint in the water we use, both above ground and below the ground in our drilling."

But Bartsch also echoed a sentiment repeated throughout Tuesday morning: Kansas lawmakers and policymakers have to provide incentives for companies to stay.

Shell wants easier access to water contracts. The wind companies want Kansas to keep in place tax incentives that expire next year.

Mark Ruelle, president of Westar Energy, said new federal regulations by the Environmental Protection Agency would hinder its growth.

Dangling at the end of all this is the potential for boosting the state's employment in an economy begging for jobs.

Bartsch said Shell's drilling in Kansas could prove as lucrative as fields discovered in recent years in Texas, North Dakota and Louisiana, which has produced tens of thousands of jobs. Shell officials, however, warned that it could be up to a year before they know how productive drilling here will be.

"But if they're comparing it to those other states, those were terrific boons to the local economies," Brownback said.

Lucas, the Siemens executive, said every new job in the energy sector creates two more in other supporting industries.

Both Siemens and Shell officials said they could see job growth in their fields, ranging from engineers and technical support to construction and transportation. They offered to work with universities, community colleges and technical schools to design the proper programs to build a workforce to power the new energy industry awaiting Kansas.

That is if, they said, the state can provide the incentives and regulatory changes needed to entice them to stay.

Brownback said the biggest barrier to policy has been bickering among various energy businesses, each trying to put itself in the best position. Brownback said they need to cooperate more and compete less.

"We need to get past that. We will get past that," Brownback said. "We need to see each of these energy sectors grow as fast and as strong as they possibly can in the state of Kansas.... We need that for us to be able to grow as a state."

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