Kern County Energy Portfolio - Kern Economic …kedc.com/wp-content/uploads/2014/11/Kevin-Hopkins.pdf · A Presentation by Kevin Hopkins Director of Research The Communications Institute

A Presentation by

Kevin Hopkins Director of Research

The Communications Institute

November 12, 2014

Kern County

Energy Portfolio

and Forecast

Kern County Energy Portfolio & Forecast


Goals of The Communications Institute:

Objective analysis of critical public policy issues.

Emphasis on economic & scientific underpinnings.

Education of leaders in government, business, & media.

Communications consulting with government & business.

Focus on emerging state and regional energy issues.


The Powering California Research Series

September 2011:

Assessing California’s Energy Needs

January 2013:

Understanding the Economic Impact of

the Monterey Shale

January 2013:

Monterey Shale Development: Impact on

Employment in the San Joaquin Valley

With funding from:

Western States Petroleum Association


Goals of this Presentation

Review the national and state energy context.

Review the Kern County economic environment.

Highlight the Kern County energy promise.

Examine Kern County’s conventional energy picture.

Highlight Kern’s growing renewable-energy contribution.

Project the economic effects of greater energy development.


The National and State Energy Context


America’s Energy Transformation

Dramatic turnaround: levels not seen in 20 years.

Could overtake Saudi Arabia production by 2020.

IEA: net U.S. energy self-sufficiency by 2035.



Dramatic turnaround: levels not seen in 20 years.

Could overtake Saudi Arabia production by 2020 2014.

IEA: net U.S. energy self-sufficiency by 2035.



0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025

US Oil Production Forecast, 2013

US Oil Production Forecast, 2014

% Change in Forecast, 2014/2013

Source: U.S. Energy Information Agency


America’s Energy Transformation: Renewables

Renewable energy generation—

primarily wind and solar power—

provided more than 40% of the

new energy capacity in the U.S. in

the first three quarters of 2014.

Source: Federal Energy Regulatory Commission,

Energy Infrastructure Update, October 2014


Energy in California: Demand

California’s energy demand = energy conservation success.

Ranks 47 out of 50 in per-capita energy use.

Almost 30% lower than national average.

With 12.4% of U.S. population, uses only 8.6% of U.S. energy.

Without conservation, would need some 75% more energy today.


Energy in California: Oil & Gas Supply

Largest untapped oil & gas production potential in the United States.

Third in U.S. in oil production & refining capacity.

Yet between 1985 and 2010, California oil production declined by 47%.

Production has finally started to edge up beginning in 2012.


Energy in California: Oil & Gas Supply



Energy in California: Renewable Energy

Renewables currently account for 27% of California energy.

More than half from hydro, but role of solar, wind, & biomass is growing.

California on track to meet its goal of having 1/3 of energy from renewables.


Energy in California: Growing Demand

And yet because of population and economic growth, demand will double by 2050.


The Kern County Economic Environment


Kern County Economic Environment: Now

Third most competitive economy in the U.S. (KC BoS)

25,000 new jobs (gov’t & private) in 2012 & 2013. (Caltrans)

3,300 new construction jobs, most energy-driven. (Caltrans)

Jobless rate fell from 15.9% in 2010 to 11.8% in 2013.


Kern County Economic Forecast: 2014 – 2019

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Wage & salaryemployment

Population Real per capitaincome

Real taxable sales Industrialproduction

Change in 2014

Annual Change, 2014-2019

Change in 2014 Annual Change, 2014-2019 Wage & salary employment 3.2% 1.9% Population 1.2% 1.8% Real per capita income 3.5% 2.1% Real taxable sales 5.4% 2.2% Industrial production 4.3% 3.8%

Unemployment rate 11.2% (2014) 8.3% (2019)

Source: Caltrans 2014 Economic Forecast


Kern County Will Need A Lot More of This…


Kern County’s Energy Promise


Kern County’s Energy Promise

If Kern County were a state, it

would be the 4th largest oil-

producing state in the country

(behind Texas, North Dakota, and Alaska).

Kern County

produces 72% of

California’s crude

oil, and is home to

the state’s five largest producing oil fields.

Kern County accounts

for about 58% of the

state’s total natural

gas production.

Kern County’s currently

deployed renewables

capacity is 7,500 MW—far

beyond the use of renewables

in any other California County.

The Tehachapi Wind Resources

Area generates almost half of the wind energy produced in California.


Energy’s Value to Kern County’s Economy

Kern County’s top 3 industries in economic value:

Oil & Gas, $36.4 billion, 32% increase (2012-2013).

Energy Generation (Renewables Energy Sector), $7.4 billion,

31.5% increase (2011-2012).

Agriculture, $6.7 billion, 18% increase (2012-2013).

Source: Kern County Assessor’s Statistical Fiscal Summary


The Energy—Economic Cycle in Kern County

Energy

Production

Economic

Performance

Fourth-strongest recovering area. No. 2 in millennial job creation. Fastest-growing metro workforce. No. 4 region for STEM jobs.

—2015 CA Investment Guide


The Kern County Conventional Energy Picture


Kern County Oil Production: Leading the Nation



Kern Oil & Gas Production In Perspective

Although Kern County is the nation’s leading

crude oil producer over the past two

decades, oil production has been in steady

decline—and has fallen by 36% since 1992.

After rising substantially in the late 1990s,

natural gas production has declined over

the past decade.

However, since 2008, production levels have

begun to improve. In 2013, more gas was

extracted than in any year since 2007.

Even though crude oil and natural gas

production have been relatively stagnant, the

values of these resources are at near-

record levels in Kern County.


The Monterey Shale/SJV Studies

Title:

The Petroleum Industry and the Monterey

Shale: Current Economic Impact and the

Economic Future of the San Joaquin Valley

Date Published:

August 2013

Written By:

Antonio Avalos, Ph.D., & David Vera, Ph.D.,

Craig School of Business

California State University, Fresno

Sponsored By:

Western States Petroleum Assn.

Principle Methodology:

Projection of historical data


The Monterey Shale/SJV Studies

Title:

Monterey Shale Development:

An Analysis of the Impact on Employment

in the San Joaquin Valley

Date Published:

May 2014

Written By:

Gokce Soydemir, Ph.D.

Head of Economic Forecasting Team

California State University, Stanislaus

Sponsored By:

The Communications Institute/WSPA

Primary Methodology:

Analogical extrapolation from North Dakota


Oil Production Forecast

0

50,000

100,000

150,000

200,000

250,000

300,000

2015 2020 2025 2030

Baseline Scenario (total value)

High-Resource Scenario (incremental)

Oil-Boom Scenario (incremental)

Incremental Oil Production from the Monterey Shale, Fresno Study (1,000 barrels/year)

2015 2020 2025 2030

Baseline oil production (total value) 91,250 127,750 127,750 120,450 High-Resource Case (incremental) 14,600 21,900 29,200 43,800 Oil-Boom Case (incremental) 14,600 40,150 124,100 146,000

High-Resource Case (percentage chg) 16.0% 17.1% 22.9% 36.4% Oil-Boom Case (percentage change) 16.0% 31.4% 97.1% 121.2%


Oil Production Forecast

Incremental Oil Production from the Monterey Shale, Stanislaus Study (1,000 barrels/year)

2015 2020 2025 2030 Baseline oil production (total value) 195,372 203,715 212,414 221,484 Shale Case oil production (total value) 206,241 223,707 240,759 253,752 Percentage Increment 5.6% 9.8% 13.3% 14.6%

190,000

200,000

210,000

220,000

230,000

240,000

250,000

260,000

270,000

280,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015 2020 2025 2030

Baseline Case

Shale Case


Kern County’s Growing Renewable-Energy

Contribution


Kern County: A Commitment to Renewables

Goal : 10,000 MW of renewable energy by 2015.

Expediting permitting > more solar & wind projects

approved than in any other U.S. jurisdiction.

8,200 MW now permitted; 3,000 MW in pipeline.


Kern County: Economic Value of Renewables

9,500 construction & operational jobs.

$25 billion in investment.

$150 million in new property tax revenue.

Power for more than 7 million people.

Source: Kern Business Journal, December 2013


Kern County’s Solar Potential


Solar Power in Kern County

—Kern Business Journal, October/November 2012


Solar Power in Kern County: Google

—Los Angles Times, September 22, 2014

GOOGLE INVESTS $145M IN KERN

COUNTY SOLAR PROJECT

The 82-megawatt project will feed enough power to the grid for 10,000

homes, Google said. It is expected to bring 650 jobs to Kern County.


Solar Power in Kern County: MidAmerican Solar

In January, MidAmerican Solar and SunPower brought their Solar Star

development project online.

The world’s largest solar plant—579MW capacity, 1.7 million panels.

Construction began in early 2013; to be completed year-end 2015.

Has provides 600 construction jobs on-site.

Will deliver more than $500 million in regional economic benefits.


Solar Power in Kern County: Catalina

Last fall, EDF Renewable Energy dedicated its 143 MW Catalina

Solar Project.

The world’s eighth largest photovoltaic plant—1 million PV panels.

Will serve electricity needs of 35,000 homes.

Has provides 500 construction jobs on-site.

Will offset 250,000 metric tons of greenhouse gases annually..


Wind Power in Kern County: Alta Wind Center

Alta Wind Energy Center is the nation’s largest wind facility.

Generation capacity of 1.548 MW of power.

Can provide electricity for up to 450,000 homes.

Generates $30 million in royalty payments to farmers.

Property tax payments of more than $40 million annually.

State sales tax payments in excess of $200 million.


Wind Power in Kern County: Google


Battery Storage: Tehachapi Energy Storage Pjt


Biomass: Conversion of Coal-Fire Mt. Poso Plant

$50 million project located north of Bakersfield.

Keeps 2 million pounds/day of agricultural waste out of landfills.

Significantly reduces sulfur pollution.

Will provide power for 30,000 homes.


Economic Effects of Greater Energy Development


Economic Impact Forecast

1,500,000

1,550,000

1,600,000

1,650,000

1,700,000

1,750,000

1,800,000

1,850,000

2015 2020 2025 2030

Baseline

High-Resource Scenario

Oil-Boom Scenario

San Joaquin Valley Employment Impact: Fresno Study

Employment (number of jobs) 2015 2020 2025 2030

Baseline 1,568,187 1,596,395 1,612,998 1,617,777 High-Resource Scenario 2,151 16,284 91,275 159,170 Oil-Boom Scenario 2,151 46,649 133,335 195,683


Economic Impact Forecast

San Joaquin Valley Employment Impact: Stanislaus Study

Category 2013 2015 2020 2025 2030 17yr %Δ

Baseline 1,591,766 1,672,482 1,716,145 1,824,096 2,065,460 29.8%

Shale Case 1,591,766 1,640,586 1,797,880 1,961,862 2,273,051 42.8%

# of Jobs Δ 0 -31, 895 81,735 137,766 207,591

1,500,000

1,600,000

1,700,000

1,800,000

1,900,000

2,000,000

2,100,000

2,200,000

2,300,000

2,400,000

2,500,000

2015 2020 2025 2030

Baseline

Shale Case


Jobs by Sector

Employment-Level Increases by Sector: Stanislaus Study

Category 2013 2015 2020 2025 2030 17yr %Δ

Total Jobs: Baseline 1,591,766 1,672,482 1,716,145 1,824,096 2,065,460 29.8%

Education & Health 149,406 156,982 173,305 187,803 205,447 37.5%

Manufacturing 102,792 108,004 109,439 110,893 112,095 9.1%

Government 237,237 249,267 262,041 275,470 286,708 20.9%

Construction 39,560 41,566 48,948 55,808 62,936 59.1%

Leisure & Hospitality 104,339 109,630 118,162 127,360 135,230 29.6%

Wholesale Trade 46,045 48,380 52,145 56,204 59,677 29.6%

Retail Trade 131,257 137,913 141,403 144,982 147,910 12.7%

Trade, Trans, & Utilities 237,823 249,883 274,765 302,126 325,963 37.1%

Information 10,114 10,627 10,680 10,733 10,976 8.5%

Financial 40,471 42,523 43,382 44,258 44,972 11.1%

Mining 28,002 29,422 31,712 34,181 36,293 29.6%

Total Jobs: Shale Case 1,591,766 1,640,586 1,797,880 1,961,862 2,273,051 42.8%

Education & Health 149,406 159,204 177,309 207,561 235,476 57.6%

Manufacturing 102,792 109,877 115,006 117,845 122,220 18.9%

Government 237,237 284,574 301,505 367,792 380,671 60.5%

Construction 39,560 42,913 53,291 63,956 71,430 80.6%

Leisure & Hospitality 104,339 111,204 129,808 141,210 155,443 49.0%

Wholesale Trade 46,045 48,534 55,961 64,354 69,943 51.9%

Retail Trade 131,257 145,599 153,208 169,928 184,774 40.8%

Trade, Trans, & Utilities 237,823 254,733 289,708 329,135 364,201 53.1%

Information 10,114 10,828 11,192 11,635 12,202 20.7%

Financial 40,471 42,559 44,274 45,913 47,163 16.5%

Mining 28,002 31,240 38,881 47,363 54,803 95.7%


Kern County’s Energy Future

Conventional energy production retains great promise.

Positioned to increase its renewable energy leadership.

Significant, cross-sector impact on Kern County employment.

Become a national role model for energy production.

Contact:

Jack Cox

President


[email protected]

209.785.1944

Kevin Hopkins

Director of Research


[email protected]

408.930.3633

Kern County

Energy Portfolio

and Forecast

Documents

Kern County Energy Portfolio - Kern Economic …kedc.com/wp-content/uploads/2014/11/Kevin-Hopkins.pdf · A Presentation by Kevin Hopkins Director of Research The Communications Institute