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Energy natural resources remain key contributor to local, state economies

Energy natural resources continue to play a crucial role in the local and state economies.

Coal mining activity in the Castle Valley region represents Utah's original energy claim to fame. Since extraction operations began in the mid-1800s, coal has been the main energy source for the state.

Many power plants rely on the high quality, low sulfur coal from the Wasatch Plateau to generate electricity, indicated Michael Hanni, Utah Department of Workforce Services economist.

After several years of decline, coal production in Utah climbed 10 percent in 2005 compared with the previous year, pointed out Hanni. Employment in coal mining jumped statewide, with the number of jobs increasing nearly 14 percent or 1,768 positions.

However, the gains are primarily the result of coal mines coming back online and, thus, employment growth in the industry is likely to moderate, explained Hanni.

Oil and natural gas have followed different paths in terms of Utah's energy resource industries, noted the DWS economist.

The state's oil production peaked in 1985 at an impressive 40.8 million barrels. Since that time, production has been in a steady decline, reaching a low of 13.1 million barrels in 2003.

But in response to high oil prices, production climbed in 2004 and 2005 to total 14.6 million and 15.6 million barrels respectively.

In 2005, marketable gas production in Utah reached a decade-long high of 302 billion cubic feet.

Employment in the combined oil and gas industries climbed from 3,002 jobs statewide in 2004 to 4,010 positions in 2005 for a 33.6 percent increase.

Of the additional 1,008 jobs, 47 percent were related to the drilling of oil and gas wells, according to the DWS economist.

Another 44 percent came from companies servicing oil and gas operations. Only 9 percent of the job increase was due to increased production employment.

"How long will this last? How long will Utah's energy resources be in such high demand? How long will the energy boom in the Uintah Basin last? Best bets appear to point to sustained demand. As energy resources in other areas of the nation become depleted - and the flat growth of natural gas and oil production in long-term forecasts from the Energy Information Administration - the use of Utah's coal, oil and gas will become even more competitive," concluded Hanni.

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