For energy-rich eastern Utah, it's stability or bust
This is an archived article that was published on sltrib.com in 2009, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Utter the word "bust" around here and people shush you. Don't say it aloud, or it will happen.

The energy economy, the source of much of the Uinta Basin's wealth and woes, looks wobbly now that the globe's financial collapse has caught up with eastern Utah. Drilling is down. Unemployment is up. Storefronts on Vernal's Main Street are starting to empty and so are motel rooms as oil and gas workers move away.

Yet in the midst of this slump comes opportunity. The basin has a chance, at last, to break with its boom-bust past and trade the rush of easy money for a different kind of prosperity: stability.

Gone may be the flush days of the past five years, when drillers responded to rocketing oil and gas prices and unleashed a frenzy of development that overwhelmed the area's ability to keep pace with the basics such as affordable housing, service jobs, even public safety.

But the boom brought new houses, new hotels, new apartments, new stores, new college campuses -- all of them building blocks for erecting a more diverse economy, one based on more retail development, more locals in college, more upward mobility for blue-collar workers, more services for residents and renewed tourism in high-desert and fast-river dinosaur country.

That's not to say oil and gas activity will vanish. Far from it. The region remains one of the nation's busiest for companies seeking drilling permits. And that pace is sure to spike as energy prices rebound.

But the basin is determined to "add new dimensions," says Rob Behunin, a Utah State University liaison who is leading a team of Vernal philanthropists, energy executives, government types, education officials and other community leaders hoping to plot a less-manic, more-balanced future for their city.

Jobs & jeers

Kylie Cisneros and her husband, Jason, both 20, moved to Vernal from St. George in July to chase good jobs and save for their Brigham Young University tuition. They arrived just in time to see the oil and gas boom start to slide.

"St. George was even worse," Kylie Cisneros says. "There was no work."

For now, she says, her husband has a good job in the gas patch while she works part time for George Burnett at his Main Street shop, Covers and Camo.

Burnett and Cisneros get a kick out of standing on the curb by some truck seats Burnett has set out on the sidewalk to show off his custom covers. They hold up a sign that says, "Honk If You [Heart] Drilling," and a chorus of approval vrooms and beeps back at them.

Burnett landed in Vernal about the same time as Cisneros after a friend urged him to cash in on the boom. "I was broke," he says. Seat-cover sales came his way, but he needed a gimmick; hence the sign, and a line of "I [Heart] Drilling" T-shirts and caps.

He believes in the message. "If we don't drill," he says, "we won't be free."

The night before, Burnett had attended a "listening tour" meeting with newly confirmed Interior Department deputy David Hayes. For more than an hour, Hayes endured verbal brickbats as hundreds of oil and gas workers and their families harangued him about how federal petroleum policies were harming them.

Seemingly shaken by the some of the crowd's outrage, Hayes said he appreciated the candor and then hurried back to his plane.

As the audience thinned, Tracy Williams, area supervisor for Foreland Refining, said, given the chance, he would take Hayes in his truck when he makes his rounds checking gauges on producing natural-gas wells. Even better, Williams said, would be for Hayes to get on a horse and ride the country oil and gas workers hold dear -- to see not just the rigs that bring riches but also the stunning wildflowers and scarce wild onions.

Shiloh Williams, a crude-oil trucker, agreed. "You could set them down and say, 'This is where I am,' " he said. Meaning, he explained, this is my place.

Ups & downs

Drilling certainly has slowed as operators cope with a glut of oil and natural gas, prices too low and production costs too high to make a profit. Yet the Bureau of Land Management's Vernal office rolls along as one of the busiest for companies seeking development permits.

Bill Stringer, chief of the BLM's Green River region, points to the numbers. From 1992 to 2001, the number of applications for drilling permits stayed more or less steady at under 300 requests annually.

Those numbers started to climb in 2001. In 2007, the Vernal office issued 1,015 permits amid a swelling backlog. Last year, the BLM issued 20 fewer permits, although 1,200 remain in the hopper.

"It will take several years of being [slower] like this to catch up," Stringer says.

Some of the lag is due to high staff turnover -- 50 percent to 60 percent. He would seek permission to hire 20 people, but by the time they were in place, 10 more would depart for other BLM areas where they could afford a home or enjoy a fraction of the workload.

During 2008, a record year for activity, the BLM worked through 11,000 "sundry" actions such as road building, drill-pad location, regulatory compliance and production verification. On the other side were drilling companies and their employees, still at work.

Stringer acknowledges the worried mood at the meeting with Hayes, but shakes his head at the idea of blaming Interior Secretary Ken Salazar's decision to shelve 77 lease parcels for further study after a federal judge enjoined the Dec. 19 auction where they were sold.

"This [slowdown] can't be blamed on one action," Stringer says. "If it were, you'd blame Citigroup."

Besides, drilling companies are hardly stampeding out of the basin. "They are preparing for the future," he says, when prices inevitably rise again and new pipelines start funneling gas to Chicago and Oregon.

But seeing is believing, and rigs tell the tale. Used as scaffolding when crews sink new bore holes in search of oil or gas, drill rigs are disappearing. Last August, 50 such rigs dotted the basin. Now there are just 15.

"That represents a significant drop in drilling activity," says Jim Springer, spokesman for the Utah Division of Oil, Gas & Mining. Most Uinta Basin drilling is gas-related rather than crude, so "with natural-gas prices where they are," he says, "it's unlikely that drilling activity will increase anytime soon."

Labor pains

Jeramie Young, who owns roustabout company Silver Bullet Services in Vernal, says his business started declining in January. Drilling operators told outfits like his they would be paid 30 percent less for their services.

Jobs began to disappear. Last spring, unemployment in Uintah County was 2.2 percent; now, at 6 percent, it's higher than the state's 5.2. And the percentage-rate forecast for new job growth: Less than zero.

During the past decade, the boom added 9,700 jobs to the area economy, a 9 percent growth rate. Now, state Workforce Services predicts the number of jobs could plunge to 2004 levels, a potential loss of 6,700 jobs.

Not long ago, service jobs in Vernal went begging. Fast-food restaurants offered high hourly pay and benefits, but still couldn't keep their rosters full. Now, service businesses are about the only ones hiring.

A new IFA store in Naples, just outside Vernal, saw 100 applicants for 10 positions, says Bob Gilbert of Workforce Services' Roosevelt office.

Marilyn Wallis of the Vernal office says a labor-helper position at the power company drew 175 applicants. A roustabout job description requires two years' experience. Employers used to hire warm bodies, Wallis says, now "they can be picky."

That's no surprise to John Mathews, an economist with Workforce Services in Salt Lake City.

" 'Energy' and 'stable' don't ever go together," he says. "Oil shale is never going to be the solution. I hope people know that."

Wallis says current hiring is mostly related to seasonal tourism, one hope on the immediate horizon.

"We haven't heard the word 'tourism' in the last two or three years," Gilbert says. "But we're hearing it now."

Hotels once blessed with 100 percent occupancy housing oil and gas workers now have rooms available when casual travelers drop in. Rates have rolled back to half what they were last summer, but a Motel 6 single still goes for $70 a night. A Holiday Inn Express still can charge $160 for a room with a microwave and a mini-fridge.

Boosters are hoping the available rooms and the $13.1 million in federal stimulus funds dedicated to rebuilding the quarry visitor center at nearby Dinosaur National Monument will revive visitation.

'Hire' education

The Uintah Applied Technology College trained 5,600 workers last year, 2,600 of them directly for 154 oil and gas companies. But those numbers also have slipped, says school President Paul Hacking.

"Every day you hear of companies laying off people," says Jean Mold, UBATC's executive director for economic development. "If the trained work force leaves, that's critical."

That's why the partnership with USU, the regional Chamber of Commerce, the Uintah County Commission, philanthropists and Vernal elected and community leaders is so important, says Rob Behunin, who is shepherding the alliance.

With oil and natural-gas royalties footing a hefty chunk of the bill, the group has amassed money for an 84,000-square-foot, $26 million UBATC campus in Vernal. It's set to open next month, linked by a tunnel to Uintah High just across the street. About $17 million more will go for roads and connections to an equally new Vernal USU campus.

USU's expansion will include a new research center for energy innovation called the Bingham Entrepreneurial and Energy Research Center for Marc and Debbie Bingham, who kicked in $50 million for the center.

Both colleges are expected to draw new students (up to 6,000) and faculty, training a more diverse work force, building a market for affordable housing and spurring demand for more service businesses.

"We want to close the net so we can keep people here, to grow and evolve and contribute to the community," Behunin says. "We'd [also] like to attract new folks and diversity."

New campus, new hope

Uintah Basin Applied Technology College President Paul Hacking concedes he gets overexcited every time he visits his soon-to-debut Vernal campus.

The school has waited 13 years for a building there. Up to now, energy-tech students got their training in trailers.

Soon, they will have a classroom big enough to accommodate the only drilling simulator in the western United States. A vast diesel-mechanic workshop will be outfitted with crane arms to lift massive engines. Airy classrooms will sport enormous windows that frame the scenery all the way to the High Uintas.

"We finally caught up," Hacking says. "We've never had a better facility."

The federal stimulus has helped, but most of the money for the new campus has come from the community and businesses.

Yet state lawmakers this year cut the budget by 17.5 percent. The school had to lay off a few employees and set aside a construction-training program and a Peace Officer Standards and Training course.

Hacking fears he may lose faculty if the energy economy erodes further.

"Most people here are optimistic that if oil and gas would come back, [the economy] could stabilize."

Patty Henetz

Come back, tourists

Vernal resident Tiffany McConkie works in Dinosaur National Monument's temporary book and souvenir store next to the temporary visitor center, but she's hoping for a permanent boost in tourism.

Federal stimulus money will help overhaul the shuttered visitor center, and the energy slowdown has freed up lodging for visitors.

When McConkie started working for the National Park Service five years ago, busloads of tourists would stay in Vernal. That stopped, she says, when the quarry center closed and the oil and gas workers monopolized hotels and motels.

Tension has built among longtime residents, petroleum workers and visitors, McConkie says. The oil and gas boom "changes the dynamic. They hit the economy, and then they're gone."

Same goes for tourists, albeit on a much smaller scale.

"At the same time," McConkie says, "I can see why tourists would be deterred, because our town isn't the friendliest. We could put a better face on it."

Patty Henetz

Uinta Basin » Economic downturn offers an opportunity to plot a more diverse and steady future.
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