Energy-hungry China is becoming a big player in the Mountain West

The West's oil, gas, and coal now are shipped more than ever through West Coast ports. China, and other growing countries, are becoming bigger and bigger owners of the energy and raw materials they want.

The Climax Molybdenum Mine in Colorado had been closed for a decade but held a job fair in February.

Robert Moran/Courtesy of High Country News

The Climax Molybdenum Mine in Colorado had been closed for a decade but held a job fair in February.

Arizona Gov. Jan Brewer gets an explanation of photovoltaic cells from Suntech founder Zhengrong Shi at a new manufacturing plant in Goodyear, Ariz.

Suntech

Arizona Gov. Jan Brewer gets an explanation of photovoltaic cells from Suntech founder Zhengrong Shi at a new manufacturing plant in Goodyear, Ariz.

A coal-powered generating plant in China.

Klineolive/Wikimedia Commons

A coal-powered generating plant in China.

Douglas, Wyo., population 5,000 and home of the legendary jackalope, lies in an almost puritanical landscape — beautiful, yet shy about that beauty, concealing it modestly under a beige blanket of grass and shrubs. A collection of low-slung stone and brick buildings sits at the town's center, with tree-shaded residential neighborhoods radiating out from it. Ford, GM and Chevrolet pickups dominate local traffic, along with the occasional bus carrying workers from the North Antelope Rochelle coal mine nearby. After their shifts, miners and roughnecks can grab a burger and fries at The Koop, a steak at Clementine's Cattle Company, or a mean enchilada and a beer over at La Costa Restaurant.

Over beers, they might talk about politics, though without a lot of disagreement: Eight out of 10 voters in Converse County go Republican. Perhaps they'll speculate as to whether the town's other unlikely mammalian hybrid, the Bearcats — last year's 3A High School State football champs — will repeat their triumph.

In the summer, emerald-green fields spread out from the North Platte River, which quietly slides past town. Come here in June, and you're likely to breathe in the smell of fresh-cut hay. Any time of year, you can hear Old Glory snapping loudly in the wind over each fourth or fifth doublewide on the fringe of town.

There are plenty of words to describe a place like Douglas: Rural, Western, small-town, typically American. It's the type of place that country-and-Western singers rhapsodize about and city-folk tend to mock. Sarah Palin would likely recognize it as one of  "these wonderful little pockets of what I call the real America. ..." Out here, "Drill, baby, drill!" is more than just a slogan, it's a way of life, for better or worse. Locals and politicians will proudly tell you that Wyoming is the backbone of an energy-independent nation.

But look more closely. On a spring morning, when both snow and dust whip through the air, a drill rig can be seen just outside of town. The sign nearby says "Chesapeake Energy," but the rig operates with funding from a Chinese energy company, and it's searching for oil and gas partly owned by the same Chinese company. In another part of Wyoming, a Japanese firm has invested in the same play, called the Niobrara. The massive coal mines to the north ship coal to 25 different states, Europe and Asia. A Russian company controls nearby uranium mines, and on the other side of the state, a company from India owns one of Wyoming's biggest soda ash facilities.

In other words, Douglas and Wyoming are not pure, unadulterated American after all, at least economically speaking. And if Douglas isn't, what community is? Not my hometown of Durango, Colo., on the edge of the San Juan Basin, where British Petroleum has about 3,000 natural gas wells. Not the mining towns of Arizona and Nevada, where Canadian, Australian and Mexican companies own gaping copper and gold mines. Not even the amber fields of Montana, which send wheat to Asia, or the Navajo Nation, which sells hay to Japan. It's the same all over the West: The natural resources that built America are no longer all-American. No matter how many red-white-and-blue flags fly over your trailer park, you too are tangled up in a global economic web that has compressed time and space and confused our ideas of place.

My quest to comprehend the most recent surge of globalization led me to Laramie, then to Douglas, then across the Powder River Basin and finally to Denver, to talk to Vince Matthews. Since 2004, Matthews has been the Colorado state geologist and director of the Colorado Geological Survey. Before that, he worked for three decades in the oil industry. For much of his career, he's observed the globalization of the West's natural resource industries. Lately, Matthews has been traveling around the state telling chambers of commerce, groups of geologists, community leaders and just about anyone else who will listen that he's worried.

Sitting in his downtown Denver office, wearing a suit and tie that would look at home on a Houston oil executive, Matthews says that China and India, with their huge populations and economies growing at rates not seen since the Industrial Revolution, are ravenous for natural resources. Handing me graphs and charts to prove it, he says that their hunger is already washing across the West, driving up the pressure to develop natural resources. He talks about a Chinese businesswoman he knows in Denver, who frequently asks him how her relatives and clients can get hold of a Colorado mine or mineral deposit. And he reminisces about a visit to the Los Angeles port at Long Beach, where he saw ship after ship loaded down with scrap metal, headed for China.

Most exports from Western states go to Canada or Mexico, but over the last decade, has emerged as one of our biggest customers; U.S. exports to China have increased 460 percent since 2000. Compared to British, Canadian or Australian multinational corporations, Asian companies still have a minuscule investment in Western resources. But over the last year, as much of Asia scrambles out of the global recession unscathed and the U.S. continues to wallow, Chinese, Indian and even former Soviet-bloc companies have bought into American oil and gas fields, molybdenum mines and more.

Even when these countries aren't directly investing in or buying U.S. resources, their appetite for them around the globe is raising prices and spurring new development here in the West, Matthews says. Combine this with a lingering economic downturn here and an attendant desperation for jobs; instability in the Middle East; new drilling and fracking technology that opens up previously inaccessible reservoirs of shale gas and oil; and an infusion of investment capital from other countries into the extractive sectors, and you get a tsunami of globalization that is reshaping the physical and political landscape of the American West.

"In the '70s, Jimmy Carter wanted to make the West into a national sacrifice zone for energy, because the West is where all the reserves are," says Matthews. "It's going to happen again."

One might say that the economic and political zeitgeist of the '70s was defined by petroleum. But on an even deeper level, it was about the globalization of natural resources. Beginning around World War I, the U.S. shifted from getting its resources within its borders — mostly in the West — to looking abroad for raw materials, particularly oil. By 1973, the U.S. relied on foreign producers for 36 percent of the oil that fueled our cars, our economy, and our lifestyle. That gave OPEC leaders the power to bring us to our knees by curtailing global oil supplies in retaliation for our support of Israel.

President Richard Nixon began the effort to pull out of the global quagmire with his "Project Independence," which had the lofty goal of weaning the U.S. from foreign energy sources by 1980. Americans traded in muscle cars for fuel-efficient Gremlins, Pacers, and Corollas. Then, President Carter put on a cardigan and launched a gargantuan effort to shift American energy production back to American soil, ramping up conventional and renewable energy development while also dusting off the long-discarded notion of squeezing stuff that's not quite oil out of the Interior West's shale deposits.


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Comments:

Posted Thu, Sep 1, 7:10 a.m. Inappropriate

Outstanding. The best single piece I have read in Crosscut all year.

ivan

Posted Thu, Sep 1, 12:18 p.m. Inappropriate

"There are plenty of words to describe a place like Douglas: Rural, Western, small-town, typically American."

Its actually highly atypical. Nearly 80% of the US population lives in urban areas.

Steve E.

Posted Thu, Sep 1, 4:13 p.m. Inappropriate

Steve E, that's the myth of the American West. "Small towns" They are drying up due to a number of other factors as well, the number one being the mechanization of farming allows one farmer to do what it used to take 9 to do. And then when the 8 families move away, so go all the associated jobs, grocery etc.

And yes this is one of the best articles in Cross Cut this year.

GaryP

Posted Fri, Sep 2, 4:49 p.m. Inappropriate

There's a lot of anthracite in Western Washington. My great-grandfather was killed in 1917 in a coal mine collapse near Black Diamond (the town named for the subject at hand). What's the outlook for local development of this resource? Could the Salish Sea basin become the new Appalachia? Our region despoiled for energy abroad, profits to soulless corporations, corrupted politics locally, fouled health and minimal wages to those doing the work? Some reassurance would be welcome here.

Seconding the applause for this piece.

NickBob

Posted Sat, Sep 3, 11:57 a.m. Inappropriate

Is it time for heavy coal taxes in Washington? Add an extra heavy B&O; tax for coal transport, storage, rental of coal cars, cleaning of coal cars, wholesaling, handling, loading, shipping, add coal to the toxics tax list, etc. And I mean heavy enough to make it hurt. Can we have B&O; and other taxs on coal transportation or do the feds trump this? Can we add a new tort law to make it easier to sue for coal dust drift? We get nothing but grief form coal export and even get the mercury coming back at us in down wind drift from China. We need the revenue and the oxes we gore are not in Washington. Either we kill coal or get a big cut of the profit. Either way we win and coal loses.

GreenerEE

Posted Sat, Sep 3, 1:08 p.m. Inappropriate

The citizens of Wyoming (just as those in Alaska) are addicted to the economics of mineral extraction. It is easy to be an anti-tax conservative when one gets all the benefits of government but does not have to pay the true cost of the services that government provides.

"Wyoming received 44 percent of all general government revenue from energy production in 2006. Energy revenue is also important in New Mexico, contributing 14 percent of all government revenue. Montana receives 5 percent of all revenue from energy production, and Utah receives more modest revenue from oil, natural gas, and coal at about 2 percent."

http://headwaterseconomics.org/pubs/energy/HeadwatersEconomics_EnergyRevenue.pdf

In the long run though, mines play out. They always do. And when they do, I'm certain that those in the Intermountain West will ask themselves why they became so greedy and didn't think about leaving some of the resources for their children or grand-children.

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