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Hobbs, New Mexico, Home Of A Failed $1 Billion Ghost Town, Conducts Another Grand Experiment

Source: Fast Company | August 27th, 2012 | By Brian Clark
Industry type: Nuclear Industry

Lea County, New Mexico, shrugs off the loss of an investor’s highly publicized tech-research city to focus on innovative energy programs, including algae, uranium enrichment, and one of the nation’s largest solar projects.

In the southeastern corner of New Mexico these days, a booming and diversifying energy industry has produced an enviably low unemployment rate. Which is why when someone mentions “the failed Pegasus project,” all it gets is a dismissive shrug by folks too busy to care.

Last month, Pegasus Global Holdings announced that it was pulling out of its commitment to invest $1 billion in a research ghost town outside Hobbs, New Mexico. Pegasus managing partner Robert Brumley tells FastCompany.com that the deal’s collapse was largely due to difficulties in negotiations with a major landowner. (He says his company remains committed to building in New Mexico, however, and is leaning toward a site near Albuquerque.)

At first, community leaders were surprised, frustrated, and even a bit piqued. But those feelings dissipated rapidly, according to Lea County Commission chairman Gregg Fulfer.

“Frankly, with unemployment hovering around 4% (the national rate is stuck at 8.3%) and our economy humming along quite nicely, we’re too busy to pout or hold a grudge,” he says.

Fulfer is a 51-year-old Lea County native who works in the oil and gas industry and has seen the region go through numerous boom and bust cycles. But today, he says, the county is humming on “all cylinders,” thanks to high oil prices (currently around $96 a barrel), heavy investment in natural gas production, and diversification into wind, nuclear, solar, and biofuels, in addition to industries outside of energy.

Presumptive GOP presidential candidate Mitt Romney even visited Hobbs on Thursday to promote his energy plans. Speaking in the parking lot of Watson Truck & Supply–an oilfield business started in 1943– he promised to speed up drilling on federal lands by turning over the permitting process to states.


A rendering of a section of Pegasus’s $1 billion research ghost town


Officials say the county is being chosen for new and innovative energy projects because of a combination of factors including: available flat and arid land; a skilled workforce; training programs; few worries about natural disasters like hurricanes or floods; state and local tax incentives; and a pro-business attitude that welcomes companies of all kinds.

Because of the region’s energy diversification, the most recent drop in oil prices (down to $45 a barrel five years ago) did not hit the county as hard as past declines, Fulfer says. Another drop, in the ’90s, saw prices fall to $15 a barrel, forcing some residents to leave the county.

“Urenco U.S.A., our nuclear enrichment plant, is going great guns, with plans to build a $1 billion addition to its existing facility,” he says, adding that other areas of the country weren’t receptive to an enrichment plant–and a few communities even held protests–but Lea County’s energy titans ultimately felt that enrichment was one of the safer fields to be in. “So while the Pegasus project would have been nice, we’re not desperate by any means,” Fulfer says. “We’ve got other major developments in the works, too.”

Lisa Hardison, president and CEO of the Lea County Economic Development Corp., says her agency has pushed hard to expand the county’s economy beyond oil and gas in recent years with its EnergyPlex brand, welcoming all types of energy development, from algae, wind, and solar to uranium enrichment.

“That’s one of the reasons why Pegasus would have been a good fit with its research efforts and high-quality jobs, because research often means manufacturing,” she says. “But they’ve moved on and so have we because we have so many other positive things in the pipeline.”

The county is also part of one of the nation’s largest solar projects in Sun Edison’s 54-megawatt effort, which is expected to generate more than 2 million megawatt hours of clean, renewable energy over 20 years to power more than 192,000 average U.S. homes annually.

In addition, last year, Massachusetts-based Joule Unlimited leased 1,200 acres–with the potential to scale up to 5,000 acres–for the production of renewable biodiesel and ethanol directly from sunlight, bacteria, and waste CO2. The company recently built a 40-acre pilot plant and is slated to start production in September.

And another firm, El Dorado Biofuels, is using recycled water from oil-and-gas production in four ponds to produce algae that could be used to generate energy or sold as livestock feed. Two others, International Isotopes and Intercontinental Potash, have plans to build plants for processing fluorine gas and fertilizer, respectively.

Brenda Brooks, the community affairs director for Urenco, says her company was recruited to Lea County in 2003, started production in 2010, and now has 350 employees working to enrich enough uranium to supply a dozen large nuclear power plants annually. The company also has 700 construction and contract workers building its new facility.

Brooks, a Hobbs native who worked in the oil industry in Texas, says it was the “tremendous community support” that led to Urenco’s selection of Lea County as the site for its plant.

“We were recruited here,” she says, praising efforts by the local community college to help train technicians for the enrichment facility. Workers from outside the area were also recruited, she adds.

Steve McCleery, president of New Mexico Junior College in Hobbs and a 30-year resident of Lea County, says companies do training on campus every day–and not just Urenco.

“They aren’t looking for degrees or college hours,” he says. “Halliburton, for example, has been here in a big way for the last year and is using our oil and gas training ground as we speak.”

He goes on: “New companies are walking in every day and we’re just trying to keep up and create packages that meet their needs.”

The Pegasus project would have been a boon to the county by “creating wealth through research,” he says. “But they made a business decision and I have to respect that.”

Meanwhile, his college and southeastern New Mexico are doing just fine, he says: “Right now, if anything, we have a housing shortage and companies can’t find employees, so it’s not the end of the world from an economic-development standpoint. I’ve been through a lot of cycles, but I think things have changed somewhat with our diversification. That’s been a godsend to Lea County, but the multibillion-dollar oil-and-gas industry is still what drives our economy.”

For more information on Lea County, see edclc.org.

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