Uncertainty Surrounding Former StorageTech Site Illustrates the Drawbacks of Relying on Out of Region Firms for Economic Development

The redevelopment of the former Storage Technology Site in Louisville into a training and R&D facility for ConocoPhillips was going to provide an economic boost to the "Renewable Range" cluster of green energy firms in the Denver region and to the broader economy.  

However, recent uncertainty over the future of the site illustrates the drawbacks of not having homegrown, in-region headquartered firms driving economic development decisions.  When Houston-based ConocoPhillips announced a split into two separate publicly traded companies, ConocoPhillips, an upstream exploration and production energy company and Phillips 66 a downstream consumer-facing refining, marketing and midstream business, the plans for the Louisville campus came into question.  Future decisions will be made by the leadership of Phillips 66 and may or may not reflect the previous vision espoused by the legacy ConocoPhillips leadership.   When land use decisions are made by companies with distant, out of state headquarters, there is an exposure to changes in strategic and leadership direction which can imp3de local progress.

Here is to hoping this site still gets redeveloped by Phillips 66 in a way  that enhances the regional green energy cluster and boosts the overall economy in the Metro Denver area.

Louisville and ConocoPhillips Working Together on Campus Planning

The Daily Camera reported that the Louisville Planning Commission and ConocoPhillips seem to be having a productive working relationship in planning the company's proposed research and training campus at the former StorageTek site off U.S. 36.

This project is one of the most important economic development efforts underway in the Denver Region and is critical to the growth of the region's sustainable energy cluster.

For more information about this project see the ConocoPhillips web site and these previous blog entries.

Image above from ConocoPhillips web site.

Planning for ConocoPhillips Campus Moves Forward

The Daily Camera had a lengthy article by Alicia Wallace about ConocoPhillips recent submission of its development proposal to the City of Louisville for its training and research campus at the former Storage Technology campus off U.S. 36. Plans are moving forward to build out 1.6 million square feet of space by 2013.

Green Sprouts in a Cold Environment

The current recession and the resulting fall in energy prices have slowed the development of the Renewable Range's green energy economy. Despite the fact that the economy (and weather) is really cold today, Spring is coming and there are a few green sprouts appearing.

A View of the Rockies is strictly non-partisan but we support Governor Ritter's green energy policies. Click here to sign an online petition to show your support for the Governor's New Energy Agenda for 2009.

Photograph of Danish Crown Prince Frederik, second from left, Crown Princess Mary tossing shovel of dirt at Vestas' factory groundbreaking near Brighton. Colorado Governor Bill Ritter is at the right and Vestas' president, Ole Borup Jakobsen, on the left.

Photograph from Denver Post Web Site, Copyright David Zalubowski, The Associated Press.

ConocoPhillips Delay

Given the state of the economy and the drop in fuel prices, its not surprising that ConocoPhillips has pushed out the opening of its Louisville campus and scaled back some of its alternative energy investment plans. Lets hope this is only a temporary delay and not a permanent change in strategy. Even a short-term delay will have negative effects on the local economy and hurt the chances of some of the proposed nearby hotel and office developments.

Venture Capital & Hotel Development Funds Driven by Green Energy in Colorado

The impact of the credit crunch and the likely recession is slowing down capital flows, job creation, real estate development and many other positive economic development indicators in the Denver Region and around the U.S. However, among the gloom, I have noticed two related positive trends, recently reported in the Boulder Daily Camera which link back to the emerging green energy cluster in Metro Denver.

First, there appears to be a wave of hotel development forming which will hit the U.S. 36 Corridor in Broomfield sparked by the ConocoPhillips plans for the former Storage Tech site. Despite the fact that the hotel business is one of the most cyclical sectors of the real estate market which tracks very closely with the macro economy, there are as many as eight different hotel projects in various stages of planning in this area. These plans are clearly driven by the large number of business travelers who are expected to come to the Interlocken area as part of the ConocoPhillips international training and alternative energy research facilities.

Second, despite a national downturn in venture capital deals, compared to the third quarter of last year, Colorado either held steady or increased its flow of funds according to two reports cited in the Camera. This was due to investments in alternative energy companies such as AVA Solar Inc. with operations in the state.

A View of the Rockies believes the development of renewable energy will change the U.S. economy as profoundly as the emergence of the Internet or the railroad network did in the previous times. It won't be an easy transition and its hard to predict when critical mass will be reached and the changes will ramp up to full effect. However, when the green energy revolution does come, it will dramatically boost the economic wealth and power of the cities and regions that play host to this sector.

In the immediate term, the U.S. economy appears to be headed for lean economic times with contractions occurring in many sectors of the economy. However, the Denver Region can outperform the U.S. as a whole if it can continue to build an alternative energy economy. In the longer term, the development of this sector holds transformative possibilities for Colorado.

Milstead Reassesses the ConocoPhillips Property Acquisition

Thoughtful Rocky business writer David Milstead wrote a column on August 5th reassessing the importance of the ConocoPhillips acquisition of the former Storage Technology HQ site in Louisville.

In an earlier column, written right after the announcement, Mr. Milstead had downplayed the significance of the deal.

See here for the blog entry in A View of the Rockies discussing the deal.

ConocoPhillips Spurring Real Estate Development and Job Growth

According to The Denver Post, the ConocoPhillips acquisition of the Storage Technology property is leading many alternative energy companies to see office space in Denver's northwest office market and spurring new office development to accommodate this demand for space.

"At least two companies have brought a total of 110 employees to the area along the U.S. 36 corridor. Renewable Energy Systems, a wind-energy company, relocated a 100-worker division from Austin, Texas, to 23,000 square feet of space in Eldorado Ridge in Broomfield. Camco Global, which trades carbon credits, opened a 4,600-square-foot office with 10 workers at 390 Interlocken Crescent.

Range Fuels, which converts bio mass into fuel-grade ethanol, recently expanded from 7,000 square feet to 17,000 square feet at Eldorado Ridge, and Siemens AG plans to establish a wind-energy research-and-development facility in Boulder that will employ 50 researchers by 2013.

"There's a true belief that the northwest market is going to become, on a national scale, a hub of renewable-energy companies that are going to do research, development, production and management," said Chris Phenicie, senior vice president of CB Richard Ellis."

The full text of the article is here. Also see my previous blog calling for the Denver Region to establish a formal brand for the areas alternative energy cluster such as "Renewable Range."

ConocoPhillips is Mystery Buyer of StorageTek Campus in Louisville

The Metro Denver Area received a tremendous economic development boost when Governor Ritter announced that ConocoPhillips was the mystery buyer who purchased the former StorageTek Campus in Louisville for more than $55 million. The energy giant plans to build a Global Technology and Corporate Training Center which will focus on the development of new technologies for renewable energy and consolidate world-wide employee training. It is appropriate that this announcement was made by Governor Ritter who has made alternative energy a keystone of his early governorship.

Despite the complaints of skeptics that this is not bringing a new corporate headquarters to Metro Denver, this is a huge boon for the Colorado economy for a number of reasons. It will provide new jobs and it will also lead thousands of people each year to visit the area to attend training classes, boosting local travel, hospitality and leisure spending. More importantly it will provide a key piece of the puzzle for the emerging green portion of the energy cluster in Colorado.

For a technology-based economic cluster to succeed, a region needs a critical mass of vertically-related producers, suppliers, distributers, sellers and consumers and researchers. The presence of ConocoPhillips will add serious financial muscle and prestige to the local green energy cluster. When a cluster reaches a critical mass, the economic power of the whole becomes greater than the sum of its parts, creating a strong positive economic externality drawing other related companies and investments to the region - ConocoPhillips will help make this a reality for Metro Denver.

Additionally, the presence of an energy company in the U.S. 36 Corridor will help diversify the commercial real estate market and local tax base in Broomfield/Louisville which is dominated by technology and telecommunications companies.

This is a fascinating case study in site selection decision-making. Although the energy sector is one of six areas targeted for recruitment by the MDEDC, senior economic development officials such as Tom Clark at the MDEDC and Don Elliman at the Colorado Office of Economic Development were not even aware that ConocoPhillips was considering this site and public speculation on the identity of the site's buyer centered on internet and computer companies. ConocoPhillips apparently made this decision entirely on its own without receiving tax credits or other economic development incentives or lobbying. This is great news for Metro Denver because it means we are competitive without needing to spend public funds to land jobs.

There are several factors which drove this decision. According to Perry Pearce, manager of state government affairs in Colorado for Conoco Phillips as quoted in the Rocky Mountain News, regional academic and research institutions were a key reason for this site selection:

"When you look at the institutions here — the National Renewable Energy
Laboratory, Colorado School of Mines, CU, CSU and DU — those sorts of central
research and educational centers contributed to the attractiveness of this
site."

These institutions are linked together by the Colorado Energy Collabaratory which is a research partnership "dedicated to performing world class research to develop new energy technologies and to transfer these advances as rapidly as possible to the private sector."

There is a rapidly growing base of private renewable energy companies involved in wind, bio-fuels, solar and other green energy areas in Metro Denver. This presence is indicative of a highly qualified local labor pool and potential collaborators and partners for ConocoPhillips.

The excellent transportation links at this campus probably also played a huge role in the site selection decision. The campus location on Highway 36 between Denver and Boulder provides easy access to the super-quick and uncongested Northwest Parkway and E470 toll roads which connect to DIA making it very easy for people from around the world to get to/from the campus on training visits.

With oil in the $100 a barrel price range, developing countries like China and India using ever larger amounts of energy resources and increasing concerns about the impact of carbon emitting energy sources on global warning, investment in and use of alternative energies is becoming increasingly financially viable and socially critical. If Metro Denver can establish itself as a core location for the green energy cluster, it is likely to bring long-term economic growth to the region. This could well be a sector which is poised for huge long-term growth capable of creating wealth on a scale similar to the development and commercialization of the internet.

Although this is a big win for the region, Metro Denver has many strong competitors who want to build green energy clusters. According to an Economist article from May 24, 2007, Silicon Valley, Boston, and Austin have all had more venture capital invested in clean technology companies than Metro Denver. Other places such as New Jersey, Arizona, Toledo, and Seattle also are trying to establish clean-tech clusters. It will take continuing political support, aggressive efforts by regional economic development officials and wise public investments in education and regional infrastructure to keep attracting further investment in green energy to the Denver Metro Area.

Metro Denver should also come up with a clever and memorable nickname for the region's renewable energy cluster like "GreenFoothills"or "Renewable Prairie" to keep the region in the "front of the mind" for green entrepreneurs and corporate decision-makers.