Wyoming: Data Centers Pay Attention to This Energy State
01 Oct, 2012
By Rachel Duran
Wyoming’s economic development officials say the state’s fiscal surplus allows for thoughtful infrastructure investments in order to support business. “Even though we are conservative, fiscally, and not looking for ways to balance the budget on the backs of businesses, we are still interested in making strategic investments in communities that make sense for businesses that want to expand there,” says Bob Jensen, CEO, Wyoming Business Council, the state’s leading economic development organization.
Jensen notes that not only does Wyoming offer a low cost tax structure but also that the state’s investments in infrastructure enhance a company’s ability to move products to markets in a more cost effective way. In addition to increasing its sites and building inventory, Wyoming has invested in rail infrastructure in a number of locations throughout the state.
For the last few years, infrastructure-related investments to support data center activities have been a major focus for economic development leaders in the state. In 2011, the state’s Legislature added a tier to existing data center related sales tax exemptions, adding a $50 million capital infrastructure level. The existing exemption requires a $5 million capital investment in addition to a $2 million or larger investment in data center equipment, such as services, peripheral equipment and containers. When thresholds are met, the sales tax burden on qualifying computer equipment is exempt.
The $50 million capital investment also requires a $2 million investment in data center equipment purchases. Under this tier, the qualifying tax exempt equipment also includes uninterruptable power supplies, back-up power, specialized HVAC equipment and air quality control equipment.
Wyoming has been drawing the attention of companies for their data center operations for a few years, highlighted by this year’s announcement by Microsoft that it will build its newest data center in Cheyenne. The company plans to build a $112 million data center at the North Range Business Park.
“What has changed for us are the assets we have,” says Brandon Marshall, business and entrepreneurial development program manager, Wyoming Business Council. He is referring to the National Center for Atmospheric Research-Wyoming Supercomputing Center located in Cheyenne. While the state is historically known for its low cost power and low cost tax climate, the project: “put us on the map as far as industries like data centers that need a lot of infrastructure tied to available power and broadband,” Marshall says.
The NCAR-Wyoming Supercomputing Center is a 171,000-square-foot facility that houses one of the world’s fastest supercomputers. The center is undergoing the commissioning phase and expects to be operational this fall. The supercomputer will allow NCAR to conduct modeling on all things climate related. In addition, the University of Wyoming’s partnership with NCAR allows faculty and researchers to access up to 20 percent of the capacity of the supercomputer to conduct their computational exercises. And because Wyoming companies are world-class producers of energy, firms could benefit from the computer’s speed to assist in conducting models on geological formations to determine areas in the state ideal for activities such as sequestering carbon dioxide.
Industries And Innovations
Wyoming is also home to data centers for Ptolemy Data Systems (Sheridan), Green House Data (Cheyenne), T3 Media (Cheyenne), and EchoStar Broadcasting Corp., which is adding a 77,000-square-foot data center to its existing operations in Cheyenne.
One project that most likely won’t happen, but which brought considerable attention to Laramie as a location to support data center operations, is a project for Verizon Wireless. The company took an option out on property to build a mega data center. When the company acquired another company the project was put on hold. “They do have the option but the likelihood they will build is slim,” says Gaye Stockman, president and CEO, Laramie Economic Development Corp. “But there is a lot of attention to this site.”
The site features a Western Area Power Authority substation, which is fed by four different power sources. The site features flat, vacant land; and the state’s high elevation allows companies to use the ambient air to cool equipment. “We have also identified 10 long-haul fiber providers in and around Laramie,” Stockman says.
Moving to other industry clusters, in regard to the energy sector in Wyoming, the southwest part of the state is home to new companies involved in activities such as natural gas distribution in terms of its use as a motor fuel. “A company in Evanston is manufacturing the distribution equipment for consumers to use compressed natural gas as a motor fuel,” Jensen says. He says the state welcomes the opportunity to work with companies that have new and innovative technologies to develop the state’s commodities in a high value way, and generate jobs and new technologies in the process.
The communities of Casper and Gillette feature strong supply chain manufacturing sectors that support oil and gas industry activities. “They continue to grow even though there has been a downturn in natural gas and exploration because of lower prices; those companies still support the oil industry and there is still a lot of mining going on here,” Jensen says.
Wyoming’s energy resources would also be attractive to companies researching green friendly ways to extract commodities. “This would include fuel cell technologies and advanced conversion of natural gas and coal into cleaner transportation fuels, as well as chemical feedstocks,” Jensen says. “These efforts have a supply chain component to them and we feel like we have a compelling story with a low cost of doing business.”
Beyond traditional energy resources, Wyoming is home to a developed renewable energy cluster focused on wind energy. The slowdown in wind farm build outs due to the indecision thus far of the U.S. Congress to renew the Renewable Energy Production Tax Credit, a major wind energy incentive, has impacted the state. “At the same time, those existing [wind] farms need ongoing parts, replacement and service,” Jensen says. “So from the logistical standpoint, the ability to centralize a facility in Wyoming to take care of the existing infrastructure for wind power is of interest to companies we are talking to.”
Talent And Education
In other industry activities, intensifying technology clusters are forming in Laramie and Sheridan. Laramie, home to the University of Wyoming, is home to small technology companies that have spun out from the university. Sheridan is home to Ptolemy Data Systems, a provider and manager of IT services for organizations, including those involved in telemedicine activities.
“We have technology transfer businesses and R&D that is in association with the university, where they are looking for redundant power capacity and fiber for their businesses,” Stockman says of Laramie. “We have conducted a survey of our tech base and they anticipate adding nearly 150 jobs in the next two years.”
In regard to the build out of the state’s rail infrastructure, a transload facility is near completion in Laramie. The transload facility was in response to ensuring infrastructure and sites are in place to support business investment. For example, an existing warehousing operation wanted to begin producing its products in Laramie, in addition to distributing from the area. The addition of a transload opportunity in the community makes production and distribution from Laramie a cost-effective decision for this company.
There are 170 available acres located adjacent to the transload site. “The land is owned by Union Pacific, and the company will enter into lease agreements,” Stockman says. “What we have done as an economic development organization is received funding so we had an opportunity that we have not had in the past.” A third-party transport operator will provide the equipment needed at the transload site.
The Wyoming state government’s investments in transportation-related infrastructure have been ideal in supporting distribution and logistics activities. “There are logistical advantages in Wyoming to take advantage of regional markets without having to be in those markets directly, and still be able to lower your overall cost of operation,” Jensen says.
The www.wyomingbusiness.org Web site says: “Wyoming combines the rugged beauty and peaceful, stress-free lifestyle of the Rocky Mountain Region with all of the modern technologies and incentives for businesses. That is why Wyoming is the New West, a place that is good for family and business.”
Everyone says they have a great quality of life, Stockman notes. She points out that Laramie is 30 minutes from some of the country’s best fly fishing, and 30 minutes from a small ski resort. Rock climbing and mountain biking opportunities are within 15 minutes of the community. Laramie is not an MSA, but with the presence of the university, “we are diverse in what we have to offer through the university and other cultural opportunities,” Stockman says.