Maximizing Resources - Global Trade Magazine
  May 7th, 2014 | Written by

Maximizing Resources

WHERE ENERGY COMPANIES ARE SETTING UP, AND WHY

Being in the Midwest, we’re far from the venture capital communities of the West and East coasts,” says Jeffrey Basch, manager of Business and Operations for Ann Arbor, Michigan-based Accio Energy. “We’re not as easily on the fundraising radar of certain groups. They’re not used to investing in Michigan.”

The company adroitly navigated the cash-barren terrain. How? You might say it’s been kissed by angels—angel investors, that is—who’ve funded its product development and operations, notes Basch, who co-founded in 2008 with a focus on generating turbine-free wind energy. “Some early-stage venture capital firms in the area have participated with us, but we’re very capital efficient, with a small team and low overhead. We haven’t required the big fund raising that most energy companies would need at our state of development.”

According to IHS Energy and Power Consulting, some energy companies locate their headquarters near the majority of their drilling and production operations. This is particularly true for smaller, independent, play-specific operators, such as one focused primarily in North Dakota’s Bakken Shale, Marcellus Shale in Pennsylvania or Eagle Ford Shale in South Texas. Proximity helps them to better leverage their people, resources and equipment.

Eagle Ford-focused companies might operate out of San Antonio to be near their fields, or in Houston, adds the IHS. Others, particularly larger international oil companies, are likely to locate in cities such as Houston, regarded by many as “the oil and gas capital of the world.”

Michigan, however, makes sense for Accio, says Basch. For one thing, the company’s stationary wind systems, which generate electricity as wind moves through an array of multiple panels, “will be much cheaper to manufacture in Michigan.” he says. “Using automotive heritage manufacturing technologies and associated low costs, we’ll produce a single commodity materials-based wind panel the height and length of a standard shipping container.”

Accio draws on Michigan’s strong base of engineers for the expertise needed to design its innovative components. The company’s proximity to world-leading engineering and physics resources at universities in southeast Michigan can lend expertise “when we need to go deep on something. They give us the specialized expertise we need to stay small while we do big things.” Leveraging the state’s talent pool, the company has gotten this novel technology further than any other team in the world at a fraction of the cost most new energy technologies require.

Looking westward, Cool Planet Energy Systems chose to place its headquarters in Denver and its research and development in Camarillo, California. A spokesperson for the green-fuels and biochar development company says these locations were chosen for their wealth of talent. “We’re hiring locally and specifically for chemical engineers with experience in refining and chemical processes. Applications are coming from local people who are working away and want to come back closer to home, another benefit of our distributed model.”

Cool Planet opened its first plant in Alexandria, Louisiana, a site selected for its low cost, state incentives and proximity to feedstock, the spokesperson explains. “We build smaller modular plants close to the biomass feedstock as we do not want to transport low-value feedstock more than 30 miles due to transport costs.”

In Denver, the company was approved for nearly $3.1 million from Colorado’s Job Growth Incentive Tax Credit for the creation of up to 393 new jobs over three years, the spokesperson says.

The site was chosen because of its “excellent” wood biomass availability, interstate and rail access, and direct barge access to more than nine refineries. The facility is expected to produce at least 24 direct jobs and bring at least $56 million in economic investment into the state. Estimates are that an additional 150 indirect jobs will result because of this facility, and 350 construction jobs will be utilized.