Overview

Resources and Consumption

Arizona has substantial coal deposits but few other fossil fuel resources. The coal deposits are concentrated in the Black Mesa Basin in the northeast part of the State. Arizona has one nuclear power plant and extensive solar energy potential. Its large desert areas offer some of the highest solar power potential in the country, and the Colorado River is a tremendous source of hydropower. While Arizona ranks near the middle of the States in total energy consumption, per capita energy consumption is low, and the State economy is not energy intensive. The transportation sector is the leading energy-consuming sector in the State.

Petroleum

Arizona’s crude oil production is minimal. Arizona currently has no refineries and receives its petroleum product supply via two pipelines, one from southern California and the other from El Paso, Texas. In summer 2003, the line from El Paso ruptured, causing spillage of petroleum products, and the section of the line between Tucson and Phoenix had to be shut down. Even though the line was repaired in less than one month, the accident caused shortages at Phoenix area motor gasoline fueling stations.

A new refinery in Yuma County, Arizona, about 100 miles southwest of Phoenix, was initially proposed for completion by 2010. However, it was delayed because the Quechan tribe expressed concerns about disturbing cultural artifacts and the Mexican government refused to supply the refinery with crude oil. The refinery was reapproved in 2008 for a location in Mohawk Valley, 4 miles east of the proposed Yuma location, and is now expected to be fully operational by 2012. The refinery is planning to receive its crude supplies from Alberta oil sands that will be shipped by barge to Mexico and shipped by pipeline to Arizona. The facility will have a capacity to refine 163,000 barrels per day of crude oil and produce 6.3 million gallons per day of petroleum clean fuels such as CARB3 (California Air Resources Board fuel specification), Arizona Clean Burning Gasoline, ultra-low sulfur gasoline, as well as other petroleum products. This new facility will be Arizona’s first refinery and could be the first refinery in the United States specifically designed to produce clean petroleum fuels.

An oxygenated motor gasoline blend is used in the Tucson area during the winter and in Maricopa County (Phoenix) year-round. Arizona also requires the use of a motor gasoline blend with low volatility in the area just south of Phoenix.

Natural Gas

The electric power sector dominates natural gas consumption in Arizona, consuming roughly three-fourths of State supply. Winters are generally mild and almost two-fifths of Arizona households rely on natural gas as their primary energy source for home heating. Arizona relies on interstate and international deliveries to meet most of its natural gas demand. Arizona is part of the transportation corridor for shipping gas from production areas in Texas and the Rocky Mountains to the southern California region via several major natural gas pipelines. Arizona has recently begun construction on a new natural gas-fired power plant in Coolidge, southeast of Phoenix, which is expected to be completed by 2011.

Coal, Electricity, and Renewables

Arizona's coal production takes place primarily in the Black Mesa Basin and large volumes of coal move in and out of the State via rail. More than one-third of the coal produced in Arizona is delivered to coal-fired generators in Nevada. The remaining two-thirds, along with coal supplies transported primarily from New Mexico, are consumed at power plants in the State.

Coal-fired plants supply almost two-fifths of Arizona’s demand for electricity. Natural gas-fired plants and nuclear power supply most of the remainder. Arizona’s sole nuclear power plant, the 3-unit Palo Verde plant, provides about one-fourth of the State's total electricity generation. Palo Verde is the Nation's largest nuclear plant and has the second-highest rated capacity of any power plant in the United States. The Glen Canyon and Hoover dams, both located on the Colorado River in northern Arizona, provide hydroelectric power. Although Arizona is a leader in the Nation in solar power potential, its solar-powered generation facilities are small and the State has not yet developed its solar resource on a large scale. In February 2006, Arizona adopted a renewable portfolio standard that requires electric utilities to generate 15 percent of their energy from renewable resources by 2025.

More than one-half of Arizona households rely on electricity as their primary energy source for home heating.