Cody and other Wyoming communities east of Yellowstone National Park could miss out on an emerging economic development opportunity because of fears about volcanic activity in the park.

Wyoming Gov. Matt Mead has made it an economic development priority for the state to attract large-scale data centers like a planned $112 million cloud computing hub to be built in Cheyenne by software giant Microsoft, Corp.

But a recent statewide assessment of Wyoming’s ability to attract and support such data centers found that some industry leaders are wary of locating facilities in the state’s northwestern corner, citing the risk of a volcanic eruption in the park.

“I’m sorry to say that could be a deciding factor for some,” said Joseph E. Sharkey, a vice president at TMNG Global, a telecommunications and technology consulting firm hired to assess the state’s infrastructure.

Previous ancient major volcanic super eruptions have spread ash over a wide region that would cover much of the United States. (USGS – click to enlarge)

Jacob B. Lowenstern, the scientist in charge of the U.S. Geological Survey’s Yellowstone Volcano Observatory, said that it would be a mistake for businesses to focus on a potential eruption as a prohibitive risk for any major infrastructure project.

Sharkey delivered a report to the Wyoming Business Council on the state’s fiber optic telecommunications and electric power infrastructure to help determine which towns might be a good fit for companies looking to build data centers.

Sean Stevens, business recruitment manager for the Wyoming Business Council, did not respond to a message seeking comment.

Like many places across much of Wyoming, Cody has a lot of things data centers look for in a host city, including relatively affordable electric power and low summer temperatures, which make it cheaper to cool the massive complexes.

Cody’s Buffalo Bill Dam even produces hydroelectric power, a likely selling point for any company looking to enhance its environmental image.

“A lot of companies would like to be able to brag that they’re on clean energy from a hydroelectric plant,” Sharkey said last month when discussing Cody’s potential as a data center location during a wide-ranging presentation to state business leaders.

But the risk of an eruption — large or small — is clearly on the radar for some decision-makers, Sharkey said this week in a follow-up interview.

Site analysts focus not just on the immediate and nearby explosive destruction that might be caused by a major eruption, “but also the typical ash pattern based on prevailing winds” from a lesser event, he said.

“That wind effect takes you directly across Cody and the northern part of the state and up into Montana and Canada. The concern is not just that you have a catastrophic explosion, but if there is any type of ash pattern,” Sharkey said.

Major companies ranging from financial institutions to Internet giants to entertainment companies have sought to build new facilities in isolated, low-risk areas ever since the terrorist attacks of 9/11 caused severe disruptions in data centers based in New York City, he said.

Data center underwriters have paid especially close attention to volcanoes as a risk factor since an April 2010 eruption in Iceland made international headlines. Flights across Europe were grounded as a precaution against the fine, abrasive grains of volcanic ash causing damaging plane engines. Analysts worry that same ash could cause power or communications disruptions and wreck cooling and ventilation systems.

Major data center projects being developed in Iceland at the time of the eruption there have since faced an uphill battle attracting clients, Sharkey said.

Whether the risks are high, grossly overblown or somewhere in between, much is at stake for communities like Cody, including dozens of jobs and millions of dollars.

The most destructive volcanic and seismic events are also the least frequent. (USGS – click to enlarge)

Sharkey made a final recommendation last year to client Verizon Communications to locate a planned 900,000-square-foot, $500 million data center in Laramie, Wyo., despite some internal discussion of the eruption risk.

That project ended up being shelved after Verizon spent $1.4 billion to acquire Terremark, a cloud hosting provider with excess capacity. But even when Verizon was considering investing billions over 20 years into what would have been one of the world’s largest data centers in Laramie, the potential for an eruption was not a deal-killer, Sharkey said.

“The Verizon comment was that if Yellowstone (erupted) the way it’s predicted on Discovery Channel, the country will have bigger issues than Verizon losing their data center,” Sharkey said.

Lowenstern agreed, saying that “it’s such an unlikely event having a super-eruption at Yellowstone that would severely affect Cody, that the loss of a data center is going to be within the noise” of much larger crises resulting from the event.

Even the likelihood of a smaller eruption that might produce heavy ash across Cody and nearby areas was still relatively small compared to the risk to infrastructure elsewhere from natural disasters like tornadoes, Lowenstern said.

Such concerns — even carried 100 years into the future, when current data center technology is likely to be obsolete — are based on a risk that is “very low, and to my mind, shouldn’t be part of an economic decision of where to site some useful infrastructure,” he said.

Despite concerns by some in the industry, Cody and other northern Wyoming communities might still be able to attract data centers, especially if a key decision maker is sold on the local quality of life, Sharkey said.

“For instance, the guy that comes there and decides it’s the greatest fishing ever — for the right client, building a data center there should be still very reasonable,” he said.

Read more at Yellowstone Gate, and contact Ruffin Prevost at 307-213-9818 or ruffin@yellowstonegate.com.

Banner photo by John Pallister/2004 USGS

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  1. This is not the reason, it is the excuse. No one seriously would consider a possible volcanic eruption as the reason not to relocate their business. They probably came and could not find a Starbucks on every corner ,or saw a sign warning of grizzley bears. They need a reality check.