High Gas Prices Haven’t Sparked Wyoming Coal Generation

As gas prices push higher, cheap coal becomes more attractive, but years of industry decline, other factors make it difficult for Wyoming mines to capitalize.

September 21, 20223 min read

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Natural gas prices continue to climb, greatly increasing the cost competitiveness of coal electrical generation.

“We know anecdotally that across the country, if we look at just total coal production, that’s up. And coal production in Wyoming is almost entirely used for electricity generation,” said University of Wyoming energy economist Robert Godby. 

It’s too early to tell for sure whether Wyoming coal-fired plants are producing more electricity in 2022, but preliminary data from the first six months of the year doesn’t show a “discernable pattern” across the Cowboy State, Godby said. Some plants are up and some are down. 

The only combined-cycle natural gas generating plant — meaning it uses gas and a steam turbine together to produce electricity — in Wyoming is the Cheyenne Prairie Generating Station operated by Black Hills Corp. It’s seen preliminary production numbers drop slightly since February. 

There are a lot of things that go into affecting how much electricity any plant will produce, and cost of fuel is one of many factors.

One that helps determine how much coal generation plants produce is the availability ofwind and solar resources. Utilities will tap into those first, because when wind is blowing and the sun is shining, they’re the cheapest. And the wind resource this year was particularly good. 

“​​If people imagine that last spring and winter were much windier … they would actually be right,” Godby said. 

Another factor in how all this plays out on the electricity market is demand. Much of Wyoming had a cooler-than-average spring, which increases demand for heating energy. 

Wyoming also exports most of the electricity its plants produce, about 13 times more than Wyomingites consume. This is second only to Texas. 

The export market, which influences demand throughout Western states, will impact how much coal generation is produced in Wyoming, Godby said. There also are environmental goals and emission-reduction targets that may play into the demand for coal generation. 

“So, it’s a pretty complicated system,” he said. 

Total coal production in Wyoming is up only slightly over last year, when it hit 239 million tons. This year, Godbey said the Cowboy State is on pace to be somewhere in the low 240 million tons. 

In coal’s heyday, Wyoming’s peak year of 2008 saw the Powder River Basin sell more than 446 million tons of the mineral. Then, Wyoming coal accounted for 50% of the nation’s electricity generation. That’s fallen to about 20% today.

The problem now is that mines wanting to ramp up production have some limitations. Finding workers is much harder after rounds of layoffs over the past half-dozen years. Supply chain issues also make it hard to get equipment, and limited rail capacity makes it difficult to ship coal to power plants. 

“Even if you did want to expand it, it’s very difficult to do that right now,” Godby said. 

He also cautions about putting too much stock in electricity generation figures. It’s survey data that’s reported to the U.S. Energy Information Administration. Before official annual figures are released, errors are sometimes corrected and revisions made. Also, not all plants have reported all their production.  

The summer months will have a big impact on annual totals as well. After June, wind resources drop considerably and demand rises as people run their air conditioners.

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