The collapse in coal production continues out of the state’s energy-rich Powder River Basin (PRB) in northeastern Wyoming.
Second quarter data released Wednesday by the Wyoming State Geological Survey (WSGS) shows coal production has slipped nearly 30% from the second quarter of 2023 when the Cowboy State dug up nearly 54.7 million tons of coal out of the coal-rich Powder River Basin (PRB).
In the same three-month period this year, more than 38.5 million tons of coal was mined, according to state data.
For the first six months of 2024, coal production fell 25% to 84.6 million tons of coal mined from 112.7 million tons dug up in the first half of 2023.
“It’s disappointing to see the decline continue,” said WSGS Energy Minerals Geologist Kelsey Kehoe, who compiles the data from figures published by the Mine Safety and Health Administration.
“My guess is that this is kind of a culmination of those long-term structural trends, or headwinds, that the coal industry has faced,” Kehoe said.
Production shortcomings are the result of the industry’s competition with electricity produced by wind turbines and solar farms, as well as low natural gas prices and the retirement of coal-fired power plants, she said.
“That’s my kind of guess,” Kehoe said. “I’m not aware of any specific events that might be driving this.”
Travis Deti, executive director of the Wyoming Mining Industry, observed that this latest blow is a tough pill to swallow, though he’s cautiously optimistic of signs of a rebound coming in the second half of the year and into 2025.
Tough Year
“There is no question that the first half of the year has been tough,” said Deti, who attributed the drop in coal production to long-term structural challenges.
These include a mild winter, high inventories of coal stockpiled at coal-fired power plants run by electric utilities and historically low prices for natural gas that have displaced coal as fuel for power plants.
The sweet spot for natural gas is $2.75 per million British thermal units (MMBtu), and as it rises closer to $3 MMBtu, PRB coal becomes more competitive, Deti explained.
“What we are seeing is that natural gas prices have been so low that utilities have burned through their (coal) stockpiles,” Deti said.
The 2024 second quarter drop of 30% in coal production reflects this trend, he added.
However, as utilities reduce their coal stockpiles at power plants, production is expected to pick up to replenish reserves.
“We will make up some of the production from the first half of the year. That’ll help. There is some reason for optimism,” Deti said.
The collapse in production comes just as coal-fired power plants across the United States, including in Wyoming, could close permanently within the next decade as a result of federal environmental rules that significantly reduce pollutants emitted into the air and toxic waste dumped into streams.
Wyoming Gov. Mark Gordon has joined with other states to file litigation to stop the federal government’s actions that he says could undermine the Cowboy State’s economy.
In Wyoming, the rules will hit many of the legacy coal-fired plants from Naughton and Bridger in the southwestern part of the state, to Dry Fork near Gillette and the Dave Johnston plant near Glenrock.
Unemployment Rising
The rules represent a big economic hit to Wyoming’s PRB in the northeastern part of the state where fewer than 3,900 people are employed in the industry.
Signs of layoffs have emerged.
Total employment in PRB mines stood at 3,893 workers at the end of the 2024 second quarter, down 260 jobs from the same period a year-ago period. About 100 jobs were lost in the 2024 first quarter.
Black Butte Coal Co.’s surface mines, located about 40 miles east of Rock Springs, Wyo., have reported some layoffs.
Amy Souza, a spokeswoman with the Wyoming Workforce Services Office in Rock Springs, told Cowboy State Daily that her state agency has received reports of up to 50 miners laid off at Black Butte Coal in recent months.
About 30 of those 50 miners were laid off last week, with the remaining 20 fired in November.
“Our job is to catch them and help them get back into the workforce,” said Souza, who said that her agency brought in potential employers this past week as part of a “rapid response” event to help the laid off workers find jobs in the local trona industry or elsewhere.
Black Butte Mine Manager Steve Gili was not immediately available for comment.
More layoffs in the industry could be confirmed over the next week.
Two major coal operators in the PRB hinted at layoffs in their first quarter financial reports over three months ago.
St. Louis-based Arch Resources Inc., which is expected to issue its second quarter financial results on Thursday, said that its performance fell short of expectations in the first three months of 2024 as thermal coal demand dipped impacting its PRB mines in northeastern Wyoming. The company said layoffs are a possibility.
Arch said that operations in the country’s largest coal producing region slipped into the red in the first quarter, principally due to competitive pressures from cheap natural gas and stockpiling of coal by utilities after a mild winter.
St. Louis-based Peabody Coal Corp., which is expected to issue its second quarter results on Aug. 1, said earlier this year that it wouldn’t hit financial guidance targets for its first quarter, partially in response to dismal coal production out of the PRB.
Peabody also cited lower coal shipments to coal-fired power plants due to “unseasonably warm weather and continued low natural gas prices.”
Coal Rebound?
Still, a slight rebound in coal production out of the PRB may be in the works.
An Energy Information Administration forecast published July 9 said that the electric power sector generated 5% more electricity in the first half of 2024 than in the same period in 2023 because of “a hotter-than-normal start to summer and increasing power demand from the commercial sector.”
The federal agency said that it expects more power generation to come from coal and less from natural gas than what was initially forecast, especially during the upcoming winter months.
An unknown factor on future coal production comes from the solar sector.
The Energy Information Administration said that it expects a 2% increase in U.S. generation in the second half of 2024 compared to the second half of 2023 with solar power contributing 42% more electricity during the period in comparison to the second half of 2023.
Solar power is the fastest growing source of electricity in the U.S., the federal agency said.
Pat Maio can be reached at pat@cowboystatedaily.com.
