The One Big Beautiful Bill Act that President Donald Trump signed July 4 is already making waves in Wyoming's coal-rich Powder River Basin, where industry advocates see new opportunities on the horizon, even as uncertainty hovers over future demand for more coal.
"I think it's good for the Powder River Basin," said Rusty Bell, CEO of Energy Capital Economic Development in Gillette, in response to news that the Bureau of Land Management is moving ahead with coal leasing mandates spelled out in the recently signed bill. "It's not just our resource; it's everybody in the country's resource, and we should be using it if it's economically viable."
Bell spends significant time outside Wyoming pitching investors on opportunities in the Powder River Basin.
"We know that there's 25 billion-ish tons that are economically viable that we can mine at today's price,” he said. “Whether there's a market for that I think is a bigger question that I can't really answer."
The legislation, which lowered federal royalty payments from 12.5% to 7% for companies mining coal frompublic lands, also mandates making available for leasing 6,250 square miles — an area larger than Connecticut.
For Bell, this represents a crucial first step toward stabilizing a Wyoming coal industry that’s been in decline for more than a decade. Just making more coal available through leases doesn’t mean companies will buy those leases.
"We certainly didn't agree with the Biden administration ending coal leases in the Powder River Basin,” he said. “I mean, that seems silly because the same administration had given us, and prior administrations had worked to help us with coal product facilities and industrial parks that would potentially use coal for other things besides thermal uses."
Also a former Campbell County commissioner, Bell argues that market forces, not government intervention, should determine coal's fate, and the legislation makes it possible for more Wyoming and Montana coal to go on the market.
"Does it mean that we're going to have these large spikes in coal sales over the next few years? I don't think anybody really knows that,” said Bell. “We do know that there's not a lot of projected thermal coal facilities scheduled to be built.
“Until somebody is projecting to build some new coal-fired power plants, we may not see this large bulge."
Economic Analysis
Rob Godby, economics professor at the University of Wyoming who tracks the energy industry, offers a cautious assessment about what the new budget bill means for PRB coal.
"From a market perspective, there probably is no demand for any new sources of coal,” said Godby. “There is more than enough coal production capacity available at the current time to meet market demand.”
Godby noted that this year, market demand is up in terms of production so far by about 10% over 2024. But that’s 10% up from a historically bad showing over the last 30 years in the Powder River Basin.
“That is more a reflection of how bad last year was in terms of coal production than a story about a rebound in coal demand,” he said.
Godby emphasized that current production levels remain well below recent years.
"Even at current production levels, we are still more than 10% below where we would've been in 2022 or 2023,” said Godby. “From a market perspective there is probably no new need for leases."
However, the economist sees potential for company-specific demand.
"From an operational or firm-specific perspective, though, there may be need by individual companies who wish to access cheaper sources of coal,” he said. “This could be because their current leases may be getting more costly to mine, or because they would like to expand their operations in particular ways.”
Godby explained that operational efficiency drives such decisions.
"If it is more efficient to try to purchase a new lease than to work existing ones — and by more efficient I mean lower cost — or if there are constraints to using existing coal leases, for example, you may have to move a highway or a rail line to access them, which is very costly, then you may wish to lease new land,” he said.
The professor noted that such requests aren't uncommon but often don't materialize.
"The demand for these sorts of leases is typically not very large relative to the record-breaking ones that were purchased over 15 years ago, but they are not uncommon,” he said. “There have been several requests to consider leases in the PRB over the past 10 years."
Godby warned against expecting significant activity.
"Over the past decade, and actually over the past 15 years, there have been a few requests to consider leasing specific parcels of federal land, but it's unclear that these companies were willing to actually take on the cost of leasing it. None did so,” he said.
Looking ahead, Godby predicts modest activity at best.
"I suspect if the PRB is reopened to leasing, and leases are made available, we will not see very many,” said Godby. “Nationally, coal demand is significantly lower than it was even in the last Trump administration."
Industry Bullish
Travis Deti, executive director of the Wyoming Mining Association, offered a more optimistic outlook, pointing to the combined impact of federal and state policy changes on production costs.
"From the producer standpoint, with the royalty rate reductions and some of the pushback on the moratorium on leasing and of course, the direction from the agency, even coupled with our reduction in the severance tax in the state, what you've done is you've lowered the cost of production pretty significantly," Deti said.
The mining association leader believes these cost reductions will drive new leasing activity.
"Producers are, and from what I'm hearing, they're going to start looking at new leases,” said Deti. “Because at the end of the day, when you look at our kind of magic number for natural gas is $3, and when you have $3 gas, Wyoming coal is competitive with what utilities dispatch."
On Monday, natural gas was selling for $3.35 per million British thermal units, or MMBtu.
Deti explained how the policy changes improve coal's competitive position, given the cuts in royalty rates and severance tax rates, “And so when you lower those, we see it as lowering that threshold with gas, making us more competitive. I think you're going to see companies looking at some of those new leases."
“We've done a 180-degree turn,” said Deti. “So now, I think you're going to see utilities say coal is actually going to be viable. Utilities think in decades as they're planning their schedules. So with coal as an option back on the table, you're going to have some folks taking a look at it."
“We’re already seeing utilities push out those premature retirement dates on them,” added Deti. “They're going to have to fuel those plants somehow.”
Opportunity Over Need?
As the market for coal continues to evolve, the recent legislation appears to emphasize keeping open coal leasing opportunities, whether or not there’s an immediate need, according to others tracking Wyoming’s coal industry at UW.
Matt Fry, director of the Center for Energy Regulation and Policy Analysis at UW’s School of Energy Resources, also pointed out the unclear market picture.
"I couldn't say with certainty whether we 'need' more leasing,” said Fry. “What I think is most important about this is that we would have the opportunity to lease additional acreage for coal production. With that in mind, if markets demand more coal than is currently available, then producers would have certainty that they can access additional coal."
Fry stressed the broader implications: "Policy and regulatory certainty are very important as we look at developing our energy resources."
Holly Krutka, executive director of the School of Energy Resources at the UW, focused on emerging technologies and future potential for tech breakthroughs — which depend on access to coal.
"There are many novel technologies under development that we very much hope will increase the need for Wyoming coal in the future," Krutka said. "I realize these technologies aren't baked into commercial leasing estimates at this time, but without leasing potential, I would fear that these technologies might not have sufficient feedstock."
These novel uses for coal include producing industrial chemicals, along with building materials like bricks and graphite.
Innovation Focus
The Powder River Basin’s commitment to finding new uses for coal beyond traditional thermal applications is the mission of the Wyoming Innovation Center in Gillette, where innovators can develop and test new coal products.
“You can rent the test bay and we'll provide the coal for you,” said Bell.
The facility serves as a testing ground.
"It's a pre-commercialization facility, so we can provide up to 2 tons an hour, which is a significant amount of coal,” Bell said.
Bell pointed to international examples of coal's versatility: "They're using coal to make a lot of chemicals in China — upward of 300 million tons of coal is being used for non-thermal uses in China. Well, that's more than we produce in the basin for thermal uses."
Bell's advocacy for Powder River Basin Coal landed him on a panel at the hip South By Southwest event back in March, and in September he’s headed to New York City for Climate Week.
"We are not shy about talking about and telling our story about the Powder River Basin to investors wherever we could go,” said Bell. “And that takes us to some places that maybe we wouldn't normally have done in economic development.
“So, New York City and Los Angeles and places that we might think of as very well or maybe a little bit more left leaning and anti-coal.”
Closer to home, Bell has found success with Wyoming's investor community.
"I work trying to get the Jackson Hole investor group to understand why investing in the Powder River Basin and in other places in Wyoming makes sense,” he explained, “because Wyoming's tax structure is based on the things that we have in the Powder River Basin.”
David Madison can be reached at david@cowboystatedaily.com.
