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Wyoming Coal Decline Could Continue, but Developments Might Help Industry’s Future

in Energy/News
2755

By Ike Fredregill, Cowboy State Daily

As coal markets continue to decline around the country, Wyoming’s energy industry could be in for a rough year, a University of Wyoming economist said.

“From 2018 to 2019, Wyoming coal production was down 10 percent, which is just a little shy of 31 million tons,” said Rob Godby, the University of Wyoming director of the Energy Economics and Public Policies Center. “I expect we’ll continue to see that trend in 2020.”

Wyoming produced about 270 million tons of coal in 2019, a low not seen since the 1970s, Godby said. 

“People will think the Blackjewel LLC closure was the sole reason, and it was a factor,” he explained. “But if you look at mines across the state, production was down throughout the year.” 

Power producers nationwide are turning to natural gas and renewable energy sources, and Godby said they likely won’t look back.

“All Wyoming coal is used pretty much for electricity generation, and coal use in electricity generation has halved,” he explained. “Coal is no longer competitive with natural gas and renewables. The cost of renewable electricity development has plummeted in the past decade, and natural gas is currently the cheapest fossil fuel.”

The short-term outlook may be bleak, but he said there are several developments underway in 2020 which could impact the industry’s long-term outlook.

Governor’s Initiatives

Gov. Mark Gordon said coal may be in decline, but it is still an essential ingredient in U.S. energy production and could one day become something more.

“The national conversation talks about climate change, talks about renewables, talks about new technology as if there is no bright future for coal,” Gordon told Cowboy State Daily. “We have a solution to all of those things. We have carbon capture sequestration. We have the opportunity to move to bio energy carbon capture technology. And we’ll continue to make coal a viable commodity in the future.”

There is a demand for coal the state can count on, so the decline is less of a cliff and more of a plateau, he said.

Gordon started the Power Wyoming planning effort in 2019 to forecast multiple scenarios for future energy markets and this year he is requesting $25 million from the legislature for the Energy Commercialization Program.

“In Wyoming, there are a lot of little pieces that are all part of solving the puzzle,” Gordon said. “My effort (with the program) is to demonstrate our commitment to this to attract investors and build confidence in the private sector.”

The money is being requested from the Strategic Investments and Projects Account, and could be applied to providing a focused approach to researching new coal-reliant technologies in collaboration with UW and counties supportive of alternate coal-usage research.

Carbon capture research occurring throughout the state could be instrumental to securing Wyoming’s future coal production, Gordon said. But he added it will take time to reap the benefits of those studies.

Looking at 2020 as a whole, Gordon said the situation is dire, but not without hope.

“I don’t think (the coal decline) is going to be decimating to Wyoming,” he said. “But, it’s going to be concerning.”

Sovereign immunity

One item high on Godby’s watch list is the unprecedented case of a coal company owned by a sovereign nation operating mines on U.S. soil.

The Navajo Transitional Energy Company (NTEC) was created by the Navajo Nation to operate mines within its boundaries.

But in 2019, the company acquired Cloud Peak Energy’s Cordero Rojo and Antelope mines in the Powder River Basin as well as mines in Montana.

At the Powder River Basin Resource Council, an organization dedicated to advocating for responsible energy development in the basin, staff attorney Shannon Anderson has kept a close eye on the NTEC situation.

“There’s a real concern and a practical problem for those of us in Wyoming with this company operating the mines and potentially owning them,” Anderson said. “If they maintain sovereign immunity, it may block legal redress on the part of citizens, neighbors, workers and government entities trying to collect taxes and royalties.”

While the Wyoming Department of Environmental Quality has yet to approve permits for the company, NTEC is operating the mines under Cloud Peak’s permits, which Anderson said is problematic as well.

“Cloud Peak is in bankruptcy right now, doesn’t have any assets and isn’t really a company that can be held responsible either,” she explained. “(NTEC) can kind of operate under Cloud Peak’s permits forever.” 

Despite being created by the Navajo Nation, the nation announced last year it will not back NTEC’s $400 million reclamation liability for the mines.

Too many mines

Despite experiencing a major decline in coal production, no Wyoming mines have closed, Godby said.

“If you look at the Powder River Basin, it’s like a Wile E. Coyote moment,” he said. “We’ve already run off the cliff, and we haven’t realized it yet. We’ve got the same number of mines chasing fewer and fewer customers, which is not a sustainable outcome.”

Two companies — Peabody Energy and Arch Coal — control more than 50 percent of the basin’s production. In 2019, the companies announced a joint venture to consolidate their Western operations.

Wyoming Coal: Are Export Facilities the Answer?

in Energy/News
2723

By Ike Fredregill, Cowboy State Daily

Wyoming coal producers have an eye on foreign markets as stateside coal demand decreases, but exporting coal comes with a new set of challenges, a Wyoming Mining Association (WMA) spokesperson said.

“When we look at the coal industry going forward in 2020 — it’s a simple fact — domestic markets are declining,” said WMA Executive Director Travis Deti. “However, Japan, Korea and Vietnam have a growing interest in buying our coal.”

Developing countries in the Asian Pacific are ramping up their coal-generated electricity operations and in some places like Japan, coal is replacing nuclear energy, he said. 

“Coal is still the cheapest alternative globally to bring your country into the 21st century,” Deti explained. “These countries want what we want, and Wyoming coal is desirable because they want to meet their emission goals, too.”

The problem is getting it to them. 

To export Wyoming coal, companies currently have to ship it north to the Port of Vancouver, British Columbia, Canada. The journey is long and costly, making the international exporting business unattractive to Wyoming companies.

“Right now, the amount of Wyoming coal being shipped is almost zero,” Deti said. “Maybe a few hundred thousand tons, but that’s next to nothing when you consider we’re shipping nearly 300 million tons annually inside the country.”

Closer to home, developers are working on expanding the Millennium Bulk Terminal in Longview, Washington, but the project is mired in court battles.

“What’s been happening over the last five to six years is you have these projects in the Pacific Northwest to expand existing ports,” Deti said. “About six years ago, there were five projects — going right through the heart of environmental movement. And one by one, these projects have fallen by the wayside because of protests.”

Of the five, Millennium Bulk is the only viable option left for Wyoming, he said.

A spokesperson for Gov. Mark Gordon said in an email the governor is exploring the option of filing a lawsuit against the state of Washington for its role in blocking the port expansion.

If the project moves forward, Deti said it could open new shipping lanes in phases.

“During the first phase, there is a potential for shipping 8 million to 9 million tons (annually) through Millennium Bulk,” he explained. “But the second phase could see as much about 30 million tons of coal being exported.” 

Clear eyes

In 2008, Wyoming shipped more than 460 million tons of coal to customers around North America. 

By 2018, that number was down around 300 million — a trend that continued into 2019 and contributed to the closures of the Belle Ayr and Eagle Butte mines following Blackjewel’s bankruptcy.

At the University of Wyoming, Rob Godby, the director for the UW’s Energy Economics and Public Policies Center and a college of business associate professor, keeps a mindful tally on the coal decline.

“Oftentimes, when people talk about the problem we have with the coal industry in Wyoming, I get the feeling they think it is we can’t get our coal to market,” Godby said. “I’m under the impression they think coal ports would be the answer to the current downturn.”

If approved and completely built out, Millennium Bulk’s full capacity would be about 10 percent of Wyoming’s current production value. 

Godby said at best, the terminal could slow the decline of coal production, but it wouldn’t reverse it.

“Revenues from exports are very volatile, volatile means uncertainty, and uncertainty is exactly what the coal companies don’t want right now,” he said.

Additionally, it is unlikely Wyoming will be able to capitalize on the terminal’s full capacity. While coal from the Powder River Basin burns cleaner than coal mined elsewhere, it has a lower energy value, which makes it harder to sell across the Pacific Ocean.

Coal mines in Montana, meanwhile, have access to ample high-energy coal and are closer to the proposed port, further reducing their shipping costs, Godby explained.

“I’m not trying to throw cold water on this opportunity, but let’s look at this with clear eyes,” he said. “It’s not a reason to not invest, but to hear some talk about it — it’s as if they think it will be the slam dunk coal needs right now, and I don’t believe it will.”

Follow the leader

Millennium Bulk might not save Wyoming coal, but it could pave the way for other port expansions, said Jason Beggar, the Wyoming Infrastructure Authority executive director.

“The key is adding additional capacity,” Beggar said. “There are a lot of projects waiting to see what happens with Millennium Bulk.”

The authority works independently under the umbrella of state government to facilitate infrastructure development beneficial to Wyoming industries such as coal. 

“The global market is so hungry for coal,” he said. “There’s an incredible demand in Japan.”

While Asia Pacific buyers get most of their coal from Indonesia and Australia, Beggar said there is a need for a stable supply.

“We’re at a generational transition with utilities in the U.S. — a lot of this stuff was built in the ’50s and ’60s, and it’s served its lifespan,” he explained. “But that’s not the case with Asia.”

Many new coal-generated power plants are being built across the Pacific Rim, and Beggar said they will likely be in operation for the next 40 to 50 years. 

Regardless of the market, Deti said for now, the best the coal industry can do is watch and wait. 

“We’re going to wait and see how some of these court cases play out,” he said. “Domestically, 2020 is going to be tough as those markets (in the U.S.) continue to decrease.”

Deti said he doesn’t believe expanding export terminals would prevent the coal decline, but it’s still worth fighting for.

“Are you ever going to make up that difference overseas — probably not,” Deti said. “But, every little bit helps.”

Year of the Pig sees Wyoming cut the fat, celebrate equality, go gaga for choo-choo trains

in Agriculture/Business/Energy/Jobs/News/Transparency/wildlife
Year of the Pig
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By Ike Fredregill, Cowboy State Daily

In 2019, Wyoming celebrated the 150th anniversary of women’s suffrage, welcomed back members of the Black 14 and bemoaned the worsening coal crisis.

Cowboy State Daily was there to cover it all.

Here’s some of our top stories from throughout the year.

Coal

Mineral extraction in Wyoming could enter a slump in the next four years, and the coal industry is slated to experience the worst of it, according to a report produced by Gov. Mark Gordon’s Power Wyoming initiative.

Some of the initiative’s scenarios predicted a recovery period in two years, but most, and the most likely, predicted a devastating decrease in both Wyoming’s total employment and population.

For the residents of coal country, those predictions could be life changing.

“The coal jobs have historically been the stable jobs,” said Alison Gee, a Gillette attorney. “Now, we’re shifting to an environment where we have to look to oil and gas to try and provide some of the stability for our families. And as you know, the oil and gas markets just aren’t that way. They’re very volatile because of the world economy.”

Although several hundred miners returned to work at the Eagle Butte and Belle Ayr coal mines after Eagle Specialty Materials assumed ownership from the bankrupt former owners, Blackjewel, the reverberations of 600 coal miners being laid off in one fell swoop earlier this year are still being felt statewide.

Corporate income tax

Despite dying in the Senate during the 2019 Legislative Session, a legislative committee is once again studying a proposal to impose an income tax on so-called “big box” stores.

The Legislature’s Joint Revenue Committee listened to testimony in September regarding a 7 percent corporate income tax on companies with more than 100 shareholders.

A similar proposal, House Bill No. 220, referred to as the National Retail Fairness Act, was not considered by the Senate Corporations, Elections and Political Subdivisions Committee before a deadline in February.

Both measures were raised as state officials were faced with rapid declines in the state’s mineral tax revenues, historically the biggest contributors to Wyoming coffers.

Irrigation collapse

After an irrigation canal collapsed, leaving more than 100,000 acres of farmland in Goshen County and Nebraska without water for months this summer, officials are looking into ways to prevent similar incidents in the future.

Built by the Bureau of Reclamation more than 100 years ago, the Gering/Fort Laramie Irrigation Canal collapsed in July, causing the governors of Wyoming and Nebraska to declare states of emergency.

Although the U.S. Department of Agriculture later said crop losses would be covered by insurance, a previous economic analysis report produced jointly by the Nebraska Extension and University of Wyoming Extension originally estimated the collapse could cost both states about $90 million combined. 

Opening the books

After a years-long legal battle between Wyoming officials and non-profit organizations over state government transparency, Wyoming State Auditor, Kristi Racines released Wyoming’s checkbook  shortly after taking office in January.

The data dump contained approximately 4.9 million line items of expenditures made by state agencies during the last six years, but it does not include several spending categories such as state employee salaries or victims’ benefit payments.

Racines took transparency a step further and launched a website dedicated to providing the public with basic spending data for the state.

Using the data provided through both the checkbook and website, Cowboy State Daily covered a series of state spending stories including the Wyoming Office of Tourism’s sponsorship of rodeo teams, the Wyoming Department of Correction’s purchases of religious items and a look at Wyoming’s own air fleet

Big Boy

The largest steam engine ever built, the Big Boy locomotive, crossed Wyoming for the first time in 60 years, bound for Utah and the 150th anniversary of the completion of the country’s first transcontinental railway.

“A steam locomotive is a living, breathing piece of machinery,” said Bob Krieger, a former steam locomotive engineer who now runs the UP Historical Society in Cheyenne. “You can see its muscles. You can hear it breathe as it pulls a grade. All steam engines do that. The Big Boy is just the biggest.”

Train enthusiasts from all over the world flocked to Wyoming to witness the historic trip.

Capitol renovations

State agencies started moving back into the Wyoming Capitol building this summer as a $300 million renovation project neared its end.

The refurbishment of the 129-year-old Capitol was the centerpiece for the Wyoming Capitol Square Project that also involved updating the Herschler Building to the north and the space between them.

The reopening ceremony coincided with the celebration of Wyoming’s Statehood Day, and the unveiling revealed a Capitol building considered to be much more accessible to the public, with larger rooms, broader passageways and more open space.

“They’ve done a lot of stuff here that opened up the Capitol,” said Joe McCord, the former facilities manager for the Capitol. “The stairs going into the House and Senate are wide open right now. Downstairs, you’ve got the galley that’s wide open. The rooms are bigger. I just love it, what they’ve done. They’ve done a great job.”

Despite being mostly complete, many agencies were still working with temporary furniture towards the end of the year as the state worked out the details of new furniture request for proposal.

Taco John’s

There was a whole lotta Mexican goin’ on at Taco John’s 50th anniversary this year, some of which the company is taking to Minnesota.

While founded in Cheyenne half a century ago, the fast food chain announced in December it was expanding its corporate office to Minneapolis, where there are more than 200 Taco John’s locations within a few hours drive from the city. But for those readers who can’t get enough oles, the franchise is slated to remain headquartered in Wyoming. 

Women’s Suffrage

State legislators kicked off the 2019 Legislative Session by passing a measure setting aside a day to recognize Wyoming as the first state in the nation to give women the right to vote.

The measure declared Dec. 10 as “Wyoming Women’s Suffrage Day,” which marks the day in 1869 when Territorial Gov. John Campbell signed the bill giving women the right to vote in Wyoming.

Marking the occasion with music, the Wyoming Symphony Orchestra commissioned an original work from American composer Stephanie Ann Boyd. 

“Wyoming, of course, put through women’s suffrage about 50 years before everybody else, and so we’re taking the inspiration of that, and the stories of the women that were instrumental in that, and writing a piece about them, but also writing essentially a 25-minute minute love letter to Wyoming,” Boyd said.

On Dec. 10, women and men marched to the Capitol commemorating the newly declared holiday and highlighting instances of inequality that still need to be addressed.

Black 14 

Fifty years after the University of Wyoming expelled 14 members of its football team, known as the Black 14, for wearing black armbands onto the field, race relations are still strained in the Equality State, said Mel Hamilton, one of the Black 14.

“It’s a shame to say, but it’s pretty much the same as when I entered Wyoming in 1965,” Hamilton said, adding, “with one exception — it went underground.”

Adding diversity to the history books and teaching students how minorities contributed to growth of the U.S. as well as informing them how racism was cultivated by ignorance would be a strong step toward improving Wyoming’s future race relations, Hamilton said. 

“They must be allowed to learn what other races have given this country,” he said. “They are ready to lead the way if we — the old vanguard — just get out of the way and let them do it.”

Chronic Wasting Disease 

The Wyoming Game and Fish Department released a draft plan to address a fatal disease running rampant through the state’s wildlife population.

“(Chronic Wasting Disease) has been documented spreading throughout the state, and there are areas where its prevalence is high enough that we think it could be having significant impacts on some of our herds,” said Justin Binfet, one of the plan’s authors and a Game and Fish Department wildlife management coordinator. “The plan is based on recommendations that were developed through an extensive collaborative process.”

Dubbed a “suite of strategies,” the plan suggests managing the disease by installing wildlife feeding bans, potentially targeting mule deer bucks during breeding season, voluntary and mandatory submission of harvested animal samples and working with landowners, cities and counties to eliminate areas with unintentionally high concentrations members of the deer family.

Wyoming’s largest wind farm extends construction schedule

in Energy/News
Carbon County wind
2575

By Cody Beers, Cowboy State Daily

An approved change in the construction schedule of the largest wind farm in Wyoming doesn’t mean that the project south of Rawlins has been delayed.

Instead, it means the Chokecherry and Sierra Madre Wind Energy Project will take 11 years to complete rather than eight as originally believed, officials said.

The new construction schedule, approved in February by the Wyoming Department of Environmental Quality, would see installation of 500 wind turbines, capable of generating a total of 1,500 megawatts of power, between 2022 and 2024. Another 396 turbines, with a generation capacity of another 1,500 megawatts, would be installed in 2025 and 2026, according to Kara Choquette, spokesperson for Power Company of Wyoming LLC (PCW) and TransWest Express LLC. Both companies are separate affiliates of The Anschutz Corporation, the Denver-based company.

A megawatt is a unit for measuring power that is equivalent to one million watts. One megawatt is equivalent to the energy produced by 10 automobile engines. A megawatt hour (Mwh) is equivalent to the amount of electricity used by about 330 homes during one hour.

The Carbon County Commission approved the construction schedule extension following a July 2 public hearing in Rawlins.

“It’s not unusual to request extensions or permits,” Choquette said. “Meeting all the rules and regulations at the county, state and federal levels is difficult, but it ensures protection of the resources. The State of Wyoming is very good at making sure energy development comes with environmental conservation.”

“We really appreciate the great support we have received for the project from the stakeholders of Carbon County and across Wyoming,” Choquette said.

The 2014 permit for the wind farm, issued by the Wyoming Department of Environmental Quality’s Industrial Siting Council, required communication about any construction scheduling changes. 

In a January 2019 letter to Wyoming DEQ, PCW stated it had completed 49 turbine pads and 60 miles of roadways for the wind farm. But the letter also stated that the construction schedule needed to be amended because of market demands, workforce schedules and availability of construction materials.

“PCW’s proposed changes to the construction schedule are due to prioritizing the completion of these infrastructure elements for the entire project, Phase 1 and Phase 2, before moving to installation of the turbine and transmission components and balance of plant,” PCW Vice President Roxane Perruso wrote in the company’s letter to Wyoming DEQ.

PCW’s request was approved by Wyoming DEQ Director Todd Parfait in February, and the Carbon County Commission finalized approval at the county level following its early July public hearing.

The wind farm will ultimately triple Wyoming’s entire wind power generation capacity, Choquette said.

“This wind power plant will provide at least 3,000 megawatts of wind energy capacity,” she said. “Currently, Wyoming has about 1,500 MW of wind energy capacity installed in six counties, including Albany, Laramie, Carbon, Converse, Natrona and Uinta counties.”

Choquette said the Chokecherry and Sierra Madre Wind Energy Project (CCSM Project) is an estimated $5 billion investment.

“The long-term surface disturbance of the CCSM project is less than 1,500 acres of a working cattle ranch that will remain a working cattle ranch,” Choquette said.

Much of the surface disturbance involves the turbine pads – the graded areas of land where the turbines themselves will be installed.

Choquette said up to 200 workers will be needed in the first few years of wind farm construction, growing to a peak of almost 850 with construction of the turbines.

“This will increase business opportunities for local hotels, motels, RV parks, restaurants and other local service providers,” she said. “During operations, the CCSM project will create 114 full-time operations and maintenance jobs, which would make the project one of the largest non-governmental employers in Carbon County.”

Choquette said the CCSM project will provide significant property tax and sales/use tax revenue for Wyoming, as well as electricity tax revenue, totaling an estimated $850 million during construction and through 20 years of operation.

Choquette, also the communications director for Transwest Express LLC, said Transwest is an independent transmission developer. 

Transwest, she said, is a separate company from PCW that is “exclusively focused on developing interregional transmission to connect Wyoming to new renewable energy markets in places like California, Arizona and Nevada, while also adding capacity for the West’s power grid that connects all western states.

“The TransWest Express Transmission Project, as well as Rocky Mountain Power’s Gateway West Transmission Project and their Gateway South Transmission Project, all go through the northern edge of the CCSM project site south of Rawlins/Sinclair,” Choquette said. “So, there are multiple transmission options for CCSM electricity, and similarly, the Transwest project will have the capacity to deliver energy westward from multiple Wyoming generation projects.”

The Wyoming DEQ’s Industrial Siting Council unanimously approved a permit May 29 to construct and operate the transmission project. The transmission line is scheduled to for construction between 2020 and 2023.

Customer-generated power electrifies calls for net metering reform

in Energy/News
solar power
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By Ike Fredregill, Cowboy State Daily

Dr. Jason Bloomberg spent more than $100,000 on his home’s solar and wind energy system with the idea he could recoup the costs through energy savings during the next 20 years.

“The goal is to reduce how much power we are using from the grid,” Bloomberg said.

But his repayment schedule could be put at risk if a plan to make renewable energy system owners pay a larger share of the costs faced by electric power providers is adopted by the state.

While renewable energy system owners can generate a large portion of their yearly power needs, most are still connected to power grids for supplemental power and as backup in case of system failure.

When they generate more power than needed at their location, the surplus is transferred to the power company’s system. For that power, the customer earns credits toward his total power bill. 

This billing mechanism is called “net metering” and is regulated by state statute. 

A net metering proposal brought before the Legislature’s Joint Corporations, Elections and Political Subdivisions Committee on Nov. 19 could have increased Bloomberg’s timeline to recoup his system’s costs to about 84 years, he said. 

“They are trying to fix something that isn’t broken,” Bloomberg said. “It’s a numbers shell game, it’s a Ponzi scheme that’s being presented by power companies, because the real competition of residential renewable energy is it’s hurting their monopoly on power production.”

While the proposal failed in a tie vote, committee Senate chair Sen. Cale Case, R-Lander, said legislators would likely continue to seek reforms in the state’s net metering policies at a later date to eliminate what he described as a subsidy for those generating their own power.

“This next session is a budget session, so I don’t think that’s the place for it,” Case said. “But, we’re going to be talking about this for a long time.”

Nickels and dimes

The debate centers around how much power customers who do not generate their own electricity have to pay compared to the costs paid by those who do have their own power generation systems.

At the Legislature’s request, the Public Service Commission’s Office of Consumer Advocate this year analyzed fixed and variable costs for three private power companies: Rocky Mountain Power, Montana Dakota Utilities and Cheyenne Light, Fuel and Power. 

The results, while varied, showed customers who do not generate their own power could spend 9 to 71 cents per month more on their power bill than those with generating systems.

“This is the amount Sen. Case is going on about when he says there is a subsidy being paid by regular rate payers to net metered customers,” Bloomberg said.

For Case, the amount — no matter how small — proves net metered customers are not self-sufficient and rely on their neighbors to foot a portion of their bill. 

“If nobody had net metering, there would be no cost shift, no subsidies,” Case said.

Case explained the cost shift occurs because private power companies wrap many of their infrastructure costs into the variable fees that net metering customers avoid paying by using credits earned through generation of their own power.

“In the utility industry, when you buy electricity, part of the price per kilowatt hour covers the energy,” Case explained. “But two-thirds of the amount per kilowatt hour covers fixed costs, including transmission lines, power plants and the other costs.”

Rocky Mountain Power spokesperson Spencer Hall said all the power company’s customers pay an interconnection fee, about $20 a month, but that only covers the maintenance of transmission lines, not necessarily additional infrastructure costs.

While the OCA report indicated fewer than 1,000 of the 200,000 customers served by the power companies studied used net metering, Case said that number could grow as people become more carbon conscious, increasing the potential subsidy to regular customers exponentially.

“There’s a lot of commitment here by people putting their own money on the line to make the planet a better place,” Case said. “These are very good people here. They’re very motivated. And, they really don’t believe there’s a subsidy, or if they do, they think it’s offset by them combatting carbon.”

Batteries required

Because the net metered customers are using renewable energy sources, they produce less power at night and during the winter, Case said.

“You might think net metering customers reduce cost on the system, because they are generating,” he said. “But the trouble is they don’t produce all the time.”

During those lulls, Case explained the power companies are experiencing the same problems, so they switch over to providing energy through other means, such as coal-fired power plants.

Essentially, net metered customers create a surplus of power when the company needs it least, generating credits to buy power back when it is most costly for the company to create, he said.

Bloomberg said power companies are installing more solar and wind power generation facilities, which would be counter-intuitive to Case’s peak-time usage argument.

“The reality is these industries are switching to solar and wind, because it makes financial sense,” he said. “There’s less costs associated with natural gas, solar and wind.”

According to Hall, Rocky Mountain Power is the largest renewable energy producer in the West.

“Once you build the windmill, you don’t have to pay for the wind and the sun,” he explained. “That’s a real value to our customers.”

But Hall said the company’s coal generation fleet still ramps up when needed.

“Coal generation is still an important part of our fleet,” he said. “But certainly, the future is renewables and low emissions.”

One of the reasons the power company can rely on renewable energy is the developing field of battery technology.

“Right now, battery technology is still expensive, and most folks can’t afford to incorporate that into their (net metered) system,” Hall said. “A lot of people think when they see those windmills turning, they are storing energy. That’s not the case.”

Because they can’t store the power, it is pushed onto the grid, Case said.

“When I’m producing excess electricity, the utility has to take it,” he explained. “It can’t stop it. So the utility will reduce its other sources of power, which are sometimes cheaper.”

As long as that remains the situation, Case there will be a call for net metering reforms.

Legislators on dwindling state revenues: ‘It’s real, it’s bad’

in Energy/News/Taxes
Silhouette of a Pump Jack
2450

By Ike Fredregill, Cowboy State Daily

As coal, oil and natural gas revenues decline, state legislators could have some hard decisions ahead, according to information generated by a strategic planning effort created by Gov. Mark Gordon. 

Dubbed “Power Wyoming,” the planning effort forecasts several scenarios for mineral-based state revenue streams during the next five years, all of which predict a deficit in coming years. 

The information compiled by Power Wyoming was presented to the Wyoming Legislature’s Joint Revenue Committee on Nov. 11. 

“The best projections in this model are very unlikely, and the worst are the most likely,” said Sen. Cale Case, R-Lander, the Senate committee’s chair. “That’s very scary.”

Case worked on Power Wyoming with Rep. Dan Zwonitzer, R-Cheyenne, chairman of the House Revenue Committee. Also on the team were members of the executive branch and economists familiar with the state’s energy sector such as Rob Godby, the University of Wyoming director for Energy Economics and Public Policies Center and a College of Business associate professor. 

Zwonitzer said the planning effort is the starting point to prepare for diminishing mineral revenues. 

“Power Wyoming is just the first step of saying, ‘Here’s what’s going to happen to Wyoming,’” he said. “The group was formed to get the message out there: ’It’s real, and it’s bad.’”

Renny MacKay, Gordon’s policy adviser, said Power Wyoming was not established to be a group of individuals working on potential solutions to the state’s revenue problems, but rather a group of experts working to gather to analyze data.

“This is a cone of different scenarios for both revenue and energy production,” MacKay said.

In its current iteration, Power Wyoming provides insight by compiling information from the state’s Consensus Revenue Estimating Group and the U.S. Energy Information Administration, among others.   

“Energy production is declining … and if there is production decline, the traditional jobs we have in Wyoming would be impacted,” MacKay said. “Information gives us power. The more we look at it, the more we talk about it, we can figure out what our opportunities are as a state.”

Worst case scenarios

While the coal industry’s struggles are being felt across the state, Case said Power Wyoming illuminated potential problems with the natural gas sector as well.

“I did not realize the issues with natural gas were as serious as they are,” he said. “Everybody else is thinking natural gas is doing great, and it’s not.”

The planning effort’s initial simulation results highlight some scenarios where the state’s total mineral revenue drops by 10 percent as early as 2020-2022 before a potential partial recovery by 2024. Some scenarios show a full recovery to expansion in revenues, but Power Wyoming reports they are the least likely cases within the current market conditions and expectations.

Most scenarios predicted a decrease in both Wyoming’s total employment and population, but in the worst case scenarios, the state’s total employment could decrease by about 20,000 jobs by 2024, followed by a similar decrease in population.

“In the next five years, there’s no way to absorb those (lost) jobs,” Zwonitzer said. “That means we’ll either have to have an increase in taxes, or a decrease in government services.”

In the worst case scenarios, he said the state would most likely need to pursue both. 

“We’ve lived a certain way in this state for 100 years with minerals paying the taxes,” Zwonitzer said. “That major revenue source is going away. So what does that look like for our future, and what do we want to do about it?”

Unreliable oil

Some of the scenarios, including those in the best case category, relied heavily on increased oil production balancing decreased coal and natural gas production. But Case warned against putting faith in the oil market.

“I think oil is very susceptible to environmental and carbon risk,” he said. “Changes in policy from Washington, D.C., and from other states could make it impossible to grow petroleum.”

A low-carbon policy consideration was also provided for the Revenue Committee as part of the Power Wyoming data package. Case said the presentation offered a more realistic outlook of oil than the initial simulation results put together by Godby.

In the policy consideration, Shell Global estimates a high usage of liquid hydrocarbon fuels, such as gasoline, in 2020 by about 25 million barrels a day. After the peak, however, the oil company predicts a gradual decrease down to 10 million barrels a day in 2060 and about 2 million barrels in 2100 as part of its strategy to comply with the Paris Climate Accord.

Most scenarios presented by Power Wyoming indicate the mineral sector is going to take a significant hit in the next five years, but even if the best case scenarios come true, Case said the future of energy is moving away from Wyoming’s traditional mineral offerings.

“This will tell you that the bad times are here,” Case said. “This is not just a tool for the Revenue Committee, but it’s also a tool for us. If you’re an employee in the coal industry, it’s probably time for you to get your own house in order.”

MacKay said Gordon is already working on the next steps of the planning effort. 

“We are bringing folks from the private industry now,” he explained. “Power Wyoming will definitely stick around for the foreseeable future.”

Losing coal could cost Wyoming dearly, take decades to recalibrate labor force

in Energy/Jobs/News
coal industry labor force
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By Ike Fredregill, Cowboy State Daily

Wyoming’s coal market has suffered devastating layoffs and mine closures in recent years, and by all accounts, the industry is shrinking. 

But, what if it dried up overnight? 

“If you were to instantly remove the coal industry, it would immediately cause job losses across the state,” said Robert Godby, the University of Wyoming director for Energy Economics and Public Policies Center and college of business associate professor. “You’re looking at about 5,000 miners directly involved in the coal industry. If you were to lose that all at once, people would feel that.”

It’s not just the miners, either. Godby said a sizable chunk of Wyoming’s labor market is reliant on coal.

“Approximately, there’s about 10,000 jobs directly or indirectly related to the coal industry — mining, electricity generation, railroads, plus all the businesses reliant on those workers’ wages,” he explained. “As coal declines in the state, we’ll have to transition those workers to other industries. And, there will not be enough jobs to absorb those workers.”

The good news, Godby said, is coal won’t disappear that quickly, but it could taper off sooner than Wyoming is prepared for. 

“In 2015, there were almost 5,600 miners in Powder River Basin, now there’s 4,400,” he said. “There are 12 mines up there that produce about 40 percent of the country’s coal. We could be below half of what we were producing in 2009 by the mid-2020s.”

High-paying careers

Data from the Department of Wyoming Workforce Services indicates once these workers lose gainful employment, many leave the state to work in the field elsewhere.

But, across the nation, there are fewer jobs for coal workers and retraining for other careers can mean starting all over.

“Those jobs pay really well,” Godby said. “It’s not only difficult to absorb and replace all those jobs, but you won’t be able to find jobs that pay nearly as well.” 

The average income for a coal industry employee is about $80,000 a year, he said. 

“The people who stay, if those jobs were to disappear, may have to do something else,” Godby said. “Many of those workers may have to accept the fact that unless they go back to school, retrain or re-skill, they won’t find jobs that pay as well.”

When a layoff occurs in any industry, Workforce Services deploys a rapid response team, agency spokesperson Ty Stockton said.

“In Wyoming, we don’t have very many businesses that have 600 employees that could get laid off,” Stockton explained. “We don’t have a real threshold for deploying the team. When Laramie County Community College (LCCC) laid off 17 employees in 2016, they went in for that.”

A team was also sent out in 2016 when about 500 workers were laid off from the North Antelope Rochelle and Black Thunder mines in Campbell County. More recently, Workforce Services deployed a rapid response team to Gillette when Blackjewel, LLC, abruptly laid off about 600 workers at the Belle Ayr and Eagle Butte mines in Campbell County.

“Rapid response is about giving those folks options and information,” Stockton said. “If they don’t have information, there’s nothing they can do.”

Teams can include mental health counselors, Wyoming Department of Family Services staff to help families, Wyoming Department of Health staff to help with health insurance questions and Workforce Services employees to discuss unemployment options and help laid off workers start the search for their next job, he said.

‘Generation of pain’

But all of those are stop-gap measures designed to lessen the blow to recently out-of-work families. 

In the long term, Workforce Services also provides funding for a number of vocational rehabilitation programs. 

“We’re trying to keep (the workers) here and give them some options,” Stockton said. 

The agency has access to about $2 million for retraining coal workers through the Partnerships for Opportunity and Workforce Economic Revitalization Grant, aka the POWER Grant.

“The only people eligible for the POWER Grant are the primary industries associated with coal-fired power plants and the coal mines,” Stockton explained. “But we also have the Workforce Innovation and Opportunity Act, and that covers everybody.” 

Additionally, Workforce Services helps fund some apprenticeship programs through grants. 

“Training an apprentice is expensive,” Stockton said. “The apprenticeship program was set up to help offset those costs, so if you need a few apprentices, you can apply for these grants and have their training paid for through the apprenticeship grant.”

About 80 trainees are currently enrolled in apprenticeship programs for electrical, plumbing and heating and cooling careers at LCCC and Northwest College, he said. 

Even with training programs already in place, Godby said recovery from the loss of an industry as big as coal would take years.

“To transition a labor force to work on anything else is going to take about at least about a decade,” he explained. “If we look at other industries like the furniture industry in the Southeast, soft wood lumber in the Pacific Northwest and the industrial decline in the Midwest, those transitions typically take a generation to overcome. That’s a generation — 20 to 30 years — of pain.”

Bill to authorize nuclear waste storage talks withdrawn

in Energy/News
Wyoming Legislature nuclear waste storage protest
A protest sign lies next to the sign-in sheet at Tuesday’s meeting of the Legislature’s Joint Minerals, Business and Economic Development Committee. The committee was to have studied a bill that would authorize the state to negotiate with the federal government over the storage of spent nuclear fuel rods, but the bill was withdrawn without action being taken. (Photo by Tim Mandese, Cowboy State Daily)
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By Tim Mandese, Cowboy State Daily

CASPER — A measure that would have allowed the state to negotiate with the federal government over the possible storage of spent nuclear fuel rods in Wyoming was removed from consideration Tuesday by a legislative committee.

Members of the Legislature’s Joint Minerals Business and Economic Development Committee agreed to stop work on the bill after its Spent Fuel Rods Subcommittee, formed to examine the issue, met in September.

Sen. Jim Anderson, R-Casper, a chairman of both the committee and subcommittee, told committee members that based on what the subcommittee heard during its meeting, legislative authorization for the state to enter into negotiations over spent nuclear fuel storage is not needed

“I have prepared a bill as the chairman if the committee to give the governor’s office authority to negotiate with (the federal Department of Energy) on this subject,” he said. “I found out that we really don’t need to give the governor’s office the authority, that they have the authority right now. So at this time, I would like to withdraw that bill from the docket.”

Members of the Legislature’s Joint Minerals, Business and Economic Development Committee during their meeting in Casper on Tuesday.
Members of the Legislature’s Joint Minerals, Business and Economic Development Committee during their meeting in Casper on Tuesday. Committee members were to have reviewed a bill that would authorize the state to negotiate with the federal government over the storage of spent nuclear fuel rods, but a subcommittee formed to examine the issue decided to pull the bill from consideration. (Photo by Tim Mandese, Cowboy State Daily)



Anderson also told the committee that any negotiations could take five to nine years to complete.

The idea of storing spent nuclear fuel in Wyoming has surfaced several times over the last three decades and each time, it has generated strong opposition.

Opponents to the plan were on hand for Tuesday and said they were prepared to argue that any rewards from accepting spent nuclear fuel would be outweighed by the risks.

 “The biggest issue for me and the state of Nebraska, who says they don’t want a dry cask storage place to get the transportation coming through, it’s the transportation,” said Coleen Whalen, a spokesperson for Wyoming Against Nuclear Dumps. “It’s going to get off on I-80 and I-25 on our teeny little highways“

Whalen said she was pleased the committee killed the bill, but unsure of how the issue would unfold going forward.

“The bill kind of came up quick and the withdrawal of it, I’m glad they are not telling the governor to negotiate, but it could be that they are just moving it out of the public eye,” she said.

Anderson noted that there are no plans for Gov. Mark Gordon to open negotiations with the Department of Energy about the waste storage.

What if coal production drops to zero? Legislature looking for new revenues

in Energy/Government spending/News/Taxes
Electricity
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By Laura Hancock, Cowboy State Daily

Coal production in Wyoming has dropped by over 100 million tons in the past decade, and state Sen. Cale Case doesn’t think the downward slide is close to finished.

“There isn’t a scenario where it turns around, where the decline stops,” said Case, R-Lander, a co-chair of the Wyoming Legislature’s Joint Revenue Committee. “No one can articulate that.”

That will likely spell trouble for state coffers, which are dependent on coal revenue to pay the bills.

What if coal production trickled down to zero? It’s not entirely a hypothetical question these days, considering PacifiCorp’s recently announced draft plan to retire coal plants early.

Fueling state accounts

Wyoming coal producers pay severance taxes, federal mineral royalties, coal lease bonus revenues and ad valorem taxes at various points of the mining process, which flow to different state, education and local government funds. But each revenue source has decreased in the past 10 years:·      

  • Severance taxes: In 2009, mining companies paid the state $273.3 million. In 2018, they paid $198.8 million. In 2024, state projections show they could pay $185.9 million.·      
  • Federal mineral royalties, which are divided between the federal and state governments by 51% and 49% respectively: Wyoming received $262.5 million in 2009 and $198.1 million in 2018. Federal data didn’t contain royalty projections for the future.·      
  • Coal lease bonuses, which have funded Wyoming’s ambitious school construction program, were $213.6 million in 2009 and $5.3 million in 2018. From 2019 to 2024, the state estimates $0 from the bonuses, collected when mining companies pay for expanding operations on federal land. There are no expectations that mines will expand operations in the near future. ·      
  • Ad valorem taxes, assessed on the value of coal and paid a year after the assessment: Coal companies paid taxes on $3.8 billion in 2009 assessed valuations. They are expected to pay taxes on $2.8 billion in 2018 assessed valuations. By 2024, state projections show valuations falling by another $100 million to $2.7 billion.

The total income from severance taxes, federal mineral royalties and coal lease bonuses dropped from $749.4 million in 2009 to $402.2 million in 2018.

Case notes these figures don’t include sales and use taxes companies pay for items small and large — ranging from paper for copiers to tires for haul trucks.

“We don’t get the sales tax on stuff they buy,” he said. “Because they’re not buying much anymore.”

Replacement revenues

As Revenue Committee co-chair, it’s Case’s job to consider ways to make up for lost coal revenue.

“That’s a big lift,” he said. “It’s a lot of money.”

True, oil and gas continue to bring Wyoming revenue – but not enough to replace coal. And it’s entirely possible, with market concerns about global climate change, that new restrictions could kill demand for those fossil fuels.

Among proposals before the Joint Revenue Committee:      

  • The committee advanced a proposal in September that would create a corporate income tax of 7 percent on companies with at least 100 shareholders – in other words, businesses not generally headquartered in the state. The revenue created would be around $20 million to $25 million a year, Case said. It’s not a replacement for coal, but a start. A similar measure failed earlier this year in the Legislature.
  • Changes to property taxes, including: An increase in the statewide mill levy for schools, increases in some property taxes, and creating a new property tax class for multi-million dollar homes.
  • Wyoming taxes wind $1 per megawatt hour. Case would like to see it increased. Case would, in general, like to impose an electricity export tax. “Wyoming’s biggest export is electricity,” he said. At this point, there is no bill draft before lawmakers.

Many conservatives have said they want to see cuts to state government before looking to raise taxes.

“Here’s what I tell people: you’ll get your cuts,” Case said. “We’re going to have to cut like crazy. And we’re still going to need revenues. This is very serious. We’ve never faced anything like this.”

Ongoing discussions

The Wyoming Taxpayers Association, which represents many of the companies that would be affected by a corporate income tax, didn’t support the idea in the Legislature earlier this year. Its leadership hasn’t yet decided on its position on the bill currently under consideration, said Ashley Harpstreith, the organization’s executive director.

The Wyoming Taxpayers Association will be discussing the state’s revenue picture at its annual meeting next month. 

“The point is we’re going to have to have those hard conversations,” Harpstreith said. “It’s coming to a head. Industry has been paying the bills for a long time.”

Wyoming filmmaker looks at plan to use nukes in fracking

in Community/Energy/News
Atomic Fracking in Wyoming
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By Seneca Flowers, Cowboy State Daily

A Wyoming filmmaker will soon share the results of several years of document research and interviews to tell a story many people have never even heard of—atomic fracking.

Greg Asay’s documentary “Atomic Fracking in Wyoming: The Story of Project Wagon Wheel” is a visual exploration into a slice of Wyoming history often forgotten. It will air on Wyoming PBS on Nov. 19.

Asay originally learned about Project Wagon Wheel while he attended law school. It was the story of how atomic fracking was nearly put into practice in Wyoming, and it ignited his interest.

After law school, while working in Cheyenne, Asay found time to go to Laramie to explore the forgotten history of atomic fracking in the state.

He spent about two years rifling through various boxes in the American Heritage Center searching for anything that gave him clues, examining thousands of historic documents.

“The whole thing was so gradual,” Asay said. “I just kept getting a little bit more and then, a little bit more.”

He eventually discovered about 2,000 photos and a slew of documents. He journaled his findings. As much as he enjoyed the process, there were times when he had to take breaks—up to months. But he always went back. 

Eventually, after nearly exhausting his search, he stumbled upon the last box that would hold the cornerstone of his video—eight original audio interviews of people directly involved with the project recorded by writer Chip Rawlins. These cassettes would begin to tell the story of atomic fracking in Wyoming.

After World War II, the U.S. Atomic Energy Commission explored peaceful and useful ways to expand the use of nuclear energy in the United States. In cooperation with El Paso Natural Gas Company, the commission used nuclear explosives to extract natural gas from sandstone formations at test sites in New Mexico and Colorado in the 1960s and ‘70s, Asay said. These tests were to play a large role in the company’s gas extraction future.

When El Paso Natural Gas wanted to conduct tests 19 miles south of Big Piney at the Wagon Wheel site, some community members held a meeting to discuss the project and learn more. The town hall meeting drew about 1,000 people to the town with just a few more than 500 residents.

Some of the residents assumed if the government was part of the project, it was probably safe; but some community members weren’t so trusting, said Ann Chambers Noble.

Noble is a historian who included a chapter about Project Wagon Wheel in her book “Pinedale, Wyoming: A Centennial History, 1904-2004.” Not only has she researched the topic in-depth, but she also remembers first-hand how the town had concerns for the nuclear fracking. In her middle school years, while the project was under consideration, she and her family would spend summers in Pinedale. She noted area residents were curious as to what atomic fracking would truly mean to them.

In 1971, locals formed an exploratory group called the Wagon Wheel Information Committee to learn more about how the El Paso Natural Gas Company would extract the gas. The committee was comprised of non-experts, such as ranchers, looking to understand more about the process, Asay said. 

After learning more about the project, members the committee began to feel uneasy about it. By 1972, area residents opposed the project by a 2-to-1 margin as tallied by a local straw poll, according to Asay.

Eventually, the controversy and delays caused by the committee’s work quelled support for the project.

Asay kept researching the committee’s journey and how members helped stop a potentially dangerous practice in their community. His narrative, actually the community’s narrative, began to take its first crude form. During the process, Asay found Noble’s book and contacted her.

Noble said she wasn’t sure what to think of his inquiry at first.

“You get a lot of these random emails as a historian,” she said. “and Greg sent me a cold email.”

At first she didn’t think much of it, but Noble said she began corresponding with him. It wasn’t until she realized Asay fully grasped the significance of the committee that she began to take him seriously. She shared with him photos and stories, which became part of the final version. Eventually, Asay shared his first rough cut of the video with her — nearly two and one-half hours, he said.

Noble reviewed a draft of the film and gave feedback to Asay. She said he really tried to achieve a correct depiction of the community and include subtle but accurate details. He wanted his film to be the community’s story.

“I love what he did,” Noble said. “I feel he really captured the story.”

Asay said he went through a couple of edits before finally polishing the 60-minute product that will soon air on PBS.

The story has become a part of Asay, One that he is compelled to share even on the road.

“There’s a turnoff near Pinedale,” Asay said. “I always point to it.”

Atomic Fracking in Wyoming: The Story of Project Wagon Wheel” airs on Wyoming PBS Nov. 19.

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