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coal mining

U.S. Power Plants Short On Coal; Utilities Scrambling With Cold Temps Ahead

in Energy/News
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By Jimmy Orr, Cowboy State Daily

The price for Wyoming’s coal is rising in the face of low supplies at power plants across the country, rising natural gas prices and predictions of cold temperatures in the near future.

Despite efforts by some political leaders to halt the use of coal as an energy source, energy producers are turning to the fuel in increasing numbers this year, only to find it in short supply.

But coal supplies at U.S. power plants have dropped to levels not seen since the 1970s and acquiring the resource has sent prices soaring. And even acquiring coal is proving to be a challenge because of supply chain issues that every industry is experiencing.

None of this is a surprise to Travis Deti, the executive director of the Wyoming Mining Association.

“We’ve been screaming from the rooftops for the last 10 years that America needs coal and that you can’t throw all of your eggs in one energy basket,” Travis told Cowboy State Daily on Tuesday.

“(Natural) gas prices were never going to stay below $2.00 (per 1,000 cubic feet) forever. Gas is at about $4.60 and some analysts are predicting it to be over $7.00 in the winter,” he said.

The problem is that coal is sold in advance of when it is needed and because of the push to move away from coal as a power source, the resource has lost market share, leaving suppliers unprepared to meet this year’s demand.

Getting coal back on the table as a fuel is easier said than done.  As Deti explained, the problem does not lie in a shortage of coal, but in producing the necessary amounts to meet that demand. After adjusting to lower production levels, coal producers require manpower to boost production again.

“Ever since the decline started to happen a decade ago,  we said you need to keep coal in the mix.  You gotta keep it in the mix,” Deti said.

Coal is the one resource, he said, that is “always affordable, always reliable, and always abundant.”

“As for reliability, coal-fired power is going to be there when you turn on the light switch,” he said. “Unlike the renewables which we saw, fatally, in Texas last winter.”

The Wall Street Journal reports that coal supplies have become so low in some areas of the country that one power company that serves one-fifth of the U.S. population is reserving coal for use during the coldest days this winter.

The high price for coal is a good thing for Wyoming, especially if mines can get it out of the ground.

However, there’s a shortage of workers. Deti said mines in the Powder River Basin could use an extra 200 miners right now, as well as more trains to move the coal.

“You’ve got companies up in the basin right now that are offering $5,000 signing bonuses just to come on board,” he said. 

Deti said the short-term prospects for coal is good.

“The basin is sold-out for 2022,” he said. “They are selling into 2023. We are going to have a couple pretty good years.”

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Wyo Environmental Quality Council Rejects Brooks Coal Mine Appeal

in coal
Pile of coal, ALT=Wyoming coal exports
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An appeal of the permit issued for Wyoming’s first new coal mine in 40 years has been dismissed by the Wyoming Environmental Quality Council.

Ramaco Carbon, which plans to build the Brooks Mine north of Sheridan, announced Thursday that the EQC had dismissed the appeal filed by the Powder River Basin Resource Council.

The decision clears the way for the development of the Brooks Mine, which will provide coal for Ramaco’s research activity and for manufacturing advanced carbon products and materials.

“We are delighted that the EQC has brought this almost decade-long permit odyssey to an end,” said Ramaco CEO Randall Atkins. “We salute the professionalism of the DEQ and look forward to going to work developing our coal-to-products technology platform.

Ramaco is a carbon technology company based in Sheridan that is focusing on using coal to produce carbon materials such as carbon fiber. 

The state Department of Environmental Quality in July approved the mine permit for Brooks Mine in July, but the PRBRC appealed the decision.

Atkins, in a statement, praised the EQC’s decision.

“This frivolous opposition has unfortunately cost Wyoming new jobs and taxpayers money while delaying our ability to do business,” he said. “The EQC fortunately, and wisely for Wyoming, has put a stop to this.”

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Wyoming Coal Bankruptcies: Who is Responsible for Reclamation?

in Mining/News
2979

By Ike Fredregill, Cowboy State Daily

Since 2015, six coal companies operating in Wyoming have filed for bankruptcy, causing some to question who will be responsible for reclaiming the defunct operations’ mines. 

However, Wyoming coal mining rules that recently underwent a significant update will protect the state against having to foot the bill for any reclamation left uncompleted should a mine simply walk away from its obligations, state officials said.

Shannon Anderson, a staff attorney with the Powder River Basin Resource Council, said her organization has concerns about future reclamation, given declines in the coal industry.

“With potential coal mine closures, we’re concerned a lot of that reclamation yet to occur won’t have funding,” she said. “Coal mine economics continue to deteriorate. Coal generation is at its lowest level since 1975, and these are trends that are probably not going to reverse.”

The resource council was founded in 1973 to advocate for responsible energy development, and Anderson said tracking reclamation efforts was a top priority for the organization in 2020.

“We’re three to four decades into coal mining now,” Anderson said. “And, there’s still a lot of land that hasn’t been reclaimed yet.”

According to a report released by the Western Organization of Resource Councils, more than 234 square miles of coal-disturbed land is unreclaimed across the West with Wyoming, Montana and North Dakota accounting for the vast majority of the unreclaimed lands.

“Luckily, Wyoming has been revising its bonding rules,” Anderson said. “But, we still have a lot of work to do.” 

Contemporaneous reclamation

Coal reclamation is the recovery of mined land for use by other industries and the public, said Kyle Wendtland, a Department of Environmental Quality Land Quality Division administrator. 

As companies move their mining operations forward, they reclaim previously mined areas, which lowers the cost of reclamation, Wendtland explained.

“For surface coal mines, reclamation is concurrent with the mining, or contemporaneous,” he said. “As you expose the coal through creation of a pit and extraction of the resource, that pit advances, and then, the prior pit is backfilled.” 

After backfilling and contouring a previously mined tract of land, mining companies add top soil and seed it as the first phase of the reclamation process. By phase two, the land is often already back in use, Wendtland said.

“Typically, most of this land will go back to agricultural production of some sort,” he said. “In phase two, you’re usually seeing it used for some sort of livestock or wildlife grazing or hay production.” 

The land must be in phase two for at least 10 years before it is eligible for release in phase three, DEQ spokesperson Keith Guille said. 

“Ensuring the companies follow the reclamation procedure is our responsibility,” Guille said. “We have inspectors go out to these mines once a month to ensure they’re meeting requirements.” 

All Wyoming mines are currently in compliance with the DEQ’s reclamation standards, he added.

Bonding process

To receive a mining permit from the DEQ, a company must post a reclamation bond, a performance obligation guaranteeing the permittee will return the land to a natural state. 

“The idea is the bond itself is a financial number of what it would cost for a third party to reclaim the mine,” Guille explained. “It’s like insurance.”

The most common form of bonding is a surety bond.

“Many companies pay premiums to a surety company, which in turn says they will cover them for this much of the bond if by chance they were to walk away,” Guille said. 

In 2019, Wyoming tracked more than $2.4 billion in surety bonds for coal and non-coal reclamation, according to DEQ documents. 

Self-bonding is the second most popular bonding method in Wyoming and concerns organizations like the resource council most. 

“Self-bonding is when you have a company that has a really high credit solvency,” Wendtland said. “And, they’re saying they have sufficient assets in the company that even if they fail, they’ll pay for the reclamation.”

Wyoming tracked more than $400 million in self bonds for coal and non-coal reclamation in 2019 of which $297 million was designated specifically for coal, DEQ documents state. 

Prior to 2015, the state held more than $2 billion in self bonds for coal.

Following guidance provided by the governor’s office, Wendtland said the DEQ reviewed its bonding policies when coal mines started filing for bankruptcy.

“We took the ‘hard look’ at our rules and did a rewrite,” he said. “Gov. Mark Gordon signed that new rules package in May 2019. Right now, Wyoming is the only state that’s undergone the rigorous process of doing that.”  

Under the new rules, self bonds can be used for up to 75 percent of a company’s bond amount and are accepted based on a credit rating rather than the previous system, which used on-balance sheet ratios. 

The changes are working well, Guille said, and the DEQ is confident the state will not have to cover bankrupt companies’ reclamation costs in the future. 

“We strengthened the rules to protect the taxpayers, the state and the companies,” he explained, adding no further changes are in the works. “We believe we’re at a point that we don’t need to be changing things around anymore.”

By the numbers:

The Wyoming Department of Environmental Quality reported about 184,000 acres of land in Wyoming are listed as disturbed by coal operations. 

Fixed facilities — shops, haul roads and rail spurs — account for approximately 38,000 of the overall acreage.

Active mining pits account for about 40,000 acres. 

Leaving approximately 107,000 acres in various phases of reclamation.

The DEQ reported all coal mines are in compliance with Wyoming’s reclamation requirements.

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

in Energy/News
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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.

Trade sector could use displaced coal miners, officials say

in Energy/Economic development/News
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By Seneca Flowers, Cowboy State Daily

Business and government leaders around the Wyoming are scrambling to make sure Wyoming workers remain Wyoming workers as the jobs in the coal industry subside.

In 2016, nearly 7 percent of the state workforce was employed in the extractive energy sector, which includes coal, according to the U.S. Department of the Interior. But with Blackjewel’s recent layoff of nearly 600 people, the state will feel the shockwaves on multiple fronts. The immediate issue is figuring out how to re-employ displaced workers. The good news is skilled trade workers are in more demand than many may think, according to some officials around the state.

Rick Mansheim, manager for state Workforce Centers in Gillette and Newcastle, has been in the front lines of trying to get the miners back to work. He said he has heard that more than 100 miners may have found new jobs, but his organization has no way to know the exact number.

“We have a whole gamut of training we can do,” Mansheim said. 

He said that some of the Blackjewel employees are taking commercial driver’s license and other college classes. He added that in the past, his offices have also been able to help people into the nursing and welding fields.

After Blackjewel’s two mines closed, the Gillette and Newcastle Workforce Centers held information sessions at the Gillette College Technical Education Center that attracted more than 300 people from the mines. The centers also held career fairs with employers from the region that attracted nearly 500 job seekers.

Help wanted in the trades

Mansheim said many companies heard of the layoffs and reached out to him directly looking to fill the void of trade workers.

State Rep. Mike Greear, R-Gillette, said the state needs more trade workers. Greear is the co-chair of the Legislature’s Minerals, Business and Economic Development Committee and also the president and CEO of Wyoming Sugar.

As a CEO, Greear said he cannot recruit skilled workers. They just aren’t there. So he must develop and continuously look for them. He said he has heard similar stories from other businesses in the state.

“I think it is an unintended consequence of the Hathaway (scholarship) program, which is a wonderful program,” Greear said.

He said many young people have chosen to pursue a college education rather than enter the trade sector.

As a company president, he is soliciting high school students and offering them trade jobs with possible future opportunities that include welding or machinist certifications for those who would like to remain in their communities.

But he can only do so much as a business leader. As a state leader, he is also limited.

“The Legislature can do good things—it can set policy, it can help guide us over some bumpy roads, but in the end, it’s got to be up to the industry to be able to attract them,” Greear said. “The government can’t do everything for everyone.”

The disappearing coal job

For those workers who want to remain in their communities, finding coal jobs is going to be more difficult as the industry slows and transforms.

Economist Rob Godby, director for the University of Wyoming’s Center for Energy Economics and Public Policy, doesn’t see coal magically rebounding anytime soon because technology and the free market will naturally reduce coal’s demand.

“Coal is in real decline,” Godby said. “The (Blackjewel) bankruptcy this summer has demonstrated how disruptive that can be.”

Godby said he expects renewable energy sources such as wind and solar to become the dominant providers of energy in the future because of policy changes with climate change and technological advances that make renewable energy production more efficient.

Greear acknowledged renewables are part of an overall portfolio for energy, but they are often erroneously blamed for the decreasing coal demand.

“The real driver of coal moving out of being the more attractive option is low natural gas prices—plain and simple,” Greear said. 

He added that as coal’s share of energy production has declined, the share provided by renewable energy has increased. But renewables have revealed some reliability issues, according to Greear, so he sees natural gas as a more stable source of energy.

Godby said technology is to blame for cheaper natural gas, which he calls “the largest factor to coal’s decline.”

In addition, Godby said technological advances in natural gas production and renewable energy production have caused coal to lose its market share prominence. The impact will not likely reverse, he said.

“You can’t put those technologies back…you can’t put those genies in a bottle,” Godby said. “Once they are invented, they are really hard to forget. Technological progress happens all the time. It’s disruptive, and old technologies are replaced by new ones.

“Nobody’s building the coal-fired power plants,” Godby continued. “So eventually they are going to age out, be retired. And they are not being replaced with other coal-fired power plants.” 

Diminished local dollars from coal

Fewer coal-fired plants mean less revenue for the state and towns.

Coal production in Wyoming has declined 22.6 percent in last five years, 29.7 percent in last the 10 years, and 34.8 percent since its booming peak of 2008, according to the Wyoming Mining Association.

Coal is the second largest source of tax revenue to state and local governments, according to the WMA, with about $1 billion in tax revenue paid every year.

But the reality is that coal may not always be able to pay the bulk of the government’s bills—at least not in its current state.

Greear said state and local governments have some time to prepare for a downturn in revenues.

While coal-fired plants are shutting down, supply projections suggest production of 240 million to 260 million tons for the next 10 years.

Although Greear expects a slow, steady decline in production, he doesn’t count coal out of Wyoming’s revenue stream entirely.

Greear said there is demand for Powder River Basin coal among some Asian countries. However, efforts to build coal terminals in Washington that would allow shipments to Asian countries have failed.

Godby said even if the terminals were built, they wouldn’t likely be a long-term solution to the coal industry’s woes and may just prolong its demise.

He added even though a prolonged death may still be economically beneficial to the state in the short-term basis, the long-term outlook may not be positive.

“It’s far from guaranteed that the developing world is going to stick to coal for quite a while,” Godby said. “It is also the case that countries like China and others are turning to renewables and natural gas much more quickly than people expected.”

Miners face uncertainty of changing coal markets

in Energy/News
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Miners left without jobs with the closure of two of Campbell County’s biggest coal mines are facing a changing reality in the nature of the coal industry, Gillette residents agree.

Residents said although the coal industry has traditionally been a stable source of income and employment, the dropping demand for coal has changed that.

“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.”

About 600 miners lost their jobs several weeks ago when Blackjewel closed the Belle Ayre and Eagle Butte mines. Efforts are being made to secure funding to return the mines to operation.

If those efforts fail, many of those who lost their jobs will probably leave the community, predicted Ken Anthony, a retired miner.

“You’ve got two to three kids at home and you’ve got a big old house payment and car payment and all of a sudden that stops,” he said. “It’s pretty scary. When they lose their jobs, it really makes a big effect on the whole county. If they can get the money and re-open (the mines), it will be fine. If they can’t, more than likely, most of (the miners) will leave.”

Gee noted that while some companies are offering jobs to Blackjewel’s former miners, most do not have the resources to offer the same level of salaries or benefits.

Tom Lubnau, a former speaker for Wyoming’s House of Representatives, said the mine closures show the state needs to work to offset the diminishing demand for coal.

“We have to, in some way, take control of our own destiny,” he said. “If we can boost the market in a certain way, develop the technologies that we need to use to market our resources, then we should do that.”

In the meantime, Gillette’s residents are doing what they can to ease the burden on the unemployed miners, said Trey McConnell, manager at the Railyard Restaurant.

“The people here, in bad times they bond together, they help one another out,” he said. “It’s one of these areas where you can kind of rely on your brothers and sisters. It’s just a very tight-knit community.”

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