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wyoming coal

Largest Wyoming Coal Plant Target Of Sierra Club Lawsuit

in News/coal
19255

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By Leo Wolfson, Cowboy State Daily

A collection of environmental advocacy groups including the Sierra Club is targeting Wyoming for a perceived lack of enforcement of federal Clean Air Act rules as they pertain to a Sweetwater County power plant.

If the lawsuit prevails, it could lead to a quicker scale down or even closure of Wyoming’s largest coal-fired power plant, the Jim Bridger Plant owned by Rocky Mountain Power.

The lawsuit, which mentions Wyoming and 33 other states, was filed against the U.S. Environmental Protection Agency in federal court in California in mid-April. It targets the EPA’s enforcement of Regional Haze Rules, commitments made by state and federal agencies to improve visibility in national parks and wilderness areas throughout the nation.

Under former President Donald Trump’s Administration, the EPA changed the Regional Haze Rule in 2017, giving states four years, until July of 2021, to complete their plans. Thirty-five states including Wyoming missed the deadline. 

PacifiCorp, the owner of Rocky Mountain Power and the majority owner of the Jim Bridger Power Plant located east of Rock Springs, was supposed to install controls that would reduce pollution at the facility by the end of 2021. This came from a 2014 agreement between PacifiCorp and the EPA that stated PacifiCorp had to initiate pollution-controlling measures and comply with a regional haze plan.

Since that agreement was made, only two of the plant’s four units have been updated with pollution controls.

In January, the EPA opposed the revised regional haze State Implementation Plan that was submitted by the state for the Jim Bridger Plant, which employs more than 500 people.

“The Biden EPA’s decision here is needlessly hurting Wyoming’s energy workers and threatening America’s energy independence as well,” U.S. Sen. Cynthia Lummis said at the time. “It is blatantly political, and I will continue to block President Biden’s EPA nominees over this issue.”

The next month, Gov. Mark Gordon announced a new agreement had been reached between the State of Wyoming and PacifiCorp to allow unit two of the Jim Bridger plant to continue operating with reduced emissions past the previous Apr. 30 deadline. The EPA has not released any formal opposition to this agreement despite a revised Regional Haze Plan not yet being submitted.

PacifiCorp plans to convert units one and two at the Jim Bridger Plant to natural gas by 2024, but wants to continue burning coal until that work is complete.

According to the National Park Conservation Association, the plant is Wyoming’s largest source of haze pollution as well as the third-largest source of haze in national parks, with Grand Teton and Yellowstone national parks also occupying the western part of the state. 

The lawsuit demands the EPA set firm retirement dates for coal-fired power plants and require other producers to limit emissions.

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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
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.”

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