Production slipped in 2013, but optimism is good for Wyoming coal in 2014

February 20, 2014

For the fourth consecutive year coal production fell in Wyoming as did employment in the nation’s top coal producing state which cut 300 jobs in 2013, according to data from the U.S. Energy Information Agency.

Coal production slipped by 3.3 percent in 2013 from 364 Mt (401 million st) in 2012 to 350 Mt (388 million st) in 2013, according to U.S. Mine Safety and Health Administration figures. Eight of the 12 active mines in the Powder River Basin, which accounts for 96 percent of Wyoming’s total coal output, saw production decline.

A wet year that hindered operations at the state’s surface mines and constraints in rail service played a part in the decline. However, 2014 could be a much better year for the sector as a cold winter and rising natural gas prices have led the nation’s utilities to burn more coal and cut into stockpiles deeper than has been for more than 10 years.

Peabody Energy executives noted utilities nationwide burned 11 percent more coal on the year. And with demand increasing and production declining, prices for Powder River Basin coal are up, the Casper Star Tribune reported.

At the end of January, Powder River Basin coal was selling for $12.35 per ton, according to the Energy Information Agency. That compared with $10.15 per ton at the end of January 2013.

“If you look at our forecast of 18 Mt to 27 Mt (20 million to 30 million st) increase in demand in the U.S., a fair share of that is going to come from the Powder River Basin,” Peabody chief executive officer Gregory H. Boyce told investors in January.

The largest drop was at Peabody’s Caballo Mine, where output declined by 47 percent, or from 15.2 Mt (16.8 million st) in 2012 to almost 8.1 Mt (9 million st) in 2013. Caballo employed an average of 263 people during the first three months of the year, according to the U.S. Mine Safety and Health Administration (MSHA). That number had fallen to 149 by the last three months of 2013.

Alpha Natural Resources’ Belle Ayr Mine (minus 25 percent), Kiewit Peter Sons’ Inc.’s Buckskin Mine (minus 17 percent), Alpha Natural Resources' Eagle Butte Mine (minus 11 percent) and Western Fuel’s Dry Fork Mine (minus 10 percent) also saw declining production, according to MSHA. All but Dry Fork saw employment fall, and in that instance only one job was added.

Statewide, average annual employment decreased from almost 7,000 in 2012 to nearly 6,700 last year, MSHA reported.

The news was not bleak everywhere. At Peabody’s North Antelope Rochelle Complex, the nation’s largest mine, output increased to slightly more than 100 Mt (111 million st), a 3.4 percent increase over 2012. Arch Coal’s Black Thunder Mine also saw production climb by 6.9 Mt (7.6 million st) to finish the year at about 91 Mt (100 million st) of coal produced.

Arch saw production in the Powder River Basin increase in 2013, from 94 Mt (104.4 million st) in 2012 to 101 Mt (111.7 million st). But the company’s average sale price per ton fell, meaning it recorded smaller profits. Arch would need to see the market improve further before increasing production, Lang told investors.

“Moving forward, while the demand outlook for the PRB is improving, we currently anticipate operating our mines in the region at level on par with 2013, absent any rail service issues,” Lang said.


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