Union Pacific reported that its coal transportation out of the southern Powder River Basin was up 8 percent in 2010 as the economy continued to make gains and utilities replenished their coal stockpiles. Its coal deliveries from Colorado and Utah were down 14 percent in 2010.
It’s another sign that despite shifting policies and markets, Wyoming coal producers continue hold their own.
While the Office of Surface Mining Reclamation and Enforcement predicts that its proposed new rules protecting streams would likely cut production (and an estimated 7,000 mining jobs) from many coal-producing regions — eastern U.S. mountaintop mining, in particular — it may result in production increases in Wyoming, Montana and North Dakota.
Wyoming coal producers appear to be dodging another bullet.
In recent years, U.S. utilities have installed scrubbers to control smog on about one-third of the coal-fired power plant fleet. That means Powder River Basin coal no longer enjoys favor among utilities for its low-sulfur content. It was this low-sulfur content that convinced eastern utilities to switch away from higher-Btu content eastern coals. They railed in Powder River Basin coal from hundreds of miles away to meet lower sulfur dioxide emission standards put in place in the early 1990s to combat acid rain.
Naturally, there’s some concern among Powder River Basin producers that eastern utilities will tap coal resources closer to home that have higher Btu content and lower transportation costs. But there’s not been a great deal of coal-switching. Each coal-fired unit must be carefully dialed-in to the specific blend of coal it burns. Switching coal sources and recalibrating these units is not easy or inexpensive.
Besides, those eastern coal producers are eager to sell their coal overseas.
As further evidence of rapidly changing fossil fuel markets, Consol Energy announced this week it expects the company’s natural gas production in the Marcellus shale will decline this year due to low pricing and “increased permitting and regulatory risks.” Consol also said it anticipates strong revenues from selling metallurgical coal into a tightening global market.
In fact, natural gas producers are taking notice of overseas markets, too. Last week, the Kansas City Star reported that some gas producers are considering exports as a way to balance a burgeoning new supply in the U.S.
Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.
