Wyoming Mining Association conference paints picture of challenges and opportunities

Members of the Wyoming Mining Association attended their annual conference in Sheridan June 18-19, which was held at the Holiday Inn.

Many speakers at the event discussed pressures working against development of fossil fuels and mining. Former Wyoming Governor Dave Freudenthal summed up the mood of the conference, saying, “Our commodity economy is really going into a general headwind.”

The group was made up of several hundred representatives from the coal, trona, heavy machinery, and environmental consulting industries, among others. Several Wyoming lawmakers also attended.

Presentation topics included the current regulatory environment, the University of Wyoming engineering school task force, coal exports to Asia, sage grouse, and extending state control over nuclear regulation.

Read on for a series of mini-reports on the topics presented at the conference.

Freudenthal speaks on America’s de-facto energy policy

Former Gov. Dave Freudenthal spoke to the Wyoming Mining Association about the regulatory environment surrounding coal mining. With coal plants closing around the country, he says the industry’s outlook is not good.

Since retiring from the governorship, Freudenthal has joined the board of Arch Coal. “I go to quarterly meetings, and they are like funerals. It is a difficult time,” he said.

He believes part of the reason is that the typical American consumer has no direct experience with the energy resources that power their way of life.

“We’ve got to get the broader world to understand the role of commodities. I don’t think they understand that for them to have a barbeque, there is going to be manure,” Freudenthal said.

He worries that we now live in a culture where the majority of people living in the country have only a dim understanding of how natural resources are produced, and what the impacts are.

“These people make the decisions about the industries that drive Wyoming,” he said.

When the coal industry led the charge against federal regulation of greenhouse gases, Freudenthal says industry may have won the battle but lost the war of public opinion.

“We may not have [climate] policy from Congress but our nation has a policy,” Freudenthal said. “This country does have a policy, and it is set in the administrative agencies and it is set on Wall Street.” He commented that activist shareholders are questioning companies about the carbon footprint of business activities.

In Freudenthal’s view, the lack of action on a federal energy policy has led some of the administrative agencies like the Environmental Protection Agency to put rules in the place that have the force of law.

“When it comes to regional haze, it’s one person down in Denver setting policy in the EPA. And that’s not the way it should be done,” he said.

In closing, Freudenthal asked the audience to support Governor Mead’s efforts to improve the engineering college at the university. On the latter effort, he noted there has been some push-back from faculty.

“Support Governor Mead in what he is doing. We need to have a university that matches our economy,” Freudenthal said.

Arch Coal, a company he used to regulate under state authorities, now pays Freudenthal as a board member. His Arch Coal compensation in 2012 was $186,000. He also lectures in the University of Wyoming College of Law.

Where does mining fit into University of Wyoming Engineering project?

Rob Hurless discussed the University of Wyoming’s $115 million plan to remake the College of Engineering into a “Tier 1” institution.

Above the cost of construction, Hurless noted that the project would require a major commitment to ongoing funding to attract top talent. Hurless is the former publisher for the Casper Star-Tribune. He served as energy policy advisor to Gov. Dave Freudenthal, and also consults Gov. Matt Mead on energy matters.

Hurless said the university has put together a series of metrics to compare the university with other public research institutions.

Wyoming’s engineering college currently ranks 132^nd in the nation for the research dollars brought in by faculty. Nationally, the average university brings in $645,000 in grants for each faculty member, while Wyoming is bringing in about $132,000.

Getting those numbers to improve will require a major budget increase for the school of engineering. Right now, the school spends about $17 million a year.

Attracting 25-30 top professors to teach, along with providing $30,000 stipends to 100 graduate students, plus additional operational costs, will require a budget increase of about $15 million per year.

That would allow the university to effectively pursue potential engineering niches in energy, computational science, and atmospheric and water science, and advanced conversion technology for coal and gas.

“If you are really serious about these niches you better be prepared to man them up to the proper level,” Hurless said.

Mining is not currently among the major niche areas planned for the engineering school. One audience member asked, “Where does mining fit into this?”

That’s a continuing point of criticism against the engineering school task force, which has industry representation exclusively from oil and gas industry.

Hurless tried to assuage concerns that mining interests would be left out of the project.

“The conversation isn’t done. The task force is predominantly oil and gas guys and they said ‘We know our perspective is too narrow.’ I think that is going to be part of the ongoing conversation,” he said.

Potential for coal exports on Mississippi River

As coal companies face heavy opposition to exporting coal to Asia through Oregon and Washington, some may have overlooked the possibility of using an existing export terminal on the Mississippi River.

Dave Gambrel, a writer for Coal Transporter magazine, gave a presentation to the Wyoming Mining Association about the Cora Coal Terminal in Rockwood, Illinois, 80 miles south of St. Louis.

The terminal was first opened in 1980, and was designed to handle 15 million tons per year. Currently it is only shipping 7 million tons a year.

Amid strong opposition to coal exports on the West Coast of the United States, Arch Coal sought another export outlet by making agreements with the Ridley Terminal in British Columbia. Peabody found other export outlets on the Gulf of Mexico in Houston and New Orleans.

But companies haven’t moved to increase shipments to the Cora Terminal on the Mississippi.

Kinder Morgan owns the Cora Coal Terminal, which could be used in tandem with its International Marine Terminal south of New Orleans. The Louisiana terminal can load “Cape-size” vessels, some of the largest oceangoing ships in the world. From Louisiana, such ships can make a 9,300-mile eastward journey to India, an equivalent trip to traveling westward from coal terminals in Washington.

With India bringing new coal fired power plants online, Gambrel thought it might become a better market for Powder River Basin coal than China. That could shift coal export plans toward the Mississippi River and Gulf Coast, both areas of the country with better access to India and less public opposition.

Wyoming still vulnerable to sage grouse listing

On the sage grouse topic, Bob Budd of the Wyoming Wildlife and Natural Resource Trust said Wyoming’s efforts to protect sage grouse core habitat might not be enough to prevent a listing on the Endangered Species Act.

The reason is that the species is managed across the region, and any listing would cover the entire region. Some states like Colorado and Montana are behind on creating sage grouse conservation plans. Declines in those states could trigger a listing across the region that would affect Wyoming.

Potential transfer of nuclear regulatory authority to the state

Attendees at the Wyoming Mining Association conference heard about the process for become an “agreement” state under the Atomic Energy Act, which would transfer nuclear regulatory authority for everything short of nuclear reactors from the federal government to the state.

Earlier this year, the legislature called for a study to investigate the process for assuming regulatory authority.

Rep. Norine Kasperik (R-Gillette) and members of industry listened to the presentation from Duncan White, Branch Chief of Agreement State Programs Branch of the Nuclear Regulatory Commission.

At present, Wyoming’s hospitals, testing labs, and mining for radioactive materials fall under authority of the Nuclear Regulatory Commission (NRC). The commission charges $277 per hour for inspecting nuclear facilities, charging Wyoming companies more than $6 million a year in total.

Wyoming is one of only 13 states that don’t currently regulate these industries. Thirty-seven other states have taken over that authority under a program that has been in place since 1962.

However, Wyoming legislators are particularly interested in the state regulating uranium mills, which requires the most complicated approval process for the NRC. Only six states currently regulate their own uranium mills.

The process for becoming an agreement state could take 3-4 years. To be approved, Wyoming would need to build a regulatory program, write regulations, hire and train staff, and find a way to fund the program. Wyoming would likely pay for its program with a mix of state funds and user fees.

Rep. Kasperik said the legislature would be diligent in deciding if the benefits to industry from Wyoming becoming a nuclear regulator would outweigh the costs to the state.

— Gregory Nickerson is the government and policy reporter for WyoFile. He writes the Capitol Beat blog. Contact him at greg@wyofile.com.

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