Wyoming and Montana filed a federal lawsuit yesterday that seeks to overturn the Bureau of Land Management’s decision to end coal-mining leases in the Powder River Basin, which is the main source of coal hauled by BNSF Railway and Union Pacific.
BLM issued its final decision on coal leases last month. The move came after a federal court ordered the agency to re-evaluate its environmental review criteria to include both limited leasing and no coal leasing options.
“Instead of working with the states to address their concerns, BLM pushed through their narrow-minded agenda to stop using coal, ignoring the multiple-use mandate and the economic impacts of this decision, including skyrocketing electricity bills for consumers,” Wyoming Gov. Mark Gordon said in a statement announcing the lawsuit. “They did not do their job properly.”
Existing coal leases in the Powder River Basin include enough coal reserves to keep production going through 2041, the agency said.
The incoming Trump administration is expected to reverse the BLM decision as part of its support of the fossil fuel industry.
The last coal lease was granted in 2012, four years after Powder River Basin coal production peaked at 496 million tons. Wyoming mines, which unearth the lion’s share of PRB coal, are on track to produce 190 million tons this year, down from a peak of 466 million tons in 2008.
The State of Wyoming projects that by 2030 coal production will fall to 130 million tons due to the ongoing retirement of coal-fired power plants and increased competition from cheap natural gas and renewable sources of electricity generation.
The declining demand for PRB coal makes the BLM decision — and the lawsuit seeking to overturn it — academic.
“There’s more than enough coal right now, given the leases,” says Rob Godby, an associate professor of economics at the University of Wyoming. “The real problem the coal companies have is not having enough coal — it’s not having enough customers.”
In the next two to three years, Wyoming coal production could sink to 160 million tons based on the announced retirement dates of coal-fired power plants, Godby says.
The main forces working against PRB coal are not regulatory or environmental — they’re economic, Godby says.
Coal-fired power plants are “just not economic to run when you’ve got natural gas so cheap in the market and you’ve got so much renewable energy. Coal is just the last choice,” Godby says. “That’s before you get to environmental issues surrounding it and the need to maybe reduce it due to climate change goals. So the downward trajectory obviously is going to continue.”
Aging coal plants will require expensive upgrades in the next few years, which has spurred a wave of planned power plant retirements. “Most power plants in the country are hitting 40 or 50 years of age, which means that those power plants are going to require significant reinvestment to maintain them. And when utilities get to that point, that’s why they’re retiring them,” Godby says.
Even coal-fired power plants with years of life left are running less frequently and tend to be sources of power only at times of peak demand in the summer heat or cold of winter. So that further reduces demand for coal, Godby says.
Meanwhile, struggling coal producers are likely to close and consolidate mines in the coming years amid dwindling demand, Godby says.
Godby likens investing in improvements in a coal-fired power plant or at a coal mine to making major repairs to a beater car with too many miles on its odometer. “You don’t put a new transmission in a car you’re going to get rid of,” he says.
For the year to date, BNSF’s coal volume is down 19%. UP’s has dropped 22%.
Last week, BNSF originated an average of 25.1 coal trains per day out of the PRB, down from 28.6 a year ago, according to Surface Transportation Board data.
UP operated an average of 10.1 loaded coal trains per day out of the Southern Powder River Basin last week, down from 12.7 a year ago, the STB data shows.
One problem is the huge new demand from AI computing and even renewables (a Kansas utility is keeping a coal plant online to provide power for a new battery plant). The other future problem is gas supply. Some analysts believe that US supply is peaking (the Permian Basin, source of most of the world’s added oil supplies for the last 20 years, is near a plateau and then will drop). This year should start seeing new LNG terminals come online, using a significant part of US natural gas supply. Coal supplies could be a life saver.
Some analysts might, but others don’t. Even with the AI demand, overall demand nationwide is expected only to increase moderately in the next 25 years. Before fracking, Chicken Littles were proclaiming that the US would run out of oil. No one is saying that now, because technology came to the rescue. There is no reason to believe that technology won’t keep advancing in the future, not only in fossil fuel production but for renewables. Already, electricity consumption has been ameliorated by more-efficient electronic devices. The number one consumer of electricity in the USA is for cooling, which will indeed increase as the planet warms. It would seem that a logical way to reduce this demand would be to decrease what causes it, and coal is a major contributor.
“Coal supplies could be a life saver.”
The Fischer-Troppe process of converting coal into clean burning motor fuel should be another reason to sustain coal mining.
Think north. Alberta has over 3400 TCF of natural gas. That’s enough to supply the US for over 100 years at current consumption levels. The price of gas in Alberta is so low that no one is drilling for it and new supply is found when looking for oil. Alberta used to ship a lot more south before the shale revolution.
A wise man once said, “Never place dependence on something you do not control…” The US is the Saudi Arabia of coal and natural gas. There is over a 300 year supply of known, untapped coal reserves in the US and several trillion cubic feet of natural gas. We don’t need to depend on foreign countries for something we have in plentiful supply. Under the Biden Administration research of conversion of coal to gas and other products basically stopped. Hopefully that research will begin anew under an administration not held prisoner by radical agenda’s that the only response to any gains in technology is “NO”.
Godby is a typical academic! Someone in Wyoming cut off ALL his electricity except that generated by wind mills & solar. Let’s go to his dwelling when it gets so cloudy and the wind stops blowing.
You’re right. Godby IS a typical academic. He’s only telling it like it is: Coal demand is down, and is stating why. He’s not making any judgments one way or the other. Sounds like your desire to cut his electricity is in the hope to mute him so that you don’t have to hear something you don’t want to hear.
And while the article mentions a drop in the number of daily coal trains this year versus last, the 25.1 for BNSF is about half of what is was 10-12 years ago when we could see over 50 loaded trains originated in one day. Acknowledging reality, former BNSF CEO called the track infrastructure built to handle the heaviest demand in the Powder River Basin “Stranded Assets” going forward. Like Godby, he was not endorsing anything one way or the other, but simply stating the reality.
The wind stops blowing in Wyoming? Good luck with that.
Interesting in how all of these things occur in the final days of ones administration. Pardons, missiles, environmental decisions, January 6th audits, the beats goes on (and on)
Mark Meyer is not listening, He had already closed his ears to any proposition except the one he supports. Like so many other liberals…
As they say in West Virginia and Pennsylvania, “Coal keeps the lights on…”