Name: Energy Journal: Arch Resources announcement is a warning sign for Wyoming | Energy Journal | trib.com
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Energy Journal: Arch Resources announcement is a warning sign for Wyoming | Energy Journal | trib.com

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Please subscribe to keep readingCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeThe second largest coal operator in the nation it will aggressively scale back production of thermal coal in Wyoming and rapidly transition to steel production in other parts of the country.Arch Resources Inc. offered a foreboding signal to the state when the publicly traded company outlined a plan to curtail coal mining at its two Powder River Basin mines by 50% in the next two to three years. What’s more, the firm said it would begin searching for a potential new owner for its thermal coal assets, or the facilities pumping out the type of coal used to make electricity.It’s no secret that Wyoming’s economy remains deeply intertwined with coal. When demand for coal slumps, Wyoming’s economy feels the shock too.Mineral production made up nearly half of all property taxes received by the state in fiscal year 2019, . That doesn’t count the severance taxes paid by operators, which accounted for made last year. The revenue in turn goes to fund education, roads and so many other public services we depend on.But demand for the mineral continues to tumble, as utilities shift to cheaper natural gas and renewable energy options.So the news that the mega coal company responsible for producing over 10% of the nation’s thermal coal was sharply pivoting away from the commodity shouldn’t have come as a huge surprise. The days of relying on meaty mineral taxes for revenue are numbered for Wyoming. But if there’s anything to take away from Thursday’s announcement, it’s that the state shouldn’t take the forthcoming changes lightly.“Arch is going to embrace these new realities as opposed to fighting them,” executives said during an investor call. The impending contraction of production at the Black Thunder and Coal Creek mines probably means more layoffs, on top of the hundreds of layoffs and furloughs that have already whipped through the basin’s mines.But there’s another ominous trend at play here.Peabody Energy and Arch are the only two remaining publicly traded companies in the Powder River Basin. The rest of the companies are private and smaller. That means that the public can’t monitor the companies’ financial states in the same way we can Arch’s. No quarterly finance updates. No public shareholder calls.The basin is filling up with less capitalized, less transparent companies. And that means Wyoming won’t always be given the luxury of a warning like Arch has provided us.Sources I’ve been speaking with warn that there’s a high probability that the days of financially sound coal companies are limited. In their place could be more shell companies, or brand new operators without substantial savings or financial backings for future mine cleanup. Layoffs, closures or sales could happen suddenly and without warning.In fact, they already have been.When coal operator Blackjewel unexpectedly filed for bankruptcy on July 1, 2019, it shut down its two mammoth coal mines here and sent nearly 600 workers home indefinitely. After that, it went through a turbulent bankruptcy process, finally settling on a new buyer, Eagle Specialty Materials.A recent federal court decision could also exacerbate the uncertainty already plaguing the basin. Last year, Peabody and Arch proposed to combine their operations under one roof through a joint venture. The leading coal operators said consolidating would save money and help them survive in the weakening thermal coal markets. But the Federal Trade Commission blocked the move for fear it would create a monopoly in the coal market.Wyoming’s governor and many economists here have predicted the failed coal merger will mean more instability for the basin and its workers.Arch immediately responded by saying it would find another means to exit the basin and shed itself from the liabilities tied to mining coal. This time, it would try to adapt by slashing production, finding a buyer for its thermal coal mines and focusing on making steel from coking coal instead.As Arch suggested during Thursday’s investor call, it will be looking for a buyer for certain thermal coal assets (in other words, its mines in Wyoming). If no buyers are found, it will significantly scale down production. Executives emphasized their commitment to find a “reliable” and “appropriate” buyer. A buyer that would take on the over $550 million in reclamation, or cleanup, obligations. A buyer that would be a good employer for workers and neighbor for the community.But there’s no guarantee Arch will follow through on these promises.To its credit, Arch has provided Wyoming with something most coal companies haven’t and likely won’t provide going forward: an advanced warning.The days of the state leaning on thermal coal production for revenue are crawling to an end, and we need to act. Sure, advancements in carbon capture or coal to carbon products could keep Wyoming's coal industry going at a smaller capacity far into the future. Focusing on research and leading the way in commercializing these technologies in Wyoming is an important part of the solution. But it’s going to take investments in multiple industries and educational programs to re-employ the thousands of miners in the state and workers in all the ancillary businesses that have supported Wyoming’s king industry.Last year, the city of Kemmerer received a grant to help prepare for the economic transition. The southwestern Wyoming town received nearly $139,000 from the U.S. Economic Development Administration to boost new development and catalyze economic diversification over the next two years. Kemmerer collaborated across multiple parties to secure the grant and match federal funding — from Rocky Mountain Power and the Wyoming Business Council to Lincoln County. The grant will help the city hire an impact manager for two years and implement an economic diversification plan.More initiatives like these (with more funding attached) will be desperately needed as the state barrels into a dark and uncertain future. Let’s heed the Arch’s warning and respond.In other news...COALA Montana-based conservation group has sued the Trump administration for allegedly violating public transparency laws in its dealings with a coal advisory group, according to the filed last week. The is a federal advisory committee working with the U.S. Department of Energy to help shape the nation’s energy policy. The council provides guidance to the department on how various federal decisions could influence coal production and consumption in the country. But the , WORC, alongside the nonprofit legal organization , filed a complaint Thursday against the Department of Energy in the U.S. District Court of Montana. The groups alleged the federal government failed to uphold the , which mandates that the public and Congress are kept informed on the committee’s activity.What role, if any, does the state’s regulatory body have in protecting the Wyoming coal communities that have reliably powered the nation for decades? The Public Service Commission recently to present the results of its investigation into the publicly regulated utility, PacifiCorp. Even though the commission found the utility’s plan deficient, regulators said it did not find it appropriate to require the utility to calculate the socioeconomic consequences of retiring coal-fired power plants in its integrated resource plan, at least not for now.OIL &amp; GASA Montana federal court’s decision this month to invalidate several land-use plans approved by the Bureau of Land Management could place similar Wyoming public land plans in jeopardy. The U.S. District Court of Montana two resource management plans and an amendment made to another land-use plan because they were approved under then-acting head of the bureau, William Perry Pendley. The governor of Montana and the state’s Department of Natural Resources filed the lawsuit. The recent ruling against the federal agency has sparked concern among some in Wyoming that plans and projects approved here could eventually be challenged too.The Bureau of Land Management will up about 280,162 acres of public land for oil and gas development in its final sale of the year. The December sale will include 61 nominated parcels, along with 200 parcels previously deferred from the June and September sales.WIND &amp; SOLARA technology company envisions transforming the University of Wyoming into a beacon for solar energy innovation nationwide. The new firm, called , has ambitious plans to create a solar generation research facility three miles from the university’s campus. Developers will work in tandem with faculty and students at UW’s College of Engineering and Applied Science to learn and test out solar energy technology.PUBLIC LAND &amp; CONSERVATIONThe in southeastern Wyoming has significantly calmed in recent days and remains well-contained, according to authorities. Firefighters have started to clean up areas damaged by the largest wildfire in Wyoming recent history. Crews focused on suppression repair efforts on private land — clearing burned debris, repairing fences and packing up equipment. Authorities urged landowners to use caution and stay alert for “fire-weakened trees, smoldering or burning fuels, and firefighting trucks and heavy equipment.” The Albany County Sheriff’s Office has lifted all mandatory evacuations orders for the Mullen Fire.ICYMI: The Casper Star-Tribune partnered with the Solutions Journalism Network to ask young people about their vision for Wyoming’s future. are their answers.Quote of the week“(Arch Resources executives) are being very clear, so that their employees, suppliers and the communities that depend on them have a clear signal and time to react and prepare. That’s the good news of today’s announcement, if there is any. There appears that we are more likely to have an orderly consolidation than a disorderly one, like Blackjewel.”— Rob Godby, economist at the University of Wyoming and associate dean of the Haub School of Environment and Natural ResourcesFollow the latest on Wyoming’s energy industry and the environment atFollow the latest on Wyoming's energy industry and the environment at

Please subscribe to keep readingCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeCancel anytimeThe second largest coal operator in the nation it will aggressively scale back production of thermal coal in Wyoming and rapidly transition to steel production in other parts of the country.Arch Resources Inc. offered a foreboding signal to the state when the publicly...

Energy Journal: Arch Resources announcement is a warning sign for Wyoming | Energy Journal | trib.com

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