By Elyse Kelly, The Center Square
After years of decline, Wyoming’s coal industry recently saw a bump in production.
Powder River Basin (PRB) coal producers reported a 6% increase in production from January through June of 2021, the Associated Press reported. PRB put out 107.9 million tons of coal this year compared to 101.85 million tons during the first half of 2020, according to AP.
Kelsey Kehoe, coal geologist for the Wyoming State Geological Survey, said the market is complicated, but credits a return to pre-pandemic levels of electricity demand for the bump.
“As 2021 has seen fewer stay-at-home orders and economic shutdowns, electricity demand is recovering,” Kehoe told The Center Square. “Additionally, natural gas prices are currently higher than they’ve been over the last five to six years, which makes the cost of coal-generated electricity more competitive with electricity produced from natural gas.”
But she is realistic about the increase.
“In Wyoming, the slight rebound in production is positive, but the demand is still much lower than it was a few years ago,” Kehoe said. “Anecdotally, we are hearing stories of mines hiring more workers, an uptick in rail shipments, and an uptick in rail traffic.”
Last year’s production marked a 22.5% decline in thermal coal, AP reported. This year’s uptick is not likely to turn things around, Kehoe observed.
“For thermal coal production (as opposed to metallurgical), it appears that this is a relatively short-term phenomenon,” she said. “The broader issues driving reduced demand still exist – primarily, the decline in electricity generation from coal-fired power plants.”
Forecasts from the U.S. Energy Information Administration and Wyoming’s Consensus Revenue Estimating Group (CREG) both project a drop in coal production for the nation and Wyoming respectively next year following the current bump, Kehoe noted.
“The US has significantly fewer coal-fired power plants in operation now than it did a decade ago, due to plant retirements and conversions to other fuel sources,” she said. “The largest annual decreases in coal-fired capacity occurred in 2015, 2018, and 2019. Having fewer plants in operation has reduced the demand for thermal coal year after year.”
The Center Square is a 501(c)(3) non-profit focused on state- and local-level government and economic reporting.