It was a low key announcement from the Interior Department’s Bureau of Land Management last week (May 16). Implementing a recent federal court ruling from Montana, BLM proposed to end new leases for existing mines in the Powder River Basin (PRB) in Wyoming and Montana.
The reaction from coal states and coal industry interests was hyperbolic and hypocritic. “My God, the sky is falling.”
The “war on coal” meme raised its ugly head again: Joe Biden is condemning the region to permanent depression. Sen. John Barrasso, Wyoming Republican and ranking minority member of the Senate Energy Committee, said, “President Biden continues to wage war on Wyoming’s coal communities and families.”
Rep. Bruce Westerman (R-Ark.), chairman of the House Natural Resources Committee, said the White House (which probably had no idea of the BLM filing) is “weaponizing federal agencies to advance their radical climate agenda.” He added, “President Biden is barring access to the resources necessary to power homes and businesses and support thousands of good-paying jobs.”
Wyoming Republican Gov. Mark Gordon said, “With this latest barrage in President Joe Biden’s ongoing attack on Wyoming’s coal country and all who depend upon it, he has demonstrated his lack of regard for the environment, for working people and for reliable, dispatchable energy.”
It’s all partisan balderdash. They surely know it. Honesty with their constituents is not in their political playbook.
The best take on what the BLM’s Miles City, Mont., and Buffalo, Wyo., offices have proposed comes from Paula Antoine of the Western Organization of Resource Councils, a regional environmental group that brought the litigation: “BLM’s announcement recognizes that coal’s era is ending, and it’s time to focus on supporting our communities through the transition away from coal, investing in workers, and moving to heal our lands, waters and climate as we enter a bright clean energy future.”
The key element in the BLM proposal is that it applies to new leases. It has nothing to do with current PRB production. That has been declining for years along with the closing of coal fired power plants across the country. While the region, particularly its Wyoming deposits, is the nation’s largest producer of steam coal used to supply coal-fired electric power plants, its significance has fallen dramatically in recent years.
According to Energy Information Administration data, 2017 PRB coal production was 334 million tons. In 2022, production had fallen to 258 million tons. An case study of the woes of the PRB producers comes from St. Louis-based Peabody Energy, as reported in Cowboy State Daily. The news service noted, Peabody, the largest operator in the Wyoming PRB, “saw its profit slip 79% from a year ago as production in the region’s surface mining operations sunk to one of its lowest levels in a decade.”
PRB coal’s spiral downward, driven by the inexorable closure of U.S. coal-fired power plants, won’t end. The decline of the Powder River Basin coal field has to do with geology, technology, and economy, not policy.
Natural gas is killing coal-fired electricity, thanks to the combined oil and gas technologies of directional drilling and hydraulic fracturing. Gas is a much cheaper fuel as well as less polluting. Sharp cost reductions in solar photovoltaics coupled with increasingly muscular energy storage also undercuts coal.
According to BLM’s calculations, Wyoming production is not expected to be impacted by a need for new areas to mine until at least 2041. In the smaller Montana operations, that date is 2060. Those estimates may be high, given the current production decline.
An August 2022 decision by the U.S. District Court for the Montana District overturning a 2018 leasing decision drove the new BLM policy. The recent case found illegal activity by the Trump administration’s BLM and its then head, Perry Pendley, who was also a villain in the Reagan administration’s compromised 1982 PRB coal lease sale.
The Montana federal court found that Pendley’s approval of new PRB lease sales failed to meet the requirements of the National Environmental Policy Act. Chief District Judge Brian Morris wrote, “BLM failed to consider any alternatives that would limit the expansion of existing mines…despite explicit direction from this Court that NEPA required BLM NEPA to do so.” Pendley was acting as BLM director at the time, although he was not authorized and was acting illegally.
What is the likely future of coal in the Powder River Basin? Coal fired power plants will continue to vanish; the need for PRB steam coal will continue to decline.
Perhaps the future for U.S. steam coal (met coal and steam coal exports are another story) will resemble what has happened in Moaba, Nevada, some 50 miles from Las Vegas. The four-unit, 557-MW coal fired Reid Gardner power plant, built between 1965 and 1976 and jointly owned by NVEnergy and the California Department of Water Resources, was demolished in 2019.
Today, the site houses a 220-MW/440-MWh battery energy storage system tied to NVEnergy’s grid. It stores surplus solar and wind power the utility generates.
NVEnergy CEO Doug Cannon told a local TV station, “The hours that we really get concerned about are from about 5 p.m. to 9 p.m. Because what happens, at that point, is the solar energy has really started to ramp off as the sun’s going down. And so, we have often had to go out to the market, the energy market, and buy energy to meet the needs between 5 p.m. and 9 p.m. Over the last couple of years, on average, we’ve paid $250 a unit of energy during those hours. We look at a project like this and this can deliver energy for closer to $100 an hour for a unit of energy.”
–Kennedy Maize
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