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Wyoming coal sale hiatus takes hold in weak market

Published on NewsOK Modified: March 7, 2014 at 5:11 pm •  Published: March 7, 2014

CHEYENNE, Wyo. (AP) — Diminished domestic demand has produced a virtual moratorium on federal coal sales in Wyoming's Powder River Basin, home to the 10 top-producing coal mines in the country.

No federal reserves in the basin have sold since June 2012, and none are expected to sell until at least 2015. That's partly because the massive, open-pit mines generally have enough reserves to last some years, but also because coal companies aren't making long-term investments to buy more.

Companies appear to be holding out for a solid, sustained resurgence in global demand, said National Mining Association spokesman Luke Popovich.

Shareholders, he said, "are looking for more immediate returns in the wake of falling demand and weak earnings over the past few years."

Last April, 21 environmental groups asked Interior Secretary Sally Jewell to impose a moratorium on new federal coal leasing in the basin. They cited greenhouse emissions as well as reports on shortcomings in U.S. Bureau of Land Management coal leasing practices that have cost the government more than $200 million.

The Interior Department hasn't issued any moratorium — but a de facto one is shaping up.

In December, the BLM's Wyoming State Office suspended plans for a March coal sale after the mining company seeking to bid requested postponement. Four other companies have made similar requests — and the BLM has granted them — since 2012.

All five companies cited a weak coal market as tougher environmental regulations and competitive prices for cleaner-burning natural gas sap demand, according to BLM correspondence obtained by The Associated Press.

No BLM lease sales are expected at least through 2014, agency spokeswoman Beverly Gorny said Friday.

"We recognize that if the company doesn't feel like it's good market conditions, it's not good market conditions for the American public," Gorny said.

Almost 40 percent of U.S. coal comes from the basin — accounting for about 18 percent of the nation's electricity generation.

The de facto moratorium is a good time for BLM to reform its leasing program, said Shannon Anderson with the Powder River Basin Resource Council, a landowner group.

Anderson provided to the AP correspondence between the coal companies and BLM. Gorny verified that the council obtained the letters through a recent Freedom of Information Act request.

Last year, the BLM held two Wyoming coal auctions but didn't sell any coal.

One auction Aug. 21 offered 149 million tons of reserves next to Gillette-based Cloud Peak Energy's Cordero Rojo Mine. No companies bid — unprecedented for a BLM lease sale in Wyoming.

A Sept. 18 auction drew a lone bid that BLM rejected. The bid by Kiewit Mining Properties, Inc., for coal next to the company's Buckskin Mine eight miles north of Gillette was the lowest per-ton bid in the basin since 1998.

Coal companies apply through the BLM to lease reserves next to their mines. The BLM undertakes a yearslong environmental review before offering the coal for sale. Almost 90 percent of the time, the company that applied is the only one that bids. Lack of competition is one reason for the government's suboptimal coal-leasing returns, according to the General Accounting Office.


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