Colorado Coal: Our economy is in trouble
Between the EPA and the Colorado state legislature, our economy is in trouble. Moffat County’s population has dropped nearly 8%.
Colorado coal production — hobbled by mine closures and a weak market — slipped to a 20-year low in 2014, according to state data. The state’s eight mines produced just under 23 million tons of coal in 2014, a 5 percent drop from 2013.
Colorado coal production is down 39 percent in the last 10 years.
There was also a nearly 20 percent cut in mining jobs to 1,512 in 2014, according to the state Division of Reclamation, Mining and Safety.
The loss of 345 mining jobs in 2014 followed a cut of more than 150 jobs in 2013.
“For the state, it doesn’t amount to much. But for Western Slope communities, it is big,” said Martin Shields, director of the Regional Economic Institute at Colorado State University. “These are well-paying jobs — an average of $80,000 — in places where good jobs are scarce.”
The losses will ripple across the local economies in Routt, Delta and Gunnison counties — to restaurants, car dealerships and stores, Shields said.
The key driver in a nationwide decline in coal production is low natural gas prices, said Brandon Blossman, a managing director at the energy investment bank Tudor, Pickering, Holt & Co.
This has led utility companies, the major consumers of coal, to switch to natural gas-fired turbines, Blossman said.
“It is pure economics, pure pricing,” he said.
Still, regulatory changes may also make coal less attractive, said Harrison Fell, a Colorado School of Mines economist.
The federal Environmental Protection Agency has issued new regulations to limit the amount of mercury — a dangerous heavy metal — that power plants can emit.
The EPA is also drafting rules requiring power plants to cut emissions of carbon dioxide, a gas linked to global climate change. Burning coal creates almost twice as much carbon dioxide as natural gas, according to federal figures.
“Coal is getting squeezed by the market and by regulation,” Fell said.
Part of the Colorado decline is due to operating problems. The Elk Creek Mine in Somerset was closed in December 2013, after underground fires made the mine too dangerous for miners.
In 2012, before the fires, the mine produced 2.9 million tons of coal, and, in 2013, 436,383 tons, according to state data. In 2014, no coal was mined.
Louisville, Ky.-based Bowie Resource Partners LLC announced in October that it was laying off 150 miners and cutting production at its Bowie No. 2 mine near Paonia.
Those cuts were the result of the termination of a contract to supply coal to the Tennessee Valley Authority and weakness in the regional market, the company said in a statement.
The 150 layoffs represented 40 percent of the mine’s workforce of 355.
Production at the mine dropped to 2.4 million tons in 2014 from 3.3 millions tons in 2013.
“I don’t discount market forces, but if all the proposed regulations go through, there are going to be more cuts,” Colorado Mining Association president Stuart Sanderson said.
The Clean Air-Clean Jobs Act — passed by the Colorado legislature in 2010 to promote replacing six aging Front Range coal-fired power plants with natural gas — will lead to up to a 4 million ton cut in coal sales, Sanderson said.
Despite the drop in production, the Rocky Mountain Basin, which includes Colorado and Utah, is faring better than some other coal region, said Blossman.
“Colorado is in the middle of the basins — not the worst, not the best,” he said.
One of the things handicapping U.S. coal is that global markets are saturated as more production came on to supply Asia, just as its economies slowed down.
“Colorado coal is a very nice export product,” Blossman said. “It doesn’t burn quite as hot as the Powder River Basin Coal (from Wyoming), but it is hot and very clean.”
“They can put it on rail cars, ship it from the Gulf once the market is there,” he said.