Can exports save Wyoming coal?
The past few years haven’t been good to coal. Demand has dropped as utility companies prepare for new environmental regulations. Production has followed, and job losses continue.
Even Wyoming’s Powder River Basin coal, considered the cleanest in the U.S. because of low-sulfur content, isn’t in as great of demand as it once was.
As a result, producers are putting their hope in foreign markets, and not our neighbors to the north and south. Can countries like China and India, with their seemingly insatiable appetite for coal, help prop up Wyoming’s diminishing industry? Some say yes, while others caution that simply building the infrastructure to send coal to Asia does not necessarily mean Asia will buy it.
Exports aren’t the answer today, said Ted O’Brien, president of Doyle Trading Consultants, an energy research firm that specializes in coal. But they could be within a handful of years.
“When and if sizable West Coast export facilities develop, something to the tune north of 25 million tons, I think that will open up an opportunity for Wyoming coal producers to establish a much bigger presence in the sea-borne market,” he said.
He is referring to terminals in Washington and Oregon that so far can’t ship the amount of coal needed to boost Wyoming’s coal industry. When and if the terminals are ready, exporting coal will not only add demand for the fossil fuel but also increase competition.
But more than exports, O’Brien argued that the U.S. may have recently realized how much it still needs coal. The recent frigid winter depleted energy stores in the country. That, combined with the closure of coal-fired power plants, puts a strain on power supplies, creating a new need for coal, he said.
“We’re now starting to see signs coal-powered power plants are valuable. You can store the coal on the ground. You have your stockpile,” he said. “The (Powder River Basin) coal is the most competitive against natural gas, the lowest cost compared to natural gas. Wyoming coal is becoming more important.”
Wyoming coal may not increase substantially in importance, but it’s not likely to take a much deeper dive, said Roger Coupal, an associate professor and department chairman for the University of Wyoming’s College of Agriculture and Applied Economics.
The country’s base of energy is still run by coal-fired power plants, and until that changes, there will still be demand for Wyoming’s coal, he said.
As for exports, Coupal cautioned that building ports does not mean Asia will buy Wyoming’s coal.
Countries such as Australia, Mongolia and China have large reserves of coal. It may be cheaper for Asia to buy closer than ship it from the U.S., he said.
And if the U.S. did build the infrastructure and Asia did want to buy our coal, it still might just be a short-term fix, said Chris Merrill, associate director of the Wyoming Outdoor Council.
Instead of thinking of ways to ship coal halfway around the world, Wyoming should be focusing on clean energy.
“Regardless of whether our neighbors, legislators, policymakers or governors in Wyoming believe in human-induced climate change, we should make no mistake: Wyoming is competing in a global market. And the market is what is going to make or break coal,” Merrill said in an email to the Star-Tribune.
“And it seems to me that unless there is some important innovation or technological breakthrough for coal-based energy, the rest of the United States and other countries, including China and India, are likely to continue making decisions — and continue investing in their own research and development of alternative energy sources — all of which will likely diminish demand for coal, leaving the Wyoming coal industry without buyers in the long term.”
Merrill sees Wyoming’s position right now as one poised for opportunity. The Cowboy State has the money to focus on energy research and technology.
“I really believe that if we, as citizens and leaders, commit to driving innovation now, we will be able to replace those coal jobs and revenues if they disappear,” he wrote.
Reach Assistant Content Director Christine Peterson at 307-746-3121 or christine.peterson@trib.com. Follow her on Twitter @PetersonOutside.
Even Wyoming’s Powder River Basin coal, considered the cleanest in the U.S. because of low-sulfur content, isn’t in as great of demand as it once was.
As a result, producers are putting their hope in foreign markets, and not our neighbors to the north and south. Can countries like China and India, with their seemingly insatiable appetite for coal, help prop up Wyoming’s diminishing industry? Some say yes, while others caution that simply building the infrastructure to send coal to Asia does not necessarily mean Asia will buy it.
Exports aren’t the answer today, said Ted O’Brien, president of Doyle Trading Consultants, an energy research firm that specializes in coal. But they could be within a handful of years.
“When and if sizable West Coast export facilities develop, something to the tune north of 25 million tons, I think that will open up an opportunity for Wyoming coal producers to establish a much bigger presence in the sea-borne market,” he said.
He is referring to terminals in Washington and Oregon that so far can’t ship the amount of coal needed to boost Wyoming’s coal industry. When and if the terminals are ready, exporting coal will not only add demand for the fossil fuel but also increase competition.
But more than exports, O’Brien argued that the U.S. may have recently realized how much it still needs coal. The recent frigid winter depleted energy stores in the country. That, combined with the closure of coal-fired power plants, puts a strain on power supplies, creating a new need for coal, he said.
“We’re now starting to see signs coal-powered power plants are valuable. You can store the coal on the ground. You have your stockpile,” he said. “The (Powder River Basin) coal is the most competitive against natural gas, the lowest cost compared to natural gas. Wyoming coal is becoming more important.”
Wyoming coal may not increase substantially in importance, but it’s not likely to take a much deeper dive, said Roger Coupal, an associate professor and department chairman for the University of Wyoming’s College of Agriculture and Applied Economics.
The country’s base of energy is still run by coal-fired power plants, and until that changes, there will still be demand for Wyoming’s coal, he said.
As for exports, Coupal cautioned that building ports does not mean Asia will buy Wyoming’s coal.
Countries such as Australia, Mongolia and China have large reserves of coal. It may be cheaper for Asia to buy closer than ship it from the U.S., he said.
And if the U.S. did build the infrastructure and Asia did want to buy our coal, it still might just be a short-term fix, said Chris Merrill, associate director of the Wyoming Outdoor Council.
Instead of thinking of ways to ship coal halfway around the world, Wyoming should be focusing on clean energy.
“Regardless of whether our neighbors, legislators, policymakers or governors in Wyoming believe in human-induced climate change, we should make no mistake: Wyoming is competing in a global market. And the market is what is going to make or break coal,” Merrill said in an email to the Star-Tribune.
“And it seems to me that unless there is some important innovation or technological breakthrough for coal-based energy, the rest of the United States and other countries, including China and India, are likely to continue making decisions — and continue investing in their own research and development of alternative energy sources — all of which will likely diminish demand for coal, leaving the Wyoming coal industry without buyers in the long term.”
Merrill sees Wyoming’s position right now as one poised for opportunity. The Cowboy State has the money to focus on energy research and technology.
“I really believe that if we, as citizens and leaders, commit to driving innovation now, we will be able to replace those coal jobs and revenues if they disappear,” he wrote.
Reach Assistant Content Director Christine Peterson at 307-746-3121 or christine.peterson@trib.com. Follow her on Twitter @PetersonOutside.
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