Shared from the 9/15/2019 The Denver Post eEdition

Mine shutdowns in top U.S. coal region bring new uncertainty

GILLETTE, WYO.» At two of the world’s biggest coal mines, the finances got so bad, their owner couldn’t even get toilet paper on credit.

Warehouse technician Melissa Worden divvied up what remained, giving four rolls to each mine and two to the mine supply facility where she worked.

Then mine owner Black-jewel LLC filed for Chapter 11 bankruptcy protection on July 1. Worden figured the accounts would get settled quickly.

“The consensus was: In 30 days, we’ll look back on this and we made it through. And we’ll be up and running, and it’s a fresh start,” Worden said.

What happened instead has shaken the top coal-producing region in the United States. Blackjewel furloughed most of its Wyoming employees and shut down Eagle Butte and Belle Ayr mines, the first idled by hardship since coal mining in the Powder River Basin exploded in the 1970s.

It’s a big hit to the region straddling northeastern Wyoming and southeastern Montana, where coal quietly has supported the economies of both states for decades and fuels a shrinking number of power plants in 28 states.

Negotiations that could reopen the two Wyoming mines under new ownership are stalled more than two months later. About 600 employees remain off the job. And doubts are growing about the longterm viability of the region’s coal mines.

“I don’t think we’ll ever be that naive again,” said Worden, 44.

Blackjewel, based in Milton, W.Va., told its Wyoming employees last week that the mines might be running again soon and to let the company know if they wanted their jobs back.

Worden said she felt little reassurance. She’s not the only one questioning long-held assumptions about Powder River Basin mines, which produce cleaner-burning coal less expensively than mines in other parts of the U.S. and weren’t widely thought of being at risk.

But with coal in longterm decline, how the basin eventually might scale down production to a sustainable level has become a big question, said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming.

“The irony here — and it’s really a cruel irony — is everybody is focused on getting these miners back to work. But really the solution to creating a healthy industry is some mines close,” Godby said.

For now, little appears changed in Gillette, a city of 30,000 at the heart of the basin of rolling grasslands where tattoo shops are abundant and big, late-model pickups still cruise the main drag.

This year, however, has been tumultuous. Three of the Powder River Basin’s nine producers — Westmoreland Coal, Cloud Peak Energy and Blackjewel — have filed for bankruptcy since March. Two others, Arch Coal and Peabody, say they will merge assets in the region.

The turmoil comes as U.S. coal production is down more than 30% since peaking in 2008.

Utilities are retiring aging coal-fired power plants and switching to solar, wind and cheaper and cleaner-burning natural gas to generate electricity despite President Donald Trump’s efforts to prop up the coal industry.

A decade ago, about half of U.S. electricity came from coal-fired power. Now it’s below 30%, a shift that heavy equipment operator Rory Wallet saw as utilities became less willing to lock in multiyear contracts for Belle Ayr mine’s coal.

“The market’s changed,” Wallet said. “The bankruptcies all tie into that.”

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