Powder River Basin: “200 year supply” of Coal Reserves Harder and Harder to Scrape out

August 12, 2013

A Colorado Coal Activist writes me:

“Producing coal in the US is now like scraping the bottom of the peanut butter jar–it is getting harder (and therefore more expensive) to produce the coal–which is one of the reasons coal costs are generally rising on average about 7% per year around the country….

Independent of what people think about climate change or mercury emissions or water use etc, repowering the US is an imperative, not a choice, because it is getting harder and more expensive to produce the fuel that has been responsible for 40-50% of US electricity.

Moreover, we don’t have too long to act, given that many US coal producers are currently in serious financial trouble, or already bankrupt”

Platts.com

When Powder River Basin coal producer Cloud Peak Energy in late July said it might cut production at its Cordero Rojo mine in 2015, the decision was based in part on projected increases in capital expenditures.

And although the company’s final decision will depend on whether coal prices rebound, the announcement highlights a growing issue for PRB miners — as production moves westward, the coal dips deeper into the earth and becomes more expensive to get to.

The amount of rock and dirt that must be removed to access the coal is known as a strip ratio. A strip ratio of 1 to 1 means a cubic yard of rock and dirt must be removed to mine one cubic yard of coal.

When PRB production began in the 1970s, it mostly started on the eastern edge of the lease tracts, where strip ratios were sometimes better than 1 to 1, as the basin’s low-sulfur coal sat nearly exposed at the surface.

But as one moves west across the basin the coal seams dip further underground and the overburden — the rock and dirt covering the coal — increases.

Later this month, the lease for the Maysfield II North coal tract in Wyoming will be sold at auction by the US Bureau of Land Management. The lease tract is adjacent to the west end of Cordero Rojo and has a strip ratio of roughly 4.5 to 1, according to the BLM’s sale notice.

To put that into perspective, the tract’s coal seam is roughly 69 feet thick, but with overburden ranging in thickness from 266 to 397 feet, according to the BLM.

“There’s very little low ratio coal out there anymore,” said Al Elser, BLM’s assistant district manager for solid minerals in Casper, Wyoming.

PRB production peaked in 2008 at 496 million st, according to MSHA data. In 2012, the basin produced 425 million st.

But by 2030, the BLM expects PRB coal production to range between 500 and 700 million st annually, according to its 2010 resource management plan, which is now being updated.

At the same time, the basin’s productivity, based on tons per employee hour, is declining, according to MSHA data. Productivity peaked in 2001 at roughly 43 tons per employee-hour, but by 2012, the figure had dropped to roughly 28 tons.

According to Bob Burnham, president of Burnham Coal, a mine consulting group based in Arvada, Colorado, much of the decline is the result of higher strip ratios.

Bill Meister, a St. Louis-based mining consultant with Golder Associates, estimates the PRB strip ratio climbs by a tenth of a percent each year as production moves westward.

Incrementally, the increase is small, but it sooner or later it becomes an issue. “You have to add more equipment to add capacity,” said Meister.

If there’s a point where strip ratios are uneconomical, that remains to be seen, said Burnham. Technology changes could improve mining efficiencies, but it also depends a lot on the price of coal.

Clean Energy Action:

A careful review of existing information on U.S. coal supplies demonstrates that:

1) The U.S. Energy Information Administration has repeatedly published data on coal “reserves” as though they include an assessment of economic recoverability when in actuality they did not. As a result, the often touted “200 year supply of U.S. coal” is not based on a realistic assessment of how much coal will actually be accessible.

2) The United States Geological Survey has developed a tool for assessing economic recoverability and published a series of reports showing that the amount of economically recoverable coal is a small fraction (e.g. less than 20%) of the original resource. The most recent USGS assessment of coal in the Gillette coal field of the Powder River Basin of Wyoming, the source of about 40% of U.S. coal, found that only 6% of the coal was economically accessible under the economic conditions at the time. Between 2002 and 2008, while coal costs were rising dramatically, the USGS reduced the amount of economically accessible coal in the Gillette coal field of the Powder River Basin from 23 billion tons to 10 billion tons.

3) The major mines in the Powder River Basin of Wyoming (e.g. the “Fort Knox” of U.S. coal) have less than a 20 year life span, and coal mines in other parts of the United States are also likely to be playing out in the next 20 years. Future coal mine expansions are highly uncertain as these expansions will face very serious geologic, economic, legal and transportation constraints. Importantly, the federal government owns essentially all of the coal in the western United States, and future coal mine expansions in western states will have to comply with a host of federal laws.

6 Responses to “Powder River Basin: “200 year supply” of Coal Reserves Harder and Harder to Scrape out”


  1. The fossil fuels are dirty, dangerous, and depleting. At this point, they are like an enormous vampiric monkey riding on the back of human civilization — threatening to kill or maim the host.

  2. MorinMoss Says:

    I hope to see coal relegated to a minor player in global energy production in my lifetime – we’d better hurry up since the spring left my chicken some time ago.

  3. Skip Pruss Says:

    Peter – you might find this of interest. DTE’s unregulated subsidiary, Midwest Energy, is working to develop a St Lawrence route for coal to European markets. It will take a big hit is Presque Isle goes down. Check out the 11 min infomercial.

    http://www.midwestenergy.com/

  4. daryan12 Says:

    To me this is the nightmare scenario, fossil fuels are running out, but we swap to using the dirtier types (shale gas/oil, tar sands, coal), these run out, but not before we’ve pushed enough greenhouse gas into the atmosphere to destabilize the climate.

    Hence we end up having to cope with a rapidly warming climate and dwindling fuel supplies, while the resources and time we could have used to develop a sustainable energy supply system will have been squandered.

  5. andrewfez Says:

    ‘…Don’t let your utility tell you it’s all fine, because chances are it isn’t. And this is a cliff that will make all the other cliffs our country has driven over look like child’s play…’


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