Colorado coal production down in the first half of 2013

Colorado coal production rose in 2012, but preliminary data for the first half of 2013, shows coal output falling about 19% from prior year levels, according to figures from the Colorado Division of Reclamation Mining & Safety cited Aug. 27 by the Colorado Mining Association.

Major producers in Colorado include Peabody Energy (Foidel Creek longwall mine), Arch Coal (West Elk longwall mine), Oxbow Mining (Elk Creek longwall mine) and Bowie Resources (Bowie No. 2 longwall mine). The major in-state customer for this coal is the Public Service Co. of Colorado unit of Xcel Energy, while out-of-state customers include the Tennessee Valley Authority.

In 2012, Colorado ranked ninth among the coal producing states, up two notches from 2010. Coal production last year increased about 10% to 29.5 million tons, CMA noted.

Stuart Sanderson, CMA President, cautioned against reading too much into the prior and current year numbers. “2012 recorded a second consecutive year of production increases, temporarily reversing a seven year decline, but 2012 production is still 25% below the record set in 2004,” he noted.

Sanderson said it is too early to draw conclusions based on mid-year numbers for 2013, as one mine has temporarily ceased operations to protect its workers while addressing heating activity at the operation, and that alone accounts for more than 1 million tons of lost production year to date.

The coal production value rose 6% to $1.1bn in 2012. Overall contributions to Colorado’s economy from coal mining reached $2.4bn based on 2010 production figures from the National Mining Association.

Employment at the mines was 2,248, due largely to the closure of Cline Mining‘s New Elk metallurgical coal mine near Trinidad in southeast Colorado. CMA reported that employees at the state’s thermal coal mines (used in electricity generation) earned average wages and benefits in excess of $115,000 annually.

Total direct employment (including transportation), according to the National Mining Association, reached 5,570 in 2010 (the most recent year for which figures were available) and generated more than 19,000 jobs statewide.

“To some extent,” Sanderson said, “the lower production figures reflect market conditions nationally, including softer demand resulting from a warmer winter. Increased demand and rising natural gas prices could alter or even reverse that trend. Energy demand will continue to rise in the United States and throughout the world. And coal is still the fastest growing major source of electricity worldwide.”

He added: “Uncertainty over government regulations, as well as market conditions, constrains the industry outlook for 2013 and beyond locally. Production cuts that will result from the implementation of House Bill 10-1365, which mandate the closure of power plants along the Front Range using clean, high quality Colorado coal in favor of higher cost natural gas, have not yet taken full effect.” Sanderson said that this will displace up to 4 million tons annually in coal sales, all at a price tag of more than $1bn to energy consumers.

Public Service Co. of Colorado is a prime mover in the shutdown of coal-fired capacity due to that state law, also called the Clean Air-Clean Jobs Act, along with the in-state operations of Black Hills.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.