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Powder River Basin Coal

Freight cars sit loaded with coal in January 2015 at Black Thunder coal mine in Campbell County.

GILLETTE — Wyoming coal production slumped to its lowest level in 13 years during 2015, recent figures from the U.S. Mine Safety and Health Administration show.

But in a sign of Cowboy State mines’ continued resilience, employment remained relatively flat. Wyoming mines employed 6,560 people in the fourth quarter of 2015, a decrease of 2 percent from the same time in 2014.

The numbers nevertheless underlined the impact of cheap natural gas, weak prices and stagnant power demand on the country’s top coal-producing state. The 376.8 million tons mined last year represented a nearly 5 percent decrease from 2014 levels and is the lowest total recorded in the Cowboy State since 2003.

The effect was evident in the Powder River Basin, which accounts for roughly 96 percent of Wyoming production. The region’s 12 active mines dug out 363.3 million tons of coal last year, 18.5 million tons less than the 381.8 million tons mined in 2014.

Since the basin’s high production mark of 446.5 million tons in 2008, production is off by 19 percent. That’s a drop of nearly one-fifth in eight years.

The Powder River Basin is the nation’s largest coal-producing region. It produces some of the world’s cleanest-burning coal for significantly less than it costs to mine elsewhere.

The coal industry is being hurt by increased federal regulation and restrictions as well as low prices for competing natural gas.

For 2015, most of the basin’s reduced production came from Cloud Peak Energy’s Cordero Rojo mine, which posted a drop of 11.9 million tons. While on the surface that may seem a reaction to more recent pressures on the coal industry, the mine is actually going through a decrease in production that’s been planned for a couple of years, said Colin Marshall, Cloud Peak’s president and CEO.

“We announced we were going to do all this in 2014,” he said. “We knew the market would be shrinking and the actual net change is we didn’t have to spend well over $200 million (by reducing production).

“By recognizing the market was coming down, the last thing you want to do is produce a lot of coal nobody’s going to want to buy. Eventually, you can’t force people to take coal, so it’s better to do (this) and manage the business accordingly. By planning the way we were, we were able to accomplish that reduction without layoffs.”

Peabody Energy’s North Antelope Rochelle mine, which produced a record 118 million tons in 2014, produced 109.3 million tons in 2015, a drop of 8.7 million tons, or 7.3 percent.

Still, Peabody announced this past week that the mine had shipped its 2 billionth ton of coal since it opened about 32 years ago.

Overall, Peabody reports that mining and shipping 2 billion tons of coal took more than 83 million employee hours and more than 125,000 trains pulling more than 17 million cars full of coal. If all the cars were put end-to-end, they would make a coal train 177,500 miles long that circled the Earth more than seven times.

Alpha Natural Resources, which declared bankruptcy in August, recorded increasing production at its Belle Ayr mine, which was up 16 percent to 18 million tons. The company’s second Powder River Basin mine, Eagle Butte, posted a 5 percent decline to end 2015 at 19.6 million tons. Both mines employed 561 people in the fourth quarter of 2015, a decrease of 4 percent compared to the same time in 2014.

Arch Coal also filed for bankruptcy protection recently. Production at Arch’s Black Thunder mine near Wright was down 2 percent to 99.4 million tons while output at its Coal Creek facility fell 17 percent to 7.8 million tons. Total employment at the two mines decreased 2 percent to 1,762.

Bob Burnham, owner and analyst of Colorado-based Burnham Coal, said that reduced production will mean fewer jobs. But he cautions predictions that Wyoming stands to lose all of its coal jobs are extreme and alarmist.

“The reality is, the mines are going to try to find ways to reduce costs as productivity trends down. As production goes down, you need fewer people,” Burnham said.

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