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Colo. coal production drops 13.5% YOY in H1'18

Colorado coal production declined by 13.5% year over year in the first half of 2018, from 8.2 million tons to 7.1 million, continuing a downward production trend in the state despite a brief uptick in 2017.

Output decreased each year from 2012 to 2017, when it rose 19.1% to 15 million tons.

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Nate Watters, director of public affairs for the Colorado Energy Office, wrote in an email Sept. 6 that the state's coal sector faces competition from cheaper energy alternatives.

"In Colorado, we are faced with an aging coal-generation fleet and increased consumer interest in a balanced energy portfolio," he wrote. "At the same time, rapid technological innovation has provided the market with cheap, abundant natural gas, and lowered costs for wind and solar generation. Colorado coal continues to have a market for export."

Four of the five top-producing mines in the state saw year-over-year production decreases in the first two quarters.

Peabody Energy Corp.'s Foidel Creek mine, the second-largest producing mine in the state, saw a 32.1% decrease in output from 2.1 million to 1.4 million tons, the largest decline among the top five mines, according to data compiled by S&P Global Market Intelligence. That decline is partially attributed to a longwall move that lowered output in the first quarter.

Tri-State Generation and Transmission Association Inc.'s Colowyo mine generated 1.1 million tons in the first half of 2017 and nearly 757,000 tons in the first six months of 2018, a 29.8% decrease. The company's Trapper mine saw a significant increase in production, up 48.6% to 1.1 million tons.

Lee Boughey, Tri-State's senior manager of communications and public affairs, wrote in an email that the Craig Station power plant had a unit outage in the first half of 2018 and purchased fewer tons from the Colowyo mine as a result.

"We expect coal sales from Colowyo to Craig Station to increase going forward," Boughey wrote.

Arch Coal Inc.'s West Elk mine, the biggest producer in the state, churned out 2.3 million tons in the first half of 2018, a 13.5% drop from the 2.7 million tons in the year-ago period. Arch CEO John Eaves said on a Feb. 13 earnings call that the mine ran above capacity for most of 2017 to take advantage of high prices on the Newcastle price index.

Arch also reported in an April 26 release that "higher cash costs per ton sold were driven primarily by planned lower volume levels from the low-cost West Elk mine," among other factors in the first quarter.

Deseret G&T Coop's Deserado mine decreased production by 9.1% from 1.2 million to 1.1 million tons.