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Murray warns of headwinds for US coal as DOE adviser says he's 'here to help'

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Murray warns of headwinds for US coal as DOE adviser says he's 'here to help'

Murray Energy Corp. CEO and founder Robert Murray expressed concern over potential headwinds for the coal industry, even as an adviser to U.S. Energy Secretary Rick Perry pledged to aid the sector.

"The election of Donald Trump is a blessing from our Lord Jesus Christ," Murray said during the Coaltrans 2018 conference in Miami, before ticking off a list of regulatory rollbacks introduced by the Trump administration related to coal production and use, including the administration's moves to withdraw from the Paris Agreement on climate change, repeal the Stream Protection Rule and rescind the U.S. Environmental Protection Agency's Clean Power Plan.

However, Murray said that coal's challenges are far from over, including some obstacles within the administration, offering specific criticism for Trump's appointments to the Federal Energy Regulatory Commission.

"The bureaucratic FERC failed to do their duties," Murray said in reference to the commission's decision to reject a U.S. Department of Energy proposal to support fuel-secure generators and prevent premature retirement of those units in order to ensure grid reliability, adding that the members are largely "biased against coal."

Murray, who once said he aimed to be the "last man standing" amid setbacks faced by the industry during the Obama administration, is again committing capital to the Illinois Basin with an agreement to acquire a majority interest in a new company that will hold certain assets of Armstrong Energy Inc. in western Kentucky.

At a time of lingering regulatory uncertainties despite President Donald Trump's strong coal rhetoric, a top assistant to U.S. Energy Secretary Rick Perry reassured the industry that the DOE has efforts underway to aid the sector, including a follow-up to a failed effort to provide greater financial support to coal-fired and nuclear power plants.

"The good news is I'm with the federal government and I'm here to help," special adviser Doug Matheney said Jan. 31 at the West Virginia Mining Symposium in Charleston, W.Va. "I went to Washington, D.C., for one purpose and that was to help create coal jobs in the United States. That's my total purpose for being there. I'm not a researcher, I'm not a scientist, I'm an advocate for the coal industry."

However, an attorney with lobbying firm Akin Gump said the DOE's days of attempting to meddle in the power markets to benefit coal are probably over.

"Perry's action was largely seen as a political move in an attempt to perhaps put the administration's thumb on the scale in favor of primarily coal but also nuclear," much as the GOP perceived the Obama administration had done to give an advantage to renewables, said Chip Cannon, a partner in Akin Gump's energy regulation, markets and enforcement practice.

"I think it's fair to say that most people in the industry believe that the administration's or DOE's attempts to intervene into the power markets to support certain types of technologies is probably pretty much behind us now and that we're back to kind of business as usual," he added.

The sector continues to face challenges of a rapidly aging customer base. According to an S&P Global Market Intelligence analysis of U.S. Energy Information Administration data, nearly 70% of the coal delivered in the 12-month period that ended Oct. 31, 2017, went to coal-fired power plants that were at least 38 years old, while about 55.2% of coal deliveries reported to the EIA were delivered to coal plants that are between 38 and 54 years old.

The week also saw Bruce Nilles stepping down from his position as the senior director of the Sierra Club's Beyond Coal campaign; he will be replaced by Mary Anne Hitt.

Fourth-quarter earnings season kicked off this week with Alliance Resource Partners LP reporting adjusted net income of $74.2 million in the quarter, compared with $119.6 million in the prior-year period, and announcing it intends to merge with its general partner, resulting in a single publicly traded entity.

President and CEO Joseph Craft III said Alliance anticipates improved demand from its domestic customers in the first half of 2018 due to recent cold weather in much of the U.S. and plans to increase production and sales volumes by 5%-6% in 2018 in part to meet increased international demand for thermal and metallurgical coal.