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Essential Energy Insights - October 2021


An energy community in flux looks to update its coal and miners for continuity

SNL Image

Cloud Peak Energy Inc.'s Antelope surface coal mine in the Powder River Basin sits in the foreground while a loading tower of Peabody Energy Corp.'s North Antelope Rochelle mine is visible in the distant background. The mines are two of the three largest in the U.S.

Source: Joshua Learn/S&P Global Market Intelligence

The one constant in the energy economy of Campbell County, Wyo., is change.

Despite its own ups and downs, sometimes due to competition from other fossil fuels, coal provides a more stable source of income than other energy industries in this region in the midst of the Powder River Basin.

The market for coal is changing fast, however, and forward-looking people are struggling to keep the commodity relevant in the years to come regardless of the shifting political landscape.

"It's always been boom and bust," said Robert Stodola, the only customer in a brewpub in Gillette, Campbell County's largest city, at around 10 p.m. on a Wednesday night. "You get that fall time when the weather's really nice and neutral everyone's not heating their houses, they're not running their air conditioning, so the power plant's not running as much."

Stodola worked as a contractor for Crown Products and Services at Arch Coal Inc.'s Black Thunder mine south of Gillette, spraying chemicals on top of the coal in trains to prevent dust and stop it from self-igniting. He was laid off March 2016, near the end of a downturn in the industry that saw huge drops in both employment and production.

Stodola was taken on again a few months later when the situation began to improve, but he said Gillette still hasn't fully recovered.

"It's still dropping. Housing's still going down, people are still moving. It really hurt the economy here, that downturn we had," Stodola said.

Changing landscape

Patrick "Rooster" Baumann, senior project manager at Cloud Peak Energy Inc., is no stranger to change. Standing on top of recently exposed coal, the compressed remains of tropical forests from hundreds of thousands of years ago, he says that "climate change is here to stay."

Baumann has worked with Cloud Peak for 23 years, mostly at the massive Antelope mine, a landscape that changes so quickly that he recently got lost trying to find the road accessing an active dragline.

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Patrick "Rooster" Baumann, senior project manager at Cloud Peak Energy Inc., stands in front of a loading tower at the Antelope mine.

Source: Joshua Learn

He was frustrated during the Obama administration, when it seemed that coal was the target of nearly every regulation during the industry's downturn. The change in leadership is going to be beneficial, he said, and Cloud Peak is stabilizing and starting to see some upside despite tough competition from leaner competitors that recently emerged from Chapter 11 bankruptcy.

Any recovery or stabilization will likely benefit Campbell County communities. Stodola said that while the Powder River Basin has other kinds of energy, coal provides the steady income and jobs. "The methane and oil and stuff, those guys punch their holes, they set up their equipment and they're done."

Phil Christopherson, CEO of the Energy Capital Economic Development, a nonprofit group that promotes development in Campbell County, told S&P Global Market Intelligence that the number of jobs provided by other energy industries fluctuates wildly, while coal requires more time and more personnel to extract.

"[Oil and gas companies] come and go. When the market's up they're here, and here in abundance; when the market dies, they leave. Coal companies they come and they stay here."

A new frontier

Stodola said President Donald Trump's plans to revive the coal industry amount to empty promises, and even the small town of Wright, 40 miles from Gillette and surrounded by the three largest coal mines in the U.S., does not seem to invest much in the long-term viability of coal in the area. At a recent public scoping hearing on the proposed expansion of Cloud Peak's Antelope lease, one of the only locals in attendance who did not work for federal agencies was Wright Mayor Ralph Kingan.

Nonetheless, Christopherson sees a future for coal and the jobs it provides by bringing more value to the commodity than merely burning it for energy. Energy Capital Economic Development is planning a Gillette facility that will help entrepreneurs and researchers develop new ways to use local coal in advanced carbon products and test their technologies on Powder River Basin coal.

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A mural in downtown Gillette, Wyo.

Source: Joshua Learn

Finding new uses for coal is only part of the battle to give Gillette a future. The other part is investing in the coal miners themselves, especially the ones who have lost their jobs.

"Technology is changing the workplace. Forty years ago, the coal mines had a whole bunch more people working there than they do now, producing the same amount of coal," Christopherson said.

On Christopherson's desk in Gillette sits "Star Trek" memorabilia — fitting, since a major project that could represent the future of Gillette and coal is linked to an institution aspiring to suborbital space flight.

The XPRIZE Foundation, which funds competitions to spur innovation in categories such as moon landing technology and artificial intelligence, will sponsor the first five finalists of the coal-focused part of its NRG COSIA Carbon challenge at the Wyoming Integrated Test Center.

Described as a "fancy RV park" for carbon capture projects, the center will sit in what is now a dusty parking lot west of town. The lot is large, about a football field in size, next to the Dry Fork Station coal-fired power plant owned by Basin Electric Power Cooperative and Wyoming Municipal Power Agency. A long conveyor belt pulls coal mined from Western Fuels Association Inc.'s Dry Fork mine several hundred yards up into the power plant.

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Construction of the Wyoming Integrated Test Center on Sept. 21. The valve in the foreground is one of five that will plug into carbon capture pilot plants, which will initially come from the five finalists of the NRG COSIA Carbon XPRIZE. The carbon will be generated by the Dry Fork Station behind.

Source: Joshua Learn

The only way to tell the plant is generating electricity is a low, throbbing background hum the smoke stack emits no visible plume.

"The plant's running at 100% capacity right now," said Jason Begger, the executive director of the Wyoming Infrastructure Authority managing the precommissioning phase of the Wyoming Integrated Test Center project.

The Dry Fork plant, completed in 2011, represented some of the most cutting-edge technology in emissions reduction when it was built, but it still emits carbon dioxide. Begger aims to put those emissions to good use at the center, currently little more than a pipe being built into the side of the plant at a point where it will siphon off CO2.

Christopherson worries that without these kinds of efforts to diversify Gillette's economy and commodity use, it will suffer the same fate as Jeffrey City, a uranium mine town that boomed during the 1960s then collapsed when the market for that commodity dried up.

"If [the coal market] goes away and we don't do anything to create jobs and diversify our economy, Gillette as a community disappears," he said.