Coal advocates look forward to seeing the federal coal lease moratorium lifted under the incoming administration of President-elect Donald Trump, but applications might not come pouring in if action is taken.
"We're certainly hopeful that that can be done as a day-one action," Travis Deti, the executive director of the Wyoming Mining Association, told S&P Global Market Intelligence. However, he said, "I don't think anybody will move on that immediately."
Deti said this is one reason why the moratorium was not necessary, even if the U.S. Bureau of Land Management was going to conduct a review of the federal leasing program. If Trump lifts the moratorium, however, Deti believes it will give Wyoming coal producers more certainty moving forward.
"I think it helps everyone. When the administration put the moratorium into place, it injected a great deal of uncertainty," he said.
Coal-friendly politicians have been vocal in their opposition to the moratorium over the past year, but a Peabody Energy Corp. spokesperson said the company still had 20 years of coal production in the Powder River Basin. Coal opponents have argued that the bevy of leases held ensures the moratorium has little impact on current and planned production.
"I couldn't see a financial reason why any one of the companies that are involved out there would have a motivation to move immediately," Tom Sanzillo, the director of finance at the Institute for Energy Economics and Financial Analysis, told S&P Global Market Intelligence.
He said the only reason to do so would likely be psychological, since the industry's profit margins are too low right now for anyone to think about investing in acquiring new federal coal leases. He said coal companies should see the moratorium as a benefit.
"If you had a moratorium and you restricted supply for a while, it's not a bad signal for the market," he said.
Deti said one of the companies that might stand to immediately benefit from the lifting of the moratorium is PacifiCorp, which is looking to expand the lease around its Bridger mine in Wyoming.
David Eskelsen, a spokesperson for Pacificorp, told S&P Global Market Intelligence that the company had applied through the BLM for an expanded lease adjacent to the Bridger mine under an emergency provision exception to the moratorium rather than waiting to see if it is lifted.
"It secures a fuel resource for the company's customers," he said. "It would be important to make sure that the power plant could continue to operate for its projected useful life."
Eskelsen said he does not know where the application for the planned expansion stands, and he said the company would not speculate on whether the lifting of the moratorium would ease things along.
The Bridger mine produced 851,212 tons of coal in the third quarter of 2016, according to the U.S. Mine Safety and Health Administration.
Logan Bonacorsi, spokesperson for Arch Coal Inc., told S&P Global Market Intelligence that the leasing program should continue under the "same careful and rigorous regulatory oversight procedures as in the past."
"The leasing of coal on federal lands has generated tremendous value for the American people and is performed in an environmentally sensitive manner and under careful and rigorous regulatory oversight," she said.
Bonacorsi said Arch had 1.2 billion tons leased at its Black Thunder mine as of the end of 2015 in the Powder River Basin and is mining about 70 million to 80 million tons a year there. "Given those facts, we can continue to mine at current production levels for a number of years to come," she said, but added that the company and other producers will need to add reserves over time.