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Production at Murray coal mines evens out after sharp drop in Q1

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Essential Energy Insights - January 2021


Production at Murray coal mines evens out after sharp drop in Q1

Afterfalling nearly 30% fromthe previous year during the first quarter of this year, production at mines ownedby Ohio-based coal producer MurrayEnergy Corp. flattened out in the second quarter, slipping just 5.2%from last year and less than a percent from the previous period.

Duringthe second quarter of 2016, Murray Energy mines produced 11.1 million tons of coal,down from 11.7 million tons in the year-ago period and 11.2 million tons in thefirst quarter of the year.

According to data compiled by the U.S. Mine Safety and HealthAdministration, output at Murray mines not jointly owned with Foresight Energy LP remained virtually flat from the firstquarter of this year overall, though certain individual mines saw sharp changesquarter to quarter and year to year.

Companyspokesman Gary Broadbent explained the slight decline as a result of "schedulingchanges which reflect the total destruction of the United States coal industry,as caused by the policies of the Obama Administration and the increased use of naturalgas to generate electricity."

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The largest increases in production over last year were seenat the company's Lila Canyon mine, climbing 477% over 2015, and its Monongalia Countyfacility, growing by 211%.

Broadbent said both increases in production were a result ofthe mines not being operational during the first half of 2015.

Located in the Uinta Basin, the Lila Canyon mine saw its sharpincrease in output as company CEO and founder, Robert Murray, an end to westbound productionin the basin by 2030. The basin is made up of facilities in Utah and Colorado.

In early June, Murray told S&P Global Market Intelligencethat an earlier prediction he made about the basin's future was becoming a realityfar quicker than he expected.

"UintaBasin coal going west and power from coal in Utah going west is going to be totallyeliminated in time so that's why I said five years ago that the Uinta Basin wouldbe destroyed," Murray said, adding that Colorado wasn't doing much better."I see a rapid decline in the Uinta Basin."

From the first quarter of this year, Murray witnessed growthin output at a number of its Northern Appalachian and Illinois Basin mines, withthe largest percentage increase seen at its New Future facility. Production at themine climbed 79.7% from the first quarter, though it dropped by a little over 50%from the same period last year.

Production at Murray's Powhatan No. 6 mine fell 11.3% from theyear-ago period and 17.1% from the previous quarter, but is expected to see a muchsharper decline in the months ahead. In May, Murray announced that it will wrap up underground coal mining productionat the mine in November 2016. The facility was slated to close this month, but closurewas extended for a few months, pushing back a series of likely staff transfers andlayoffs.

Another one of the company's mines will also see a sharp in the months ahead at itsNew Era facility.

Production at the mine fell 15.6% from the same quarter in 2015and nearly 50% from the previous period, but is scheduled to cease operations inOctober, "on completion of mining in the current longwall panel."

Even as it plans for mine closures and the of thousands of layoffs in themonths ahead, Murray does have some intention of expanding its production reach.Earlier this month, Murray told S&P Global Market Intelligence that it filed a permit applicationwith the West Virginia Department of Environmental Protection to add about 7,200acres of coal reserves to the Marion County coal mine in northern West Virginia.

The Marion County mine produced 783,381 tons in the second quarterof this year, amounting to a 54.6% drop from the year-ago period and a 37.6% increaseover the first quarter of 2016.