Peabody Energy Corp. is touting a global pure-play coal investment strategy, but the pitch includes an expectation for no new significant greenfield development in the U.S. as the company meets customer demands with existing mines and reserves.

Peabody expects the recent decline in coal use and share of electricity generation in the U.S. to slow as gas prices begin to stabilize over the next five years, Peabody wrote in a Feb. 22 presentation to investors. The company still expects about 40 GW of coal-fired power to be retired over the next five years, driving an average decline in demand of 15 million to 20 million tons per year over each of the next five years.

While Peabody believes that its operations are some of the best-positioned to compete with low-cost natural gas, it also said in a presentation outlining its 2018 priorities that it will "likely avoid significant greenfield development" within the United States while managing life extensions for certain Australian projects.

"We believe this is a largely expected position for Peabody, which has 4.7 billion tons of coal reserves, so our aggregate reserve-to-production level is quite healthy at more than 20 years, giving us long life spans with existing mines and infrastructure, as well as good brownfield potential if warranted," said Vic Svec, Peabody's senior vice president for global investor and corporate relations. The presentation noted that Peabody's reserve position requires no new lease by applications for federal coal for nearly a decade.

Other producers may also be hesitant to make significant investments in new thermal coal projects beyond their existing assets in the U.S. as power plant customers continue to retire and the nation's coal fleet ages.

"We may be seeing [Powder River Basin] mines enter a state of terminal decline, where volume growth is not possible on the current seams without massive investment and/or expansion into new reserves," said Steve Piper, director of energy research for S&P Global Market Intelligence. "But as we saw last year, none of the producers seem eager to acquire new leases because they don't have faith the market will be there."

The three top Powder River Basin coal producers recently reported guidance to investors indicating their cumulative production from the Powder River Basin is likely to decline between 1% and 6% in 2018 compared to 2017.

Relatively few new coal mines have opened in the U.S. in recent years, and many of those are mining metallurgical coal.

Grant Quasha, the new CEO of Paringa Resources Ltd., in an interview in summer 2017 touted his company's effort to bring on the first greenfield thermal coal project since the start of the Trump administration. He said the Illinois Basin coal project could capture new market share if gas prices rise toward $4/MMBtu but otherwise would likely take business away from higher-cost coal operations already in place

Averaging multiple electricity generation forecasts, Peabody said coal's share of U.S. generation is expected to fall from about 30% in 2017 to about 27.4% by 2022. It told investors that low-cost coal basins such as the Powder River Basin and the Illinois Basin will be able to continue to compete for the share of a market that one part of the presentation described as in a "slow secular decline" in the face of headwinds from low natural gas prices.

Peabody said its U.S. segment remains a "strong cash generator, offering meaningful returns" as the company takes a cautious approach to new capital investment. It also said its current strategy fits an emphasis on improving margins and returning extra cash to investors.

Peabody is selling the company as a leading global pure-play coal investment with scale and diversity across coal types and mining regions and a diversified global customer base. One slide pointed to IHS Markit data showing total world coal-fueled capacity will increase 15% to 2,389 GW, representing a growth in global coal capacity larger than the entire U.S. coal fleet.

The company is expecting modest overall growth in global coal demand, with increases in Asia offsetting declines in U.S. and Europe. Peabody wrote that Australia, where the company is "very well-positioned," is expected to drive the majority of global seaborne coal supply growth for coal sold both for electricity generation and steelmaking.