GILLETTE — Rumors about the coal industry are common in northeast Wyoming where strip mining provides 5,000 direct jobs and supports about three times that in the mine services sector. But when Arch Coal filed for Chapter 11 bankruptcy in January, Robert Frieze, who works at Arch’s Coal Creek mine, realized that talk of layoffs might be true. Then the number of trains loaded at the company’s Coal Creek mine dropped by half.
Frieze and his partner Megan Fink began preparing.
Then came Black Thursday — March 31. Arch laid off 230 workers at its Black Thunder mine. Peabody Energy announced 235 layoffs at its North Antelope Rochelle Mine on the same day. Frieze survived the cut, as the layoffs didn’t include Coal Creek. But he and Megan still have a sick feeling in their gut.
“Right now we’re just scared, because who is to say if he goes to work tonight and has to come home right away?” Fink said Saturday afternoon as Frieze slept to prepare for another night shift.
For 40 years, Gillette, Campbell County and all of Wyoming have feasted on revenues from mining coal — spending billions of dollars on roads, pipelines, schools and other public facilities, and socking away billions in savings. The corpus of Wyoming’s Permanent Mineral Trust Fund stands at more than $7 billion (bolstered mostly by coal, oil and natural gas). The Wyoming State Treasurer’s Office says it invests a total $19 billion.
But since last week’s layoffs, many families here are asking what’s left for the workers?
Not much. Not directly. There are no state-initiated jobs programs for those who are laid off in the energy sector. Unlike Alaska, there is no mineral royalty payment to Wyoming citizens. Instead, the state spends millions on infrastructure, K-12 and secondary education, various economic development strategies and on promoting the coal, oil and gas industries themselves.
“We’re on our own out here,” Peabody miner Glen Bertrand said.
Bertrand, 52, survived last week’s layoffs, but said the future remains uncertain.
“It’s been stressful to say the least,” the Wright resident said Friday while nursing a bum knee at the Wright Recreation Center. “I mean, I have friends out there that don’t have a job right now. It’s pretty tough.
“What are these guys going to do?” Bertrand continued. “Hopefully they get some help, somebody comes through and gives them some help, get some politicians doing something because they’re not doing nothing for us.”
Arch Coal and Alpha Natural Resources have filed Chapter 11 bankruptcy. Many experts expect Peabody Energy will follow shortly.
Last week’s mine layoffs have rattled the foundations of Gillette, Wright, Douglas and other communities in northeast Wyoming, which were already suffering from major losses in oil and gas jobs. While local leaders proclaim resilience, there’s also a lot of fear and anger.
For coal miners in particular, the fear is of losing perhaps the best-paying job they’ve ever had. Wyoming coal miners, on average, gross $82,000, according to state figures. Miners also face the possibility of leaving towns where they have lived what some might consider a charmed blue-collar life — excellent schools, excellent (some say extravagant) public facilities and a real sense of community where neighbors, in one way or another, all rely on the energy industry.
Anger is primarily directed at President Barack Obama and what is seen as a “war on coal” in the form of mounting federal regulations on the industry — from shovel to smokestack. Many residents here believe coal is under attack for political reasons, and they take it as an affront to the region’s mining culture and the steady supply of energy it’s produced for the nation.
“The fact now is President Obama — he has taken the steps to do what he thinks is right,” but his energy policies are foolish, Fink said. “America was built on hard work. Coal mining — any sort of mining — is hard work. Natural gas, yeah, it’s cheap. It’s not going to last forever. Coal is going to be there.”
Arch Coal spokeswoman Logan Bonacorsi said the severance package offered to those who were laid off provides a week of pay for each year of service, with a minimum of four weeks and a maximum of 26 weeks. Asked whether Arch intends to keep its commitments to retirees through Chapter 11 bankruptcy, Bonacorsi said, “Yes, we are and fully expect to continue to make retiree benefit payments.”
Meantime, miners and their families read reports of mining company executives who have paid themselves handsome bonuses in the midst of bankruptcy filings and layoffs. That the coal companies’ strategic decisions in recent years have contributed to their financial woes is not lost on miners and their families.
“I almost guarantee you right now if Peabody would not have made big bets on metallurgic coal in Australia we wouldn’t be talking about layoffs right now,” said Sean Seems, who left Peabody’s North Antelope Rochelle Mine last year to work at a gold mine in Alaska.
Katie Pearson, 26, and her husband Matt sensed that layoffs were coming. The Wright couple, with a new baby, spent the past few months preparing their finances as best they could and contemplated options. Katie works at the community recreation center in Wright, but her salary alone would not be enough for them to stay if her husband lost his job at the nearby Black Thunder mine.
“We love it here,” she said Friday. “This is home and we’d never voluntarily leave here.”
And so when Matt and Katie learned Thursday that he wasn’t caught in Arch’s layoffs there was an overwhelming sense of relief — and sorrow. Many friends and mining colleagues who live in Wright were not so fortunate. The future is still uncertain for the couple, too. They expect more layoffs. They are sure to see close friends in their small community pick up and leave for places and futures unknown.
“It feels helpless,” Katie Pearson said.
Glen Bertrand, the North Antelope Rochelle miner who survived last week’s layoffs, said he’s got a way to go before retirement.
“I’m 52 years old, I’m crippled, I just got my knee fixed. I’m scared, what am I going to do?”
He said that like his neighbors, he’s tried to prepare financially for whatever the future holds.
“You don’t know what’s going on, and I honestly didn’t know this would happen this fast and be this drastic,” he said. “But it hit hard.”
Fink said she tried to lower expectations for her children around Christmas. “There’s no overtime,” she told them when they asked for presents like Beats headphones. She’s clipping coupons, and the couple made extra efforts to pay off a vehicle to avoid debt.
Still, she and Frieze feel fortunate. They rent a nice home for a decent price, and there’s always the family farm back in Montana, where her father — who works in precious metal mining — has been through tough times as well.
Still, “if we go back home there is no making money like he [Frieze] does down here,” Fink said.
Sean Seems, who left Peabody’s North Antelope Rochelle Mine last year, said he and his wife left for reasons other than possible layoffs. But, friends were already telling him last year that a change might not be a bad idea.
“It’s always been budget cuts and budget cuts,” Seems said of North Antelope Rochelle, one of the largest coal mines in the world. “Pretty much from 2008 until now there’s always been cuts.”
He said he and his wife have noticed a higher cost of living in Alaska, but they mostly moved there for the opportunity to enjoy the outdoors. “I don’t think I had a premonition about it [layoffs], but other people did. I have had a lot of [friends] asking about jobs up here.”
Gov. Mead deployed teams from Wyoming Workforce Services, Department of Insurance, the Wyoming Business Council and other agencies to Gillette, Douglas and Casper immediately following news of last week’s layoffs. State employees met with recently laid off miners in coordination with Arch and Peabody meetings as they went over terms of severance. But local workforce development offices saw very few walk-ins during extended hours Friday and Saturday.
In a press conference hours after news of the layoffs Thursday, Mead acknowledged coal miners’ contributions to the local and state economies and promised to continue supporting the industry. That includes continuing to push the administration’s “record number of lawsuits” against federal regulations.
“To the miners out there, both myself, the congressional delegation, the Legislature, the people of Wyoming, have done what we think is right in trying to support the mining industry, but we understand it is little comfort to all of you today,” he said.
Sweeping cuts in the 2-year budget bill Mead signed into law last month include a $732,539 cut to the Department of Workforce Services, which agency officials told lawmakers would result in diminished services throughout local branches.
“It’s not going to help, let’s put it that way,” said Mike Griffin, deputy administrator for Workforce Services’ employment and training division.
Agency officials say they are deciding how to implement the budget cut while still trying to serve those who are exiting oil, gas and coal jobs. “We are moving into the construction season,” Griffin said. “We’re seeing if we can make that transition with the skills they already have and see if they can get right back to something else.”
President Obama’s POWER Initiative providing $65.8 million to communities impacted by the declining coal industry is regarded as a program aimed at Appalachian communities, where underground and mountaintop mining has contracted significantly over the past 10 years. But the Wyoming Business Council and Energy Capital Economic Development in northeast Wyoming are considering applying to the program. The program aims to aid efforts in workforce training and developing industries that might be sustainable in various communities.
“We’re actually in the midst of developing some projects,” said Dave Spencer, program manager for WBC’s northeast division. “There are two counties — Campbell and Sheridan — that qualify, and we’re also looking at it on a regional basis. I would think types of projects to look at are restructuring workforce retraining, advanced manufacturing and value-added activities, or research in new industries. But you don’t do that overnight. It’s not like a public works project to put a lot of people to work.”
The USDA Rural Development office in Casper is also looking into an application for a federal loan that would be aimed at aiding communities hit by the energy downturn.
Doubling down on coal
Gov. Mead often says he is doubling down on coal — a sentiment generally shared by his predecessors and the Wyoming Legislature.
The state’s investments in the coal industry during the past 10 years included $41 million in state dollars that attracted a total $84 million for research in coal technologies at the University of Wyoming. The state has committed $15 million for the Integrated Test Center, which will be built and operated at the Dry Fork coal power plant north of Gillette in partnership with Basin Electric Power Cooperative, Tri-State Generation & Transmission and other partners.
Another $100,000 is available to the Mead administration to promote or litigate on behalf of coal ports in hopes that Powder River Basin coal might gain traction in the international market. The Wyoming Infrastructure Authority is also authorized to provide up to $1 billion in bonding for a coal facility outside the state’s borders. Those funds would come from investors, not the state of Wyoming.
Wyoming once set aside $50 million for the High Plains Gasification center in partnership with General Electric, but GE pulled out of the project, and Wyoming reallocated those dollars.
For the past two years, Gov. Mead and legislators have discussed a sprawling industrial complex modeled after the Heartland Complex in Alberta, Canada. Officials have an eye toward southwest Wyoming as a potential location for its pipeline, railway, transmission line and interstate corridors. They say the idea is to take waste streams — such as carbon dioxide and produced water, from the region’s coal and trona mines, electric generation plants and natural gas fields — and convert them to value-added products.
However, a policy advisor to Gov. Mead has said the idea was put on hold last year because of the energy downturn.
Cracks in the coal bedrock
Wyoming lost more than 5,000 jobs last year, most of them in energy-producing regions.
The biggest job loss in Campbell County from third quarter 2014 to third quarter 2015 was in oil and gas, which shed 750 jobs compared to 115 direct mining jobs during the same period, according to state senior economist David Bullard. However, those losses in mining jobs — now at 580 — may be of more concern. Oil and gas jobs are like icing on Campbell County’s cake — sometimes it’s thick and sometimes it is thin. Mining, however, has been an economic stabilizer that has helped service companies survive and even diversify in drilling downturns.
It’s going to get worse before it gets better, Bullard said just days before the Arch and Peabody layoffs. “I will expect that unemployment will continue to increase probably in Campbell County and at the state level as well.”
Unemployment is decreasing in every state surrounding Wyoming and throughout much of the country, which means there’s a strong likelihood for skilled workers moving their families out of state.
“Out migration is bad for Wyoming, but for those people who find a job somewhere else that’s good for them,” Bullard said. He added that Laramie County’s economy is holding out well, and that Casper and Rock Springs seem to be doing better than other energy producing regions in the state.
Campbell County’s resilience is little consolation in northeast Wyoming where the sting of the mining industry’s retreat is sharpest. Although coal production fluctuates, a return to the days of mining more than 400 million tons per year faces strong headwinds — chiefly natural gas.
“It’s important to put the blame where it belongs,” University of Wyoming economist Rob Godby said. “If a war on coal was declared, it was by natural gas, quietly in 2008.”
The proliferation of hydraulic fracturing across the country created a glut of natural gas that experts say promises to endure, and keep natural gas prices low for years to come. Godby said the federal regulation that was the most immediate threat to the coal industry was the Mercury and Air Toxics Standards, which was stayed by courts last year. But that didn’t stop utilities from retiring old coal power units that would have been expensive to upgrade to the new MATS standards.
Although utilities continue to retire old coal plants and shift to natural gas, the domestic natural gas glut remains and domestic natural gas development stands ready to crank open the spigot when needed.
“We’re potentially seeing a structural change in the coal market,” Godby said. Natural gas prices are not likely to spike like they did in the 1990s, because the new dynamic of fracking and shale gas is poised to keep America flush in natural gas. “It’s not like we’re going to run out of it,” Godby said.
“If we’re serious about climate change, any return to 400 million tons of coal [annually] would be short-lived,” Godby added.
He said in the past year, Wyoming coal producers were reluctant to cut back production, not wanting to lose market share. But an extremely warm winter left utilities with flush stockpiles of coal — that, along with bankruptcy filings, is forcing Wyoming mines to cut back on production.
“Something had to give,” Godby said.
Still Godby says he doesn’t expect Wyoming coal is doomed to crash. The state will continue to churn out large volumes. He said a full recovery to more than 400 million tons per year will be a challenge, however.
“Wind [energy] is competitive with coal now, and coal is only going to get more expensive to produce.”
And while many residents and elected leaders in Gillette believe coal’s woes might be turned around with a pro-coal candidate in the White House come 2017, some experts say that the forces against the industry even include geology.
The Powder River Basin’s large strip mines are profitable at scale, but as they chase coal seams deeper and deeper, and the cost of production increases, notes U.S. Geological Survey coal geologist Jon Haacke.