Wyoming 2012 coal production slides

Wyoming 2012 coal production slides

Wyoming’s annual coal production may have slipped below 400 million tons for the first time in seven years.

According to U.S. Energy Information Administration (EIA) data, Wyoming was on track to produce approximately 398 million tons in 2012, which would represent a 9 percent slide from 2011 production. (Final production figures for 2012 will be available in a few weeks.)

It’s a serious economic and psychological thumping in a state that had set a new coal production record every year for nearly 20 years. Coal is the second largest source of revenue in Wyoming and contributed $1.13 billion to state and local governments in 2011, according to the Wyoming Mining Association.

The biggest factor behind declining U.S. coal demand is the cheap, flush supply of new domestic natural gas — an obvious alternative for utilities. Particularly public utilities that are required to justify their fuel costs. Plentiful and cheap natural gas — along with an onslaught of tougher federal regulations from the mining stages to the smokestack — are the reasons why coal has gone from supplying 51 percent of America’s base-load electrical capacity to just 43 percent in a matter of seven years, according to EIA.

If declining U.S. demand for coal the new normal, it could spell trouble for Wyoming. There is panic among Wyoming’s top elected officials, and in Campbell County. And you might expect there is panic among Wyoming coal producers. You might expect that declining demand in their core market — U.S. utilities — is nudging the coal industry toward the negotiating table for an American energy and climate policy.

But you would be wrong.

Check back later for full analysis on why Powder River Basin producers aren’t exactly sweating the decline — yet.

— Dustin Bleizeffer is WyoFile editor-in-chief. Reach him at 307-577-6069 or dustin@wyofile.com. Follow Dustin on Twitter @DBleizeffer.

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