Under the right circumstances, carbon under pressure produces diamonds. But the intense pressure from multiple fronts now squeezing Powder River Basin coal is crushing the industry.
Already struggling with weakening demand for U.S. coal, the nation’s largest coal-producing region also has been hit hard by the COVID-19 pandemic with historically bad results.
Through the first eight months of 2020, PRB production is nearly 25% below this time last year and hundreds of high-paying jobs have been lost.
While the last four months of the year may pick up some, it won’t be enough to salvage a 12-month production cycle that could see the basin produce less than 200 million tons of coal for the first time in three decades. It’s also likely more layoffs are on the way.
‘It could be even worse’
Through three weeks of August, the federal Energy Information Association shows coal production in Wyoming, mostly from the PRB in Campbell County, at less than 130 million tons. At the same time last year, it was 177 million, reflecting a 27% drop.
“Even if we were to match last year’s total for the rest of the year, we’d be looking at under 230 million tons from the Powder River Basin, which is still a lot less than the 266 million in 2019,” said Rob Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming College of Business.
That’s not likely, however, as demand for thermal coal continues to lag, pressured by continued low natural gas prices and the pandemic, which has caused a significant reduction in electricity demand, he said.
“The fact is, we’re not going to see coal exceeding what it did last year for the remainder of the year,” Godby said. “That’s just too much to ask for.”
What he calls a “best-case scenario” for Wyoming coal for the rest of the year is to maintain a pace that’s about 25% behind. It’s a significant improvement from the start of the pandemic when much of the nation was shut down.
“The rate we’re producing right now in the Powder River Basin, it’s looking like coming in under 200 million tons,” Godby said. “It’s pretty sobering.
“The only good news is it could be even worse. At one point, we were running 30% to 40% behind some weeks. Given that we’ve had weeks where we were 40% below last year’s production, that’s why we might think that as this year goes on, more layoffs are potentially likely.”
That could put the PRB on par with the bust of 2016, when local mines lost 851 jobs, or about 15% of the workforce. Production that year was down about 77 million tons, or 21%.
So far in 2020, the basin is down 568 jobs, or a little more than 12% of the workforce. That includes 80 furloughed workers at Navajo Transitional Energy Co.’s Antelope mine south of Wright who where laid off last week.
The numbers say more layoffs are likely to come, Godby said.
“You look at what’s going on in the national coal market, and coal’s never had a year like this,” he said. “It’s going to be the worst year the Powder River Basin has ever seen in terms of production decline.
“The question is how large of a production decline it’s going to be. We still have four more months of this year to go.”
Anyone hoping for coal to rebound to the point it’s a larger piece of the nation’s overall energy pie only has to look at what the producers are doing, Godby said.
Peabody Energy Corp. recently wrote down the value of its flagship North Antelope Rochelle mine near Wright by $1.42 billion.
“That was an admission coal is not going to come raging back,” Godby said. “Any argument that coal is going to come bouncing back should’ve been out of people’s minds when NARM took that reduction in value on that asset.”
The COVID effect
As it has for many industries, the coronavirus pandemic has greatly impacted coal, which already was struggling, said Campbell County Commissioner Rusty Bell.
While PRB coal isn’t likely to ever to reach the 400 million-ton level of production it had from 2006-2011, even a return to pre-pandemic levels would be welcome at this point, he said.
“Everybody understands that in the energy market right now we need to get the country and the world back open again so we can get people using energy again,” Bell said.
A year from now, the PRB could be in a much better place if the nation can get a handle on the virus and open the economy to the point where energy is being consumed at higher levels, he said.
“Hopefully, a year from now we’re a half a year away from the COVID issue and the nation’s back open and we see where that levels off,” Bell said. “I don’t think anybody really knows where that is, though.”
He also said coal is a snapshot of a larger picture for Campbell County, which also has seen job losses in oil, gas and support businesses.
Layoffs are “probably much, much higher with coal, oil and gas and when you get to the service industries as well,” he said.
Emergence of renewables
Along with natural gas and COVID-19, coal is being squeezed out by the accelerated emergence of renewable sources of energy like wind and solar generation.
In April, renewables out-produced coal for electricity generation in the United States every day of the month. In May, they beat coal on 28 of 31 days.
Less than a decade ago, coal accounted for 50% of the nation’s electricity generation. Now it’s about 17%, a plunge nobody saw coming as quickly as it has, said Travis Deti, executive director for the Wyoming Mining Association.
“The government-subsidized build-out of renewables have taken the market share from the coal industry,” he said.
Producers are at a breaking point, Deti said, adding that the main reason the loss of jobs hasn’t kept pace with the drop in production is because cutting people is a last resort for most companies.
“Every one of those operators are doing everything they can to keep those jobs and keep people employed,” Deti said. “But production drives employment and that’s just a tough thing to deal with.”
As long as the pandemic continues to stifle the economy, the coal industry won’t find much relief, he said.
“The underlying gorilla in the room right now is we’ve got to open up the economy, and opening it up nationwide and getting people using electricity again,” Deti said. “But no one knows when that’s going to happen.”
Renewables have been built out to the point that they have a strong foothold as a provider of power to the national grid, Godby said. Along with the continuing retirements of coal-fired generation, it doesn’t look good for coal to regain its market share.
“Renewables have been added to the grid and this has been one of their best years, if not their best year,” he said. “What that means is once those renewables are on the grid, less coal is going to be needed.
“As long as we have natural gas prices as low as they are, that’s not going to relieve the pressure.”
While renewables may be growing, one only has to look west to see that they can’t handle the level of power generation to replace coal, Bell said.
This summer, parts of California have experienced power blackouts and rolling blackouts and brownouts because its electricity supplies were taxed. Because of laws the state has to limit coal-produced electricity, millions of people have intermittently been out of power.
“I think that’s an interesting spot to be in where we don’t turn the power on because we don’t want to use that (coal) source of energy,” Bell said. “I don’t think at this point anybody’s just going to write off coal.”
Whenever that time comes, people shouldn’t expect coal to rebound anywhere close to where it’s been in the past. Years of low natural gas prices and COVID-19 have pushed its transition into the fast lane, Godby said.
“Right now, the level of coal production is what most of us expected we’d be at 10 years from now,” he said. “It’s basically been accelerated a decade.
“With the unprecedented low levels of gas prices and the expansion of renewables, it’s come much sooner and has hurt much more than most of us could’ve thought would happen.”
The real dilemma for Wyoming and the Powder River Basin is how to move beyond a dependence on coal and oil revenues, Godby said. It’s a question much easier to ask than answer.
It’s also shouldn’t be considered a doom-and-gloom scenario. Looking around Wyoming, the massive impact coal has had on the Cowboy State is evident and continues to pay off.
“Every new school in the state was pretty much built with coal money,” Godby said. “Every school kid in the state can thank coal for the quality of education they’re still getting.
“The coal sector has a lot to be proud of, but as with everything else in life … the sun rises and the sun sets. We should be thankful and grateful for the benefit fossil fuels have brought us, but the unfortunate thing is we’re not going to bring those times back.”
Bell agreed, saying that the nearly $2 billion coal has contributed to public education over the past decade is something to be thankful for.
“For all of Wyoming, look at the facilities coal’s built,” he said.
An immediate impact of the pace of coal’s decline is the human toll, Godby said.
“The unfortunate reality is it looks like those stable, well-paying jobs that are the cornerstone of the Powder River Basin economy are disappearing much more quickly than expected and forcing communities to transition much more quickly than they thought,” he said.
In the meantime, efforts to diversify the state’s vast carbon resources must continue, Bell said.
“We’re sitting on billions of tons of carbon and the things that are above and below it — like the rare earths — so to say we can’t use that resource in some way is crazy,” he said.
In the end, coal isn’t Wyoming’s greatest asset, Godby said. It’s the tough, hard-working and resilient people who live here.
“Wyoming still has a lot to offer the country and the world,” he said. “It may not look like what we’ve been used to for the last 50 years, but we need to be having those conversations and they can be positive.”
Concrete foundations will soon be poured for the new Kid Clinic after the winning bid was submitted by Powder River Construction, announced Dennis Holmes, associate superintendent for instructional support, at last week’s Campbell County School District Board of Trustees meeting.
Powder River Construction’s bid came in at $1,168,555, which was $61,000 less than the next lowest bid. Holmes described it as a “50-50 venture financially” between the district and Campbell County Health. He described a project timeline that hopes to see the clinic open and seeing patients by May 2021.
Kip Farnum, director of student support services, described the need for a new building as quite dire. The current building, formerly the Hillcrest Elementary location, has been a good one and “got us way longer through this thing than we thought,” Farnum said.
“We desperately needed a new building,” Farnum said. “The building we’re in is on its last leg. The roof is basically ... paper-thin, and one good hailstorm and we would be out of that building. Also the HVAC system is original equipment, so it’s 50 years old. We’ve been stealing parts off of every discarded HVAC system in the county to make that thing go.
“We’re at the end. It has served its purpose. It’s on life support now, and we’ll be pulling the plug soon.”
The new location, situated at 702 S. Kendrick Ave. on a vacant lot next to Twin Spruce Junior High, will allow not only for the services now offered but also for an expansion in the future. The new building, at nearly 4,000 square feet, will be larger than the current space, and according to a press release from Campbell County Health, it will contain five exam rooms, a triage room and five counseling offices.
Misty Robertson, chief nursing officer at Campbell County Health, was excited to see the partnership continue.
“It’s something you just don’t see in every community,” Robertson said. She agreed with Farnum’s assessment and said that the current building is failing. She was excited for a new space that was not simply retrofitted to provide medical services but was actually designed for that purpose from the start.
Farnum said a new building just makes sense for the clinic, which he described as “one of the most successful clinics under the Campbell County Health umbrella.”
He described the clinic’s one primary care provider, Holly Hink, a nurse practitioner, as seeing “record-numbers for us.”
“This month, she’ll come close to seeing 400 kids,” Farnum said.
Marlo Dunham, practice manager at the Kid Clinic, said that visits were down for the hospital’s most-recent fiscal year due to a cyber attack and the influx of COVID-19, but the clinic still saw 3,205 counseling visits and 3,220 medical visits. The year before that had 5,893 counseling visits and 2,996 medical visits.
The clinic will see any child, up to 21 years old, regardless of whether that child is a student in the school district, Farnum said. Medical services include well-child visits, vaccinations, sports physicals, medication management and treatment for pediatric infections like strep throat, ear infections, sinus infections, pneumonia and common colds.
Mental health services are available to kids as young as 4 years old and include treatments for depression, anxiety, substance abuse and family changes and adjustments.
“The staff at the clinic, they are so geared into working with the school district,” Farnum said. “Holly works with all of our school nurses, and our counselors work very closely with the counselors at the Kid Clinic. What that does is allow us to integrate services between the two entities, and gives us a chance to provide a much better standard of care than if kids weren’t involved with the Kid Clinic and the school district, just because we communicate and we can talk and we can work together on interventions.”
Another metric he used to substantiate his assertion of the clinic’s success was the clinic’s low no-show rate, which he said was “negligible.” He attributed that to an impressive partnership between the schools, the clinic and the district’s transportation department.
“The fact that we can transport kids is such an amazing service for kids,” he said. “Especially for our mental health services, we can pick up kids at school, we get consent to transport them from their parents, and we can pick them up and take them to their appointment and bring them back to school.”
It saves parents from having to take time off work to attend the appointments, and it helps ensure the kids attend regularly.
“During the heart of the school year, we’re transporting anywhere from 60-90 kids a week,” Farnum said.
Dunham confirmed that the district’s transportation efforts, which she said transported 60-65% of the clinic’s counseling patients, played a huge role in the clinic’s success. She, too, was optimistic about what a new facility will allow for services going forward.
“I think for us, we’re looking forward to a functional building, one that’s more conducive to the medical process” Dunham said. “We’re excited to get into a place where we can take excellent care of these students.”
The clinic can trace its roots back to 2008, when the district applied for and received a Safe Schools/Healthy Students grant from the U.S. Departments of Education, Health and Human Services and Justice. The $6 million grant lasted five years.
“With that grant, we were able to partner with the hospital, and they provided counselors from their behavioral health service to come in and work with kids with a mental health need,” Farnum said. That lasted about four years.
As part of the grant’s requirements, the district had to provide a plan for continuity of services after the grant ended, which led the district to apply for a school-based health care center grant through Health Resources and Services Administration, Farnum said.
He said the district was doubtful it would win that grant, but surprisingly, it did, which provided the district with about $500,000 to build the facility. The district still needed funding for staffing, and the hospital was willing to work with the district to staff the clinic. The district used another $500,000 grant from the John P. Ellbogen Foundation to fund the services provided by the staff for the first three years, Farnum said.
The Kid Clinic began seeing kids for mental health services in September 2013 and for primary care services in March 2014.
Within the next 90 days, Campbell County will know whether it can move forward in creating a new community college district.
On Tuesday, the Wyoming Community College Commission received a formal and complete application from the Campbell County Commissioners to create a new community college district.
The application requests the new district encompass all of Campbell County as the taxing district and be called the Gillette Community College District.
Now that the Wyoming Community College Commission has received the application, it will conduct a survey to consider the following:
It will have 90 days to make a decision.
“Hopefully, they give us the go-ahead to take it to the next step,” said Josh McGrath, president of the Gillette College Booster Club and a member of a task force created to assist in the creation of a new district.
That next step is the 2021 legislative session. If the district gets the approval of the state Legislature, then it will go before a vote in Campbell County.
Many in the community were frustrated by a lack of communication between the district and Campbell County leading up to the Northern Wyoming Community College District’s June 25 announcement that sports (except for rodeo) and the Energy City Voices would be cut to save money.
Over the ensuing five days, Gillette residents put together a plan to fund sports at Gillette College for the 2020-2021 school year with private money while also working toward a longer-term solution.
They presented the proposal at a July 2 meeting in Sheridan, but the college district board didn’t accept it, partly because it only addressed Gillette College and didn’t include Sheridan College.
After that meeting, the county began looking into creating its own district.
On Aug. 6, the county sent in what it thought was a complete application, which included the commissioners’ resolution supporting the submission of the application, as well as basic information such as the county’s assessed valuation and the number of students enrolled.
The commission advised “that was not going to be sufficient,” said county administrative director Carol Seeger.
The commission wrote and adopted emergency rules and invited the task force to an Aug. 27 workshop with the college commission.
“We visited with them about our intentions, the work we’ve been doing,” Seeger said, adding that they also got to comment on the emergency rules, and “they made a couple of our suggested changes.”
One question on the application asked the county to project 20 years into the future.
“We’re all struggling to figure out where we’ll be in six months,” McGrath said, adding that educators rarely project beyond five years into the future.
“The suggestion was to limit that to 10 (years),” Seeger said.
The county re-submitted the application with additional information, and the commission then considered it complete.
According to Wyoming Statute, the application must first be approved by the Wyoming Community College Commission, followed by the state Legislature, and finally by a majority of Campbell County voters. For the initial approval phase, the WCCC has 90 days to complete a thorough review of the application and formally approve or deny the proposal.
McGrath said some of the questions, such as where would the campus be located, were easy to answer, since “we have a wonderful college currently here.”
The review process requires the commission to consider the complete application, gather comprehensive economic, demographic, and enrollment data, hold a minimum of two public hearings, and carry out an extensive formal survey completed by a third party. Upon completion of these mandated tasks, the WCCC will hold a formal meeting on or at about Nov. 20 to review all documentation associated with the application and resulting studies to issue a final vote and decision.
The commission also is required to hold at least two public hearings. Dates for these hearings have not been scheduled, but they will be advertised at least 14 days in advance.
Under the rules, one hearing will be scheduled in Campbell County and one in an additional county.