In the afterglow of the holiday season, following an increase in coal production at the end of the year, an industry knocked to its knees in 2016 is showing budding optimism.
The story of the year for coal was bankruptcy: falling in and climbing out.
Three of the nation’s largest coal producers were operating merrily in Wyoming’s Powder River Basin when coal took a turn for the worse, caught up in a street scrap where low prices, competition with cheap natural gas and tremendous debt each pummeled the industry.
Worries about an aging fleet of coal-fired power plants and impending federal regulations on greenhouse gas emissions were buffeting the coal industry as well.
Alpha Natural Resources actually began 2016 in bankruptcy. It was the first company to file for Chapter 11 protection, in August of last year.
In early 2016, Arch Coal, which owns the Black Thunder mine near Wright, and Peabody Energy, an international coal giant that operates the North Antelope Rochelle mine south of Gillette, followed Alpha’s lead. The two companies laid off hundreds of coal miners from their ranks in the spring.
The heaviest blow came on the morning of March 31, when 235 miners for Peabody and 230 for Arch were let go, gutting the strength of coal communities like Gillette and Wright.
Two of the three companies have emerged from bankruptcy so far.
Alpha exited bankruptcy in July, split into two companies. Alpha retained much of the company’s eastern mining operations, while a newly formed company, Contura Energy, acquired the Belle Ayr and Eagle Butte mines in Campbell County.
As part of its restructuring plan, Alpha promised to replace its controversial self-bonds — money for cleanup backed up by a company’s financial strength. The move, which came after significant federal pressure, appeased environmentalists in Wyoming. They hoped Alpha’s plan would set a precedent for other bankrupt coal producers.
Arch came next, emerging in October. The company also promised to replace its self-bonds. Peabody is set to submit its bankruptcy exit strategy to the courts by January, but has yet to announce how its bonding obligations in Wyoming may change.
But despite companies getting back on their feet, much of 2016 saw money pouring out of the companies’ pockets.
The turnaround for coal was its third-quarter production numbers. From summer to fall, coal production in the entire Powder River Basin suddenly almost doubled.
The numbers still fell short of 2015, when coal producers dug almost 100 million tons of coal from state soil.
Many doubt that coal will rise to its former heights. Though the debt accrued by companies like Alpha and Peabody is greatly reduced, the competition of natural gas, the decline in coal-fired power plants and the stigma of greenhouse gas emissions still threaten the coal industry.
Those threats led many in Wyoming coal country to pledge their votes to Donald Trump in November. Trump had promised to unleash the nation’s energy and championed clean coal at his rallies before the election.
Some companies fared better than the big three.
Gillette-based coal producer Cloud Peak Energy started the year free of the burdensome debts of its competitors.
The company announced late in the year that it would return to exporting coal to Asian markets.
The trend of increased coal shipments industrywide is expected to continue as the nation sinks into a cold winter. Natural gas prices, coal’s menace, have already begun to rise.
Though the future of regulations, politics and production are uncertain, the end of 2016 has been far better than the beginning for coal.