Wyoming may be one of the richest states in the Union but its main source of wealth, coal production, faces mounting environmental, economic and logistical challenges. Shrinking and extremely competitive markets for thermal coal, Wyoming’s economic boom, have made it necessary for Wyoming’s government to set up and fund a program, Economic Diversity Options Needed for Wyoming or ENDOW, that will research and develop strategies to keep Wyoming’s income and budget stable. Mineral resources, especially coal, will continue to play a role in Wyoming’s economy but to what degree remains uncertain.
“I wouldn’t understate coal’s value to Wyoming,” UW Center for Energy Economics & Public Policy Director, Professor Rob Godby, said.
Wyoming has access to the cheapest coal in the nation for electricity but the market flooded with natural gas which substitutes for coal in electricity production. Coal met 50 percent of that power demand a decade ago. Now coal accounts for approximately 30 percent of electricity production, mirroring the high production of natural gas, Godby said.
The Wyoming Mining Association advocates on behalf of the entire Wyoming mining industry and places special emphasis on creating a coherent understanding of Wyoming’s dynamic relationship to coal production.
“The number one use for our coal is power production so what we really need are new coal fired power plants,” Wyoming Mining Association Executive Director, Travis Deti, said. “However, we probably won’t get back to where production was a decade ago anytime soon, maybe never in my opinion.”
ENDOW Support Staff member and Director of Economic Diversification Strategy and Initiatives for the Office of Governor Mead, Jerimiah Rieman, said, “Our data points out opportunities in numerous industrial sectors including financial, insurance, real estate, manufacturing and healthcare. Our biggest focus is on retaining our workforce which means an appropriate educational system that will prepare our young residents to be our greatest resource going forward.”
The coal industry is taking measures to stay legitimate in an increasingly difficult market. Emergent technologies and an evolving marketplace have created graphene production, captured carbon dioxide and prospective use in “ultra-critical” high-efficiency coal/steam power plants under development in Japan.
“The U.S. is primed to build and complete massive natural gas terminals,” Godby said. “The logistics of getting Wyoming coal to Asian markets rests on Canadian export terminals limited to 20 million tons of coal but typically less.”
Twenty million tons of coal per year is small compared to the 460 million tons Wyoming produced in 2008. Proposed but stalled Millennium Bulk Export Terminal and Gateway Pacific Terminal would have allowed only just around 100 million more tons to ship but have encountered political, environmental and economic roadblocks.
“We do look for partnerships with UW for some studies on emergent coal uses,” Deti said. “Big kudos to Governor Mead for embracing these realities and the need for innovation in the mining industry.”
Specialization and diversification are common themes among all perspectives discussing the legitimacy of coal use and production. Narrowed focus in market strategy inherently adds some new risks while eliminating others.
“The cost and risks associated with coal are really prohibitive when Arch Coal and two of the other largest coal companies go bankrupt in the last three years,” Godby said. “It’s not a matter of production but rather these companies chose to make huge investments in metallurgic coal, the Chinese market and on Chinese infrastructure but in the end the coal came from other markets.”
These investments in export markets can be risky.
“Betting on export markets is risky for American markets,” Godby said. “If we committed to expensive technologies for the recovery and transport of natural gas we would be dominant.”
Wyoming is aware of the economic problem ahead due to the changing coal markets. However, Wyoming’s leaders, executive and legislative, are taking economic diversification and preparedness to the next step through ENDOW.
ENDOW is a program created by Governor Matt Mead and the Wyoming Legislature focusing on new emerging industries that can support Wyoming and a job market to retain Wyoming’s disappearing graduates and young highly-skilled workers.
“Right now, you have a situation where 60 percent of 18 to 25 year olds with a high school diploma or greater won’t be working in Wyoming 10 years from now,” Rieman said. “We’re just shipping out our most valuable resource, our youth, without any return.”