Northwest Colorado coal production decreasing
November 18, 2010
The coal industry was once in a time of high optimism, riding a wave of "robust" production levels, Colorado Mining Association President Stuart Sanderson said.
The year was 2004, and the state's coal industry was producing 40 million tons of coal.
"At that point in time, it looked as though we had the potential to hit 50 million tons," he said. "Demand for energy was increasing and the export markets were robust."
But, that didn't last for long.
Now, Sanderson said the opposite is true, and coal production levels are slipping.
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Since 2006, coal production in the state has dropped from 35.4 million tons to 28.5 million tons last year, according to statistics from the Colorado Division of Reclamation, Mining and Safety.
This year's coal production numbers aren't looking much better, Sanderson said.
"The economy, having gone through a period of decline, has had its impact on demand for coal as well as the uncertainty in governmental regulation," he said. "I know that there are operations that have to consider what impacts governmental regulation will have on mine expansions … and there is a fair amount of uncertainty that has slowed growth."
Northwest Colorado's three mines — Colowyo Coal Co., Trapper Mining Co., and Twentymile Coal Co. — have all experienced recent production declines, according to statistics.
Colowyo's coal production levels are down about 2.9 million tons from 2006. In 2009, Colowyo produced 3.4 million tons of coal, down from 6.3 million in 2006.
Through August of this year, Colowyo has mined 1.7 million tons of coal. Last year, through August, the mine produced 2.2 million tons of coal.
Trapper's production levels haven't decreased much, from 2.4 million tons of coal in 2007 to 2.1 million tons last year.
Through August of this year, Trapper has mined 1.4 million tons of coal, which holds steady to production levels through August of last year.
Twentymile coal production levels are down about 700,000 tons from 2006. The Routt County underground mine produced 7.8 million tons in 2009, down from 8.5 million tons of coal in 2006.
Through August, Colorado mines have produced a combined 16.9 million tons of coal, which is down about 3 million tons from the same period last year. Through August of last year, Colorado mines produced 19.9 million tons of coal.
Sanderson said Colorado has also recently fallen out of the top 10 of coal producing states.
Jim Mattern, Trapper president and general manager, said much of the coal industry's production declines come from the economic slump.
"We are still in a recession, and so that is not helping matters at all," he said. "I would guess that (production) would be in the same ball park plus or minus a couple percent from where we were last year."
Although the in-state coal market remains somewhat steady, Sanderson said, Colorado's coal export market to other states fell to 16 million tons in 2009, a decline from recent years.
"That could be any number of factors — like the utilities in the East and Midwest finding that they have the ability to obtain coal from other sources," he said.
But, Sanderson said his "big concern" is the recent passing of Colorado House Bill 10-1365, also known as the Clean Air, Clean Jobs Act, and how the legislation would affect coal production.
Sanderson said Xcel Energy, which owns several coal-fired power plants affected by the bill, estimates the bill could displace up to 4 million tons of coal per year.
The notion that the displaced coal could be resold in export markets "is bogus," Sanderson said.
"That is definitely going to be to the detriment of the industry and the communities that those industries serve," he said of H.B. 10-1365. "But, hopefully we can make some of that up with a higher demand for electricity and coal."
Although he said it was hard to put a timeline or number on it, Mattern believes that as the economy improves, demand for electricity and coal will increase.
Sanderson shared the sentiment, and agreed it would be hard to estimate this year's final production numbers or future state production levels.
"But nationally, I think things are looking a little brighter from where they had been," he said. "The coal producers … have reported a bit stronger demand coming out of the recession."
But, Sanderson said he remained "very guarded" in talking about coal mining's future in Colorado because "our government's policy is so hostile to mining here."
"Particularly through the enactment of House Bill 1365, quite frankly legislators proved that they were willing to bargain away the interests of Colorado rate payers, the interest of the citizens of Northwest Colorado and the coal-producing regions, and to bargain away their obligations to try to promote the economy by the passage of this bill," he said.