All aboard the coal train
Very little is certain for ol’ King Coal these days. The numbers weren’t pretty last year. Coal production was down almost 8 percent in 2009, and consumption fell even further. Environmentalists are still fighting new coal-fired power plants tooth and nail—and winning. And the future of federal carbon regulation, which could have major implications for the industry, has gained little clarity under the Obama administration.
Which is all to say it’s a risky time to invest in coal. Nevertheless, Montana is making moves to do just that. Amid much controversy, the state Land Board showed its commitment to leasing the Otter Creek coal reserves last month by lowering its asking price from 25 cents per ton to 15 cents after receiving no bids. And in the past few weeks, the Associated Press has reported on a number of new mines “being eyed” by the industry.
At least one company has indicated its intentions are more than speculative:
Nick Shakesby, chief operating officer at Maple Carpenter Creek, said Monday that a new mine could be running by 2014, at a site the company controls about 50 miles northeast of Billings.
"We’re not interested in sitting on it. We’re interested in developing it and putting in a mine," he added. "We’re marketing it offshore — Asia and India."
Montana sits on the largest coal deposits in the nation, but it's not the largest producer. That honor goes to Wyoming, which unearths more than 400 million tons of coal each year. Even in Wyoming, though, the future of coal is somewhat up in the air. Production in the state declined by about 7 percent last year, the first slump in years. Adding to coal's troubles, "industry leaders say there are too many political uncertainties afoot to have much confidence in a stable future," according to the Casper Star-Tribune.
So why is Montana betting on coal? The AP explains it this way: "As production tapers off for many Appalachian mines, [Evan Barrett, Schweitzer's chief of economic development], said the industry is looking for new sources of similar high-quality fuel. And the Bearcreek and Bridger-Fromberg coal fits the bill." Those are both projects that Montana Coal Ventures is looking into, though it hasn't yet applied for any permits.
Whether they'll follow through remains to be seen. After all, the reasons Montana is still sitting on its massive coal reserves haven't changed. Opponents say mining most Montana coal is economically infeasible. There's no transportation infrastructure to take Otter Creek coal to market, for instance. The only railroad operating elsewhere in the state is Burlington Northern Santa Fe, which takes advantage of its monopoly by charging particularly high shipping rates, according to the Montana Environmental Information Center. The center also argues that the geology in much of Montana makes accessing coal tricky and expensive.
Bud Clinch, executive director of the Montana Coal Council, told the AP a lot of coal companies "kick the tires" in Montana, but few throw down the cash it takes to start digging.