Powder River Basin coal production at historic low in 2019

GILLETTE — With two of the nation’s largest coal mines shut down for nearly four months last year, it wasn’t a revelation that overall production at Wyoming’s 12 Powder River Basin mines was down 8.3% in 2019.

What was more eye-opening was a double-digit drop in production seen in the fourth quarter of 2019 compared to 2018 when all the mines were operating again.

According to numbers released Monday by the federal Mine Safety and Health Administration, production from the PRB mines located mostly in Campbell County dropped to a historic low in 2019 to 269.2 million tons of thermal coal. It’s only the fourth time since 1998 that production was below 300 millions tons and is the lowest in more than two decades.

The Blackjewel effect

The MSHA report also is the first look at the first quarter of operation for Eagle Specialty Materials, which bought the Eagle Butte and Belle Ayr mines from Contura Energy and a bankrupt Blackjewel LLC in October.

Prior to being abruptly shut down by Blackjewel on July 1, the day the company filed for bankruptcy, Eagle Butte and Belle Ayr were the nation’s fourth- and sixth-best producing mines in the nation, combining to dig 35.6 million tons of coal in 2019.

The mines were down nearly 39% on the year, including the shutdown where the mines produced a fraction of what they would during normal conditions, with a combined production of about 21.8 million tons. The MSHA report also shows that even while the mines are operating again, they’re producing at a much lower pace than a year prior.

In the fourth quarter of 2019, the mines produced a combined 4.2 million tons of coal, more than 57% less than the 9.9 million tons in 2018.

The numbers also for the first time give an idea of how many of the 580 employees who were locked out for months were eventually called back to work or had their positions filled in October when ESM took over.

At the end of 2019, Eagle Butte is at 210 workers and Belle Ayr at 223. The combined 443 employees are 137 fewer than when the July 1 lockout happened, or a decline of about 24%.

From the top down

Along with the first look at ESM’s operations, the basin’s largest coal producers also show a significant decline in the fourth quarter of 2019 and for the year.

Peabody Energy’s North Antelope Rochelle mine, the largest producing mine in the world, dug about 21.4 million tons in the final quarter last year, a 13% decrease from the same quarter in 2018.

Arch Coal’s Black Thunder mine, second to NARM in production, saw a small 1.2% bump in annual production despite a 17.4% drop in fourth-quarter numbers, according to the MSHA.

The Antelope mine, the third largest producer in the PRB and nation, saw its production increase 7.7% on the year despite operator Cloud Peak Energy filing for Chapter 11 bankruptcy and selling its PRB mines to Navajo Transitional Energy.

Between the big three producers, they produced more than 62% of the basin’s overall output in 2019.

The release of the 2019 final quarter coal production numbers comes just before an anticipated Peabody Energy fourth-quarter and year-end earnings call Wednesday morning. The world’s largest privately held coal producer has seen its stock drop drastically over the past 18 months.

Peabody’s stock was at $7.12 a share Tuesday morning, down nearly 80% form the $35.48 a share it was trading at a year ago.

Arch Coal also has a year-end earnings call set for Thursday morning.

Along with the overall financial status of the companies, many energy analysts also are interested to hear an update on the pending joint venture between Peabody and Arch, which would merge their PRB and Colorado operations.