SALT LAKE CITY — A new analysis by an advocacy group championing an end to fossil fuel dependence shows that Utah is among the top coal-producing states experiencing drastic production declines from its apparent peak year.
The report by Colorado-based Clean Energy Action said production numbers tracked in the nation's 16 top coal-producing states should call into question the extent of U.S. coal reserves and how they can be mined profitably.
“Economically viable coal is a nonrenewable resource, and after examining currently available geological and financial data, there is good reason to believe we are rapidly reaching the end of U.S. coal deposits that can be mined at a profit," said Leslie Glustrom, the study's author and director of research and policy at Clean Energy Action. "If coal can’t be mined at a profit, not much of it will be mined."
Glustrom's report predicts that financial distress of coal mining companies could lead to significant changes in coal production in less than a decade, so policymakers would be wise to take a hard look at coal cost and supply issues.
In Utah, there have been indications of struggles at some coal mines over the past few years. In 2012, the Dugout Mine laid off 114 workers, and in June, Arch Coal announced it was selling the Sufco, Skyline and Dugout mines for $435 million to cut costs from falling coal prices.
Just last month, the West Ridge Mine in Carbon County laid off 102 workers, blaming the Obama administration's pursuit of policies aimed at shutting down coal-fired power plants.
The report released Wednesday examined trends in U.S. coal production from 1990 to 2012 in the 16 top coal-producing states. Utah is No. 15 and reached a peak production in 2001 of 27 million tons. Last year's coal production in Utah was at 16.4 million tons, or down 39.3 percent from 2001, according to the report.
With the exception of Indiana at 2.4 percent, all other states experienced double-digit declines, according to the report, including Pennsylvania, 80.2 percent; Virginia, 61.4 percent; Ohio, 50.2 percent; Kentucky, 47.7 percent; and Illinois, 46.4 percent.
The report noted that the top 16 states produce 95 percent of U.S. coal, and with the exception of Indiana, all appear to be past their earlier peak, suggesting that mining coal "reserves" is only going to become more expensive.
"The rising cost of production is the sleeper issue for those who follow coal and energy markets in the United States," said Tom Sanzillo, director of finance with the Institute for Energy Economics and Financial Analysis. "It is a geological certainty and an economic fact that as mining activity matures in a region, production typically becomes more difficult and more expensive."
The group stressed that there is a faulty reliance on the amount of recoverable coal that can be tapped over the next 200 years, pointing to what it says are flawed numbers put out by the Energy Information Administration and the U.S. Department of Energy.
In short, the Energy Information Administration's reporting of more than 200 billion tons of "estimated recoverable reserves” for U.S. coal supplies has been like a “faulty fuel gauge” for U.S. coal estimates, the report said.
"The point of this report is that the fundamental constraint on coal is not from natural gas prices or government regulations, but from the geology of coal," said Zane Selvans, the group's geologist and assistant director of research.
But casting doubts on the viability of coal is likely to be met with harsh criticism in Utah, where more than 95 percent of the state's electricity is generated from coal.
The Bureau of Land Management said the state has 10 operating mines that produce coal from 77 leases covering more than 98,000 acres. The Central Utah Coal Fields, where coal is being produced, have been mined for more than 100 years, and agency projections estimate there are about 15 years' worth of reserves left.
As those reserves are depleted, coal production could shift to other areas of the state, the BLM said, noting it is currently reviewing an application for surface coal mining outside of Panguitch.