Commentary - May 1st, 2014
8:29 am
Fri May 2, 2014

Responsible Coal Development

This year’s frigid temperatures have been a stark reminder of the importance of reliable and affordable electricity for families in Montana and across the nation.  For many, the electricity that heats homes and keeps the lights on comes from coal produced in southeast Montana.

Coal remains America’s single-largest source of electricity.  The federal Energy Information Administration projects that coal will be the country’s leading electricity fuel for decades to come as currently there are no alternatives that can provide large scale, low-cost reliable power in the way coal does.

It is frustrating that opponents of coal are able to propose that moving quickly from coal is viable without having to explain the massive economic impacts this would cause through rapidly rising electricity prices.  Europe has tried this experiment and is now increasing its use of coal.  Even the Intergovernmental Panel on Climate Change projects the world’s use of coal will increase led by growing electricity demand in Asian nations.

This is why Cloud Peak Energy actively supports the development of carbon capture and sequestration technology that will allow carbon dioxide from coal and gas power stations to be captured and stored deep underground. 

Cloud Peak Energy is proud to be one of Montana’s largest job providers and taxpayers.  We operate Montana’s biggest coal mine, the 18 million ton per year Spring Creek Mine which is located near the Wyoming border in southeast Montana.  In 2013, Cloud Peak Energy paid $360 million in taxes and royalties, of which $55 million went to the state of Montana.  For the same year, our corporate income totaled $52 million.

To give some perspective; Cloud Peak Energy’s 2013 total coal sales of 89.1 million tons supplied approximately 4 percent of the nation’s electricity; enough energy to power around 15 million U.S. homes.

While American electricity demand is projected to be stable for the next few decades, there is a tremendous opportunity to increase production from Montana to export to growing Asian markets.

Cloud Peak Energy’s logistics business currently exports over 4 million tons a year of coal from our Spring Creek Mine to U.S. allies in South Korea, Japan and Taiwan.  According to the International Energy Agency, Asian coal imports are projected to increase by 65 percent over the next 30 years, as those countries build state-of-the-art, coal plants to power their growing economies.

Montana is in a great position to benefit from that increasing demand having high-quality coal close to west coast shipping ports.  However, existing ports are at capacity, and additional terminals need to be built to allow Montana coal to be exported to Asia.

You may be aware that well-funded environmental groups have been working hard to frustrate and delay new terminal development.  We are confident that any legitimate concerns regarding rail traffic and coal dust can be addressed but are well aware that opponents of terminal development are much more interested in stopping coal exports than in ensuring they are executed responsibly.

Stopping port development would impact Montana’s ability to grow its economy, create jobs and generate tax revenue.  A University of Montana study found that if the Spring Creek Mine expanded by roughly 50 percent, 1,500 new jobs would be created at both the mines and in the wider community, $60 million of additional economic activity would occur and more than $50 million in new tax revenue could be generated.  Utilizing the state’s coal reserves would cause investment in infrastructure that would aid the state’s entire economy, not just coal.  These are big impacts that will not happen without new ports.

In addition, Cloud Peak Energy has option and exploration agreements with the Crow Indian Tribe covering more than 1 billion tons of the tribe’s coal.  If even a small portion of their coal were to be mined, it would bring significant benefits to the tribe’s people by providing well-paying, stable jobs and significant tax revenues.

Coal is a vital part of our national energy portfolio and will remain so for the foreseeable future.  Moreover, coal is an important export commodity in high demand throughout the world that is going to be used increasingly by developing nations.  If Montana does not supply the growing Asian export demand the coal will come from other countries. Montana has a tremendous opportunity to supply some of that demand and to benefit from the new jobs and investment in the process.

I am Colin Marshall, President and CEO of Cloud Peak Energy; through the Spring Creek Mine we are proud to be a part of Montana.

Colin Marshall is President and CEO of Cloud Peak Energy, which is headquartered in Gillette, Wyoming and one of America’s largest coal producers. This piece was adapted from an Op-ed by Mr. Marshall that ran first in the Billings Gazette.