Powder River Basin produces 43 percent of US coal, but production falling and ownership consolidating

As the United States transitions increasingly away from coal, 16 mines in the Powder River Basin (PRB) region of northeast Wyoming and southeast Montana accounts for 43 percent of the nation’s coal production, according to a new U.S. Energy Information Administration (EIA) report.

As of last year, coal’s market share of U.S. electricity generation was hovering at 28 percent — a significant decrease from its 48 percent peak in 2008. At that time, the PRB region’s coal production had hit as high as 496 million short tons, but as of 2018, it was holding at 324 million short tons. However, 10 of the mines in the region were owned by four companies and were responsible for 87 percent of its production. As of this year, two of those companies have filed bankruptcy, leaving just two — Peabody and Arch Coal — to propose a joint venture going forward.

Currently, the region’s mines are only using about two-thirds of what they could produce each year. Though coal’s grip on the energy industry continues to fall, prices for PRB coal have remained relatively stable. In 2008 it averaged a selling price of $13.31 per short ton, compared to $12.31 per short ton last year. The rates to deliver this coal, however, now account for almost two-thirds of the total delivered cost of the coal. Such costs were significantly lower in 2008, at around 56 percent.

Asian countries continue to show an interest in PRB coal for use in their coal-fired power plants, though this accounts for little of the area’s business. Most of the PRB’s coal still goes to electric power generation in-country, according to the EIA’s Short-Term Energy Outlook.

The report also concludes, however, that coal production in the western region — of which PRB is a part — will likely fall another 12 percent this year, as coal’s share of power generation falls still further.