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Peabody Energy

Haul trucks transport coal in the Peabody Energy North Antelope Rochelle Mine in the Powder River Basin in this 2012 file photo.

LANDER, Wyo. — Coal companies have abandoned applications for federal leases boasting nearly 2 billion tons in reserves this year, offering further evidence of the industry's deteriorating financial condition and raising doubts over its future.

Peabody Energy, America's largest coal company, withdrew its four-year pursuit of the Antelope Ridge lease in October. The roughly 8,200-acre parcel near the North Antelope Rochelle Mine has reserves of 1 billion tons, or roughly a 10-year supply at current production levels.

The move followed a decision by Arch Coal in January to end its quest for a 957 million-ton lease near the Black Thunder Mine.

The twin developments come as firms seek to harbor cash in the face of a historic downturn that has prompted three major coal companies to file for bankruptcy this year.

But the decisions also promise to reshape Wyoming's mining industry long-term, leaving a smaller sector with output gradually declining in the coal-rich Powder River Basin.

"It is going to be a different looking industry than I started in 40-some years ago," said Robert Burnham, an industry consultant.

Not all are discouraged by the trend. Environmentalists, who have been pushing for a moratorium on new coal leases, called the withdrawn lease applications a boon for the climate.

The applications abandoned in 2015 alone would result in 3.2 billion metric tons of carbon emissions over the lifespan of the projects, or equal to the emissions of nearly 674 million cars, said Jeremy Nichols, climate and energy program director at WildEarth Guardians, an environmental group.

"That is huge. One coal-fired power plant won’t even come close to emitting that much in its life," he said. "We’re achieving something here. We’re really getting serious about transitioning to clean energy."

Roughly 40 percent of American coal is mined on land overseen by the U.S. Bureau of Land Management. Coal companies lease land from the government, often paying millions for the right to mine on federal land.

It was a brisk business until recently. In 2011 and 2012, BLM approved six leases with nearly 2.2 billion tons in combined reserves. The sales netted the government about $2.2 billion.

But the BLM has not approved any leases in the three years since, largely at the behest of companies that have held back as market conditions deteriorated.

Cloud Peak Energy is the sole company actively pursuing a new lease. The Gillette-based firm submitted an application for a 441 million ton lease in August.

However, Cloud Peak is something of an anomaly. Five lease applications with combined reserves totaling nearly 2 billion tons are currently on hold at companies' request.

Firms' hesitancy to lease reflects the short and long-term challenges facing the industry, analysts said.

Cheap natural gas is perhaps the greatest near-term threat. U.S. coal consumption is expected to fall by 100 million tons in 2015, or roughly 11 percent, largely due to utilities' preference for gas. Consumption will likely fall another 40 million tons in 2016, as the trend continues, said Hans Daniels, an analyst at Doyle Trading Consultants.

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The Clean Power Plan, President Barack Obama's bid to cut carbon emissions by a third in the next 15 years, presents a long-term obstacle. The proposal has generated considerable uncertainty in the industry, accelerating the trend toward natural gas, analysts said.

"To make these long-term financial commitments is difficult in this environment," Daniels said. "You need to protect as much capital as possible and focus more on your short-term survival."

By contrast, firms have relatively little to lose by withdrawing their lease applications. The capital costs of mining mean lease sales often draw a sole bidder, even in a bull market. Companies often bid on tracts adjacent to their current operations.

Peabody's case is illustrative of the dynamic. A company spokeswoman said Peabody withdrew its Antelope Ridge application with the understanding it could resubmit a modified version in the future.

"Peabody has a highly competitive position in the Powder River Basin as the largest producer and reserve holder," Beth Sutton, the spokeswoman, wrote in an email.

Peabody's current leases boast combined reserves of roughly 2 billion tons, or 20 years supply, by analysts estimates.

Mining at Antelope Ridge would not likely have begun for years, but the company would have had to pay for the lease upfront. Analysts said Peabody would likely pay upwards of $1 billion for the lease, though payments would be metered out over a period of five years.

Peabody reported a loss of $304 million in the third quarter of 2015.

"At this point, with coal they don’t need for 20 years, it doesn’t make a lot of sense for them to be laying out cash," said Burnham, the consultant. "You’ve got a major unknown of what’s going to happen here."

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