Higher quality coal produced in the Powder River Basin is threatening coal sales in southern Wyoming's Hanna Basin, according to a Wyoming Geological Survey official.
Powder River Basin coal producers are upgrading their low-sulfur, low-moisture coal, which is expected to increase in popularity as eastern utilities look for cleaner-burning fuel to comply with new federal environmental regulations.And although Powder River Basin coal costs more to produce than Hanna Basin coal, Powder River coal companies will probably lower the price in the near future, according to Richard Jones, acting head of the survey's coal division.
"It's inevitable that with their mining costs so low up there in the Powder River Basin that it might be high for a while, but when they get those conversion and upgrading plants paid for and get their capital investment taken care of, they'll pretty much open up the door for those products," he said.
"So I can't get real excited about the Hanna Basin. They do have their niches, but even those niches are being threatened. I hope they continue mining coal up there, but the signs aren't very good. I try to remain an optimist, but sometimes it's pretty tough," Jones said.
One of the problems in marketing Hanna Basin coal is the product is perceived by utilities as inferior in quality to other western mines, although somewhat better than Powder River coal.
"Hanna seems to be caught right between the Powder River Basin and what is referred to as the high-quality producers in Utah," he said.
In addition, he said, transporting the coal from the Hanna Basin is expensive because Union Pacific is the only carrier. Without competition, the prices are higher, Jones said.