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HomeenergyReports of coal's demise are greatly exaggerated

Reports of coal’s demise are greatly exaggerated

The first thing you notice at the Spring Creek mine in Decker, Mont., is the size. It's not just the sprawling, 9,000 acre site in Big Sky Country near the Montana-Wyoming line. It's everything about mining the coal.

Giant coal hauling trucks the size of two-story buildings zip around the complex with surprising ease, considering the fact that they are carrying 255 tons of coal per trip. The coal is loaded onto mile-long trains—each car carrying more than 100 tons—that leave the mine 24 hours a day, seven days a week, 365 days a year.

At the same time, massive 13,000-ton cranes known as draglines slowly peel back strips of earth and rock 200 feet deep to reveal the rich, black, 80-foot seam of coal below. As the coal is removed, giant machines are filling the strip back in, then moving over like a gigantic lawn mower and starting the process all over again.

Despite the dizzying amount of activity at Spring Creek, production is well below its prerecession peak. The sluggish economy and an abundance of cheap natural gas have hurt demand. So has the prospect of tougher environmental regulations following the spill of 30,000 tons of toxic coal ash in North Carolina in February and a proposal by the Obama administration for tougher limits on carbon emissions.

CORRECTION: The video embedded with this story originally misidentified the name of a Wyoming-based company. The correct name is L&H Industrial.

A mile-long train loaded with coal rolls out of the Spring Creek Mine in Montana headed for Detroit.Brad Quick | CNBC

Cloud Peak CEO on 'tremendous' demand

But the Spring Creek mine's owner, Wyoming-based Cloud Peak Energy, believes coal is poised for a comeback. The U.S. Energy Information Administration, or EIA, sees a long-term horizon for coal.  

"Even the EIA projects that 40 percent of America's electricity in the future, in 2030, is going to come from coal," Cloud Peak CEO Colin Marshall told CNBC Thursday. "Internationally, the demand is tremendous," Marshall said.

The economics of coal are changing, proponents say, particularly for the cleaner, lower-sulfur coal mined in the Powder River Basin of Wyoming and Montana. Natural gas prices are rising, making coal competitive again. Economies around the world are rebounding. And a record cold winter in most of the U.S. doesn't hurt either.

"There's nothing like a cold winter to remind utilities of the value of their coal fleet," said Paul Forward, managing director with Stifel Financial.

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