U.S. President Donald Trump's administration has billed his move to reopen federal lands to new coal leases as a win for miners seeking to expand production. But a review of company filings shows that coal miners with the most to gain already have enough leases in hand to last well over a decade.
Trump signed a decree on Tuesday to reverse former President Barack Obama's 2016 ban on new federal coal leases, part of a wide-ranging executive order to sweep away green regulations his administration says have hobbled the drilling and mining industries.
"You know our nation can't run on pixie dust and hope, and the last eight years showed that," Interior Secretary Ryan Zinke said before Trump signed the executive order on a stage at the Environmental Protection Agency lined with coal miners.
But companies focused on coal deposits below federal lands, such as Peabody Energy Corp, Arch Coal Inc, and Cloud Peak Energy Inc, have enough coal in the ground on existing leases to last an average of more than 17 years at 2015 sales levels, earnings reports show.
That suggests miners could already ramp up production levels immediately if the market demanded more coal. Energy experts say that is unlikely on a large scale due to stiff competition from cheap and abundant natural gas.
"These initiatives prevent things from getting worse for coal, but they won't help much," said Charles Dayton, vice president of market analytics at Doyle Trading Consultants in Colorado, which has been tracking reserve levels on public lands.
Shares of Cloud Peak closed 4.9 percent higher at $4.51 after the executive order. Arch closed 1.8 percent higher at $69.00 and Peabody gained 6.8 percent to end at $2.22.
The current level of reserves appeared to be within historical norms. A decade ago, under Republican President George W. Bush when there were no bans on federal coal leasing, the industry had about 18 years' worth of leases on federal lands, according to a Reuters examination of securities filings.
Arch Coal and Peabody confirmed they have substantial reserves on their federal leases already, but nonetheless welcomed Trump’s move.
"Peabody has a comfortable amount of reserves in the Powder River Basin, although we recognize the poor public policy represented by the leasing moratorium put into place by the prior administration," Peabody spokesman Vic Svec told Reuters in an email.
Arch Coal has "sufficient permitted reserves to sustain our operations on federal lands for a number of years to come," spokeswoman Logan Bonacorsi said. "But as with all producers we will need to add reserves over time, and the ability to obtain those reserves when needed is important."
Officials at Cloud Peak and Contura Energy Inc did not respond to requests for comment.
Trump's executive order will also seek to undo Obama-era rules limiting carbon emissions. One example is the Clean Power Plan, a regulation that would have increased pressure on states to replace coal-fired power stations with ones using cleaner fuels like natural gas, wind and solar.
'Signal to Markets'
Obama's administration imposed the temporary ban on new federal coal leases in January 2016 as part of a broad environmental and economic review to ensure royalties from lease deals provide fair returns to taxpayers.
It was not immediately clear whether the royalty review would continue even with the ban on leases lifted. Some analysts said this scenario could trigger a near-term land rush by companies fearing higher royalty rates in the future.
Coal accounts for about a third of U.S. electricity production, down from about half one decade ago. About 40 percent of all U.S. coal comes from federal lands, mainly in the Powder River Basin in Wyoming and Montana.
Luke Popovich, a spokesman for the National Mining Association industry group, said he expected Trump’s executive order to have symbolic impact, at least.
"Lifting the moratorium would strengthen the signal to markets that the federal government is not any longer standing in the way of fossil energy," he said.
He added that reopening federal lands to new leases could also play into a production upswing if demand ultimately increases. The U.S. Energy Information Administration has forecast a 9 percent increase in western coal production to 443.4 million short tons by 2018, driven mainly by higher natural gas prices. Others were less optimistic about the U.S. coal industry's outlook, saying the best Trump could do is slow the sector’s decline. Since 2012, coal production has plunged more than 25 percent to the lowest levels since 1978 due to falling prices. The industry has been hit with massive layoffs and bankruptcies.
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