Powder River Basin - Coal

Coal

Powder River Basin coal is classified as "sub-bituminous" and contains an average of approximately 8,500 btu/lb, with low SO₂. Contrast this with eastern, Appalachian bituminous coal containing an average of 12,500 btu/lb and high SO₂. PRB coal was essentially worthless until air pollution emissions from power plants became a concern. A coal-fired plant designed to burn Appalachian coal must be modified to remove SO₂ at a cost estimated in 1999 to be around $113 per ton of SO₂ removal if it switches to burning PRB coal, and $322 per ton of SO₂ removal by installing scrubbers.

The Powder River Basin is the largest coal mining region in the United States, but most of the coal is buried too deeply to be economically accessible. The Powder River Basin coal beds are shaped like elongated bowls and as mines expand from east to west in the Powder River Basin, they will be going "down the sides of the bowl." This means that the overburden (rock lying over the coal) will increase as will the stripping ratio (the ratio of rock that needs to be moved to get to a ton of coal).

The United States Geological Survey (USGS) has conducted a series of studies on the economic accessibility of coal in the major coal producing regions of the country. The studies have typically found that only a small fraction of the coal will be economically accessible at the current price of $10.47/ton. In August 2008, the USGS issued an updated assessment of coal in the Powder River Basin. After considering stripping ratios and production costs, the USGS concluded that at the time of the economic evaluation, only 6 percent of the original resource, or 10.1 billion short tons of coal, was currently economically recoverable. At a price of $60/ton, roughly half (48%) of the coal is economic to produce.

Presently the approximately 15 mines in the Powder River Basin are working in areas where the stripping ratio is between 1:1 (i.e. one ton of rock for one ton of coal) and 3:1. As the mines expand the stripping ratio will increase. As more rock needs to be moved (using large electrically powered draglines and diesel and electric mining trucks) the production cost will also increase.

The United States uses about 1 billion tons of coal a year, with about 40 percent of the coal currently coming from the Powder River Basin. The amount of coal coming from the Powder River Basin has been increasing over the last 20 years.

Increasing the price paid for coal can increase the amount of economically recoverable coal, but increasing the price of coal will also increase the production cost for the coal. In addition, because coal is a solid, not a liquid, it cannot be produced from many scattered wells as oil and gas can be. Rather, coal has to be produced from mines that expand slowly by moving massive quantities of overburden.

The mines in the Powder River Basin typically have less than 20 years of life remaining. Almost all of the coal in the Powder River Basin is federally owned and further mine expansions will require a series of federal and state approvals, as well as large investments in additional mine equipment to begin the excavations.

The majority of the coal mined in the Powder River Basin is part of the Fort Union Formation (Paleocene), with the low sulfur and ash content of the coal in the region making it very desirable. Coal supplies about half of the United States' electricity supplies, with the Powder River Basin mines supplying around 40 percent of the coal that fuels those stations, mainly to the east of the Rocky Mountains, for generating electricity.