Coal miners will lose their job if the Tongue River Railroad is built, according to the STB

According to the Surface Transportation Board (STB), coal miners are going to lose their job if the proposed Otter Creek mine and Tongue River Railroad (TRR) are built. Seems counterintuitive doesn’t it? I’ll explain shortly but before I get started let’s get some things out of the way in the spirit of full disclosure.

Am I the right messenger on this? Probably not but no one else seems to want to dive into these waters so here it goes. You all know that I am personally opposed to this railroad and am critical about some of the practices of the mining industry. That being said, what I’m writing today is not my opinion about the railroad or coal mining. What you will read is taken directly from the draft environmental impact statement on the TRR released by the STB. It is extremely relevant to communities throughout the Powder River Basin because the STB is telling us that if the Otter Creek coal mine and Tongue River Railroad are built, coal mining jobs in existing coal mines will be lost.

A quick breakdown of the STB’s coal market analysis

The STB is required to analyze if the TRR is in the public interest. Part of the public interest determination is to show that there is a demand for the coal hence the 350-page Coal Production and Markets section. If you want to dig into it, by all means, proceed.

What they make extremely clear throughout the document is that, from their analysis, the coal from the proposed Otter Creek mine will displace other Powder River Basin (PRB) coal. For every ton of Otter Creek coal sold on the market, between .76 and .88 tons of other PRB coal that is in an existing mine will not be mined. In fact, the STB goes to great lengths to say that this coal would add very minimal coal to the market under all scenarios they examined.

“The cost of Tongue River coal is competitive with other Powder River Basin coal, but is not low enough to induce new demand. Thus, Tongue River coal would compete with other Powder River Basin coal for a relatively fixed demand amount.” (Appendix C, Chapter 8, Page 8)

According to the STB, a majority of the Otter Creek coal will be sold in an Upper Midwest market, not an export market. I was very surprised when I read this since it is counter to everything that Arch Coal has been saying about the future market for their coal but we’ll save that for another day. The STB argues that Otter Creek coal can’t compete with other PRB coal for export because of its low BTUs.  (Appendix C, Chapter 8, page 19)

Still with me? Hang in there.

You might be thinking, if Otter Creek coal can’t compete for an export market as the STB says, how would Otter Creek coal have a domestic advantage? Their answer is Otter Creek coal will be cheaper to produce because of lower strip ratios and will be closer to the domestic market than other PRB mines.

The STB’s conclusion in ALL of their scenarios is this.

“From 2018 to 2037, across all cases, on average, every ton of Tongue River coal produced would displace 0.76 ton of other Powder River Basin coal.”

Who is going to lose their job?

We know that lower BTU coal is more attractive to plants that are mine-mouth or are relatively close to the mine site. Otherwise, unless there are extenuating circumstances, it doesn’t make financial sense to ship low BTU coal long distances because you have to ship more of it. We also know that rail costs will just keep going up. Also, Otter Creek coal is high sodium coal which tends to glaze the inside of the boilers and reduce efficiency.

Rosebud Mine, owned by Western Energy is the mine that feeds the Colstrip power plant, a mine-mouth plant. The Rosebud Mine currently has a higher strip ratio than other mines in the PRB and associated higher production costs. Since the mine is adjacent to the power plant the delivered cost of coal is generally less than if coal was purchased and delivered by railroad from other PRB mines. Otter Creek coal has similar BTU content as the coal from the Rosebud Mine and will have lower strip ratios.

The Tongue River Railroad’s “Preferred Alternative” is to take Otter Creek coal 42-miles north from the Otter Creek valley to Colstrip. PPL has said that they won’t burn Otter Creek coal but as most of you know PPL is jumping ship and spinning off to a newly formed company called Talen Energy which will officially happen on June 2. Will the people over at Talen Energy maintain PPL’s promise not to burn Otter Creek coal? I’m not sure but one of the contracts that Western Energy has with the operator of Colstrip ends in 2019. Arch Coal would like to have the Otter Creek mine up and running in 2019. And if  you didn’t know, Arch Coal is not a union friendly mining company.

I don’t think that the miners at Rosebud Mine are the only ones in danger of losing their jobs. I’m not even sure that Colstrip could burn high sodium coal like the coal from Otter Creek but it probably could with some modifications or by blending it with Rosebud coal. Job loss could also happen at older mines with higher strip ratios all over the PRB. The STB never talks about this in their draft EIS.

Which coal miners are going to lose their job if the Tongue River Railroad and Otter Creek mine are built? We don’t know for sure but it might be a good question to ask the STB when they come visit us in June.

What we do know for sure is you can’t displace coal with out displacing people.

Public Hearing Times and Locations

• June 8, 2015, 2:00-4:00 pm and 6:00-8:00 pm at St. Labre Indian School, 1000 Tongue River Road, Ashland, MT
• June 9, 2015, 2:00-4:00 pm and 6:00-8:00 pm at Miles Community College, Room 316, 2715 Dickinson Street, Miles City, MT
• June 10, 2015, 2:00-4:00 pm and 6:00-8:00 pm at Colstrip High School, 5000 Pinebutte Drive, Colstrip, MT
• June 11, 2015, 2:00-4:00 pm and 6:00-8:00 pm at the Northern Cheyenne Tribal Building, Council Chambers, 600 South Cheyenne Ave, Lame Deer, MT
• June 12, 2015, 2:00-4:00 pm and 6:00-8:00 pm at Forsyth High School, 917 Park Street, Forsyth, MT

Written comments may be mailed to the following address:

Ken Blodgett
Surface Transportation Board
395 E Street, S.W.
Washington, DC 20423
ATTN: Office of Environmental Analysis
Docket No. 30186

Comments may also be submitted electronically by clicking here.