November 27, 2024 - Coal mining in Kentucky and Wyoming has had a rough year, and its impact is felt in Oklahoma.

Nearly 300 workers at a coal mine operated by Tulsa-based Alliance Resource Partners L.P. (ARLP) are being laid off in Kentucky.

In a Worker Adjustment and Retraining Notification (WARN Act) filing Nov. 15, Alliance said it sent notices to all of its approximately 280 employees of the MC Mining Complex in Kentucky’s Pike County. The mine is operated by Alliance subsidiary Excel Mining LLC.

“The decision to issue WARN notices at the MC Mining Complex was not made lightly,” said Joseph W. Craft III, chairman, president and chief executive officer.

“Despite our continued efforts to navigate challenging geology and market conditions, persistent weakness in coal demand, compounded by some delays in timely payment for committed coal sales, has necessitated this difficult but necessary step to begin winding down production operations. We deeply regret the impact this decision has on our employees, their families, and their communities.”

The MC Mining Complex is owned by MC Mining and operated by Excel, both wholly-owned subsidiaries of ARLP Through Oct. 31, the MC Mining Complex has generated 2024 year-to-date coal sales and production volumes of approximately 700,000 tons and 8,00,000 tons, respectively.

As of Nov. 15, coal production from the MC Mining Complex will be reduced to two production units. Combined with current inventory, mining from the two units will continue to supply existing contractual commitments before ceasing in anticipation of the mine’s permanent closure. Excel employees not involved in the reduced production of coal will focus efforts on reclamation activities throughout the MC Mining Complex.

ARLP does not expect this action to have any impact on its previously announced guidance ranges provided in an Oct. 28 press release. In that announcement, ARLP reported:

• Q3 2024 total revenue of $613.6 million, net income of $86.3 million, and EBITDA (earnings before interest, taxes, depreciation and amortization) of $170.7 million.

• Increased oil and gas royalty volumes to 864 MBOE (thousands of barrels of oil equivalent), up 11.9% year-over-year.

• Completed $10.5 million in oil and gas mineral interest acquisitions.

• Declared quarterly cash distribution of 70 cents per unit, or $2.80 per unit annualized.

• Increased committed and priced sales tons for the 2025 full year by 5.9 million tons, to 22.5 million tons.

“We realized another solid quarter of year-over-year volumetric growth in our oil and gas royalties business,” Craft said.

“We continue to reap the benefits of a minerals portfolio that is heavily weighted toward the Permian Basin, where top-tier upstream operators are actively drilling and completing new wells on our mineral acreage. Additionally, we continued to add to our position in the Permian, successfully closing $10.5 million of ground game acquisitions during the 2024 Quarter.

“We remain committed to growing our oil and gas royalty segment as a complement to our core coal operations,” said Craft. Coal is no longer king in Wyoming The Cowboy State Daily reported it has been 32 years since Wyoming produced less than 200 million tons of coal, but that streak is “about to be broken short of a miracle.”

With just a couple of months remaining in 2024, Wyoming’s coal mines need to produce 40 million tons of coal to keep the run of 200-million-ton production years alive, said Rob Godby, an energy economist and University of Wyoming associate professor.

“To hit 200 million tons , you’d need another 40 million tons mined in nine weeks, and that ninth week is always a partial week,” he told Cowboy State Daily.

That’s an average of about 5 million tons a week, which Wyoming’s mines haven’t hit for any week so far this year, Godby said. That means that overall, “It’s going to be a disappointing year” for coal, he said.

A combination of an unusually warm winter along with massive stockpiles at power plants led to Powder River Basin coal production to be down more than 20% yearover- year for the first half of 2024, records show. And the second half so far hasn’t been much of a rebound.

The overall outlook for the end of the year and the first quarter of 2025 gives Godby a little glimpse of déjà vu.

Power plants “still have such huge stockpiles, that we’re where we were last year with them as high as it’s been,” he said. “I would argue you can see the really significant decline we had in the first six months of the year (repeating). It’s not like the companies need more coal now.”

Oklahoma Gas & Electric has consumed low-sulfur coal from Wyoming for many years. According to the utility ’s website, OG&E’s power mix is 67% natural gas, 22% coal and 7% renewable energy from wind turbines and solar panels. OG&E, based in Oklahoma City, provides electricity to almost 900,000 residential, commercial and industrial customers in Oklahoma.

The commodity is still important to Wyoming, but currently the market is more favorable to natural gas than coal. Furthermore, the state’s economy now relies more on oil and gas revenues than it does on coal, he said.

“We’ve now become most dependent on the most volatile commodity – oil – and that puts us in a pretty risky situation,” Godby said. That’s because while oil is producing revenue for the state, now at about $70 a barrel, it’s also unpredictable and prone to crashes, he noted.