CHEYENNE, Wyo. - The beginning of bankruptcy proceedings for the nation's second-biggest coal company cast another dark cloud over the economy of Wyoming and other states in the top coal-producing region, following a bankruptcy filing by another major coal operator last year.
Arch Coal's (ACI) Chapter 11 reorganization announced Monday won't affect employee pay or benefits, cause mines to close, curtail production, or interrupt deliveries, the St. Louis-based company said in prepared statements.
But Arch officials didn't rule out mine closures or layoffs based on long-term trends, and it remains unknown when and how the industry might somehow halt its downward spiral.
"Looking ahead, it is always possible that additional steps could be necessary if the market continues to weaken," the company warned in a question-and-answer document for employees.
Nationwide, coal production sank to the lowest levels in three decades last year. The vast majority of that drop was in Appalachia, but production out West was down as well, according to preliminary figures released Friday by the U.S. Energy Information Administration.
Many utilities have been switching from coal to natural gas to generate electricity. Besides being cheaper, natural gas emits less greenhouse gas, a major consideration as utilities look to comply with tough new government regulations to try to control global warming.
The biggest problem for Wyoming, where mines supply about 40 percent of the nation's coal, is no new federal coal reserves are being leased.
Wyoming gets significant payments every time the federal government leases new coal tracts in the state. The payments, which help build schools, topped $700 million in the state's 2013-14 budget cycle but are forecast to dwindle to $26 million for 2019-20.
"The plight of the coal industry has been hard to watch. Unrelenting pressure from federal regulations and policies coming out of D.C. are pushing companies to a financial brink," Gov. Matt Mead's spokesman David Bush said by email Monday.
Arch's Black Thunder mine in Wyoming is the world's biggest single coal-mining complex and ranks second in the U.S. for production. The open-pit mine produced 101 million tons in 2014, accounting for about 10 percent of U.S. production.
Arch last leased a new coal tract for Black Thunder in 2012. Last year, the company withdrew plans to lease almost 1 billion tons of new coal for the mine.
Arch's two mines in Wyoming and one in Colorado together employ 2,100 people. In Montana, a proposed Arch mine that was supposed to begin operations last year faces uncertain prospects after multiple delays.
The fourth-biggest U.S. coal company, Bristol, Virginia-based Alpha Natural Resources, filed for Chapter 11 reorganization in August. Like Arch, Alpha also has two open-pit mines in the Powder River Basin that together have about 540 employees.
Not everybody was glum about the bankruptcy filing. The group WildEarth Guardians, which has contested several coal leases in the West on the grounds that coal contributes to climate change, called on Arch to wind down business altogether.
"There is no future for coal, and it's time for Arch Coal to be honest about this with its shareholders, its employees, and the American public who sustain so much of the company's operations," Jeremy Nichols of WildEarth Guardians said in a news release.