Soft markets, hard rules put crimp in coal

The story of Wyoming's coal industry today is actually two stories: the Powder River Basin, in the northeast corner of the state, and the ''almost shut down'' southwest and south-central area, particularly around Hanna.

Soft world markets for coal, plus new federal environmental regulations that have undercut Western coal's one-time advantage, have left the state's mines running at less than capacity.

Coal demand is tied to demand for electricity, of course, which has fallen with the recession; and utilities are delaying or even canceling planned power plants. There are rumors of coal companies agreeing to accept somewhat below-contract prices from their customers to keep the contracts from being abrogated.

But here in Gillette, in the Powder River Basin, where coal from the 65 -foot-wide seam all but jumps into the power shovel's bucket, mines are still humming along smoothly, producing coal for $7 to $12 a ton. Coal near Hanna, in thinner beds, costs twice that to produce.

Although 1982 was a sort of pause year for the state's economy, coal output was better than that of the year before. In fact, Wyoming coal production has increased every year for the past 19 years. The state geological survey's ''best guess'' projection is for continued increases, from 112 million tons this year to up 155 million tons by 1989.

''We're seeing the effects of the recession,'' says Earle Bagley, manager of the Sun Company's Cordero Mine here. ''But long term, there's so much heating value in all this coal it's sure to provide a lot of energy for the country.''

The muscular-looking trucks each with their six huge tires, too wide and too slow for ordinary roads, make their Dantean progression in endless circles, hauling away overburden and carrying coal from seam to crusher. As the trucks dump their load, the coal dust whipped in the wind looks like black flame.

Coal leaves the mines of the Powder River Basin in trains of 110 cars, each loaded within about 45 seconds as the silos discharge with a roar.

It's all strip mining, or surface mining, here in the rolling landscape, empty but for cows grazing nonchalantly on a hillside.Around the state one is told that reclamation requirements are as strict here as anywhere else in the country. At the mines, officials maintain that when a mine comes to the end of its 25- to 30-year life, the landscape will look just as it did before the mine was opened, just some tens of feet lower. Original contours will be maintained.

At the Cordero Mine, tour guide Kim Hohnholt explains the care taken with the fine crust of topsoil, only six to 36 inches thick. Mine crews try to keep exposure to the elements to a minimum, and even worry about disturbing the tiny insects that live in the soil. ''We try not to have more than 100 acres exposed at any one time, in any one phase,'' he says.

The Sun Company is particularly proud of an experimental ranch near Buffalo where work with grasses is done so that reclaimed tracts will actually look better than Mother Nature's own handiwork.

The Powder River Basin's formula for success in tough times includes use of the flexible truck and shovel operations, easily expanded as demand requires, instead of the more expensive draglines; reliance on long-term utility contracts; and cautious hiring practices. Few if any of the regions are running at capacity, but none have suspended operations, either. In fact Mobil has just opened its Caballo Rojo mine, in the planning since 1975 - a testament to both the lumbering slow pace at which energy projects proceed and also to faith in the long-term value of this area's coal reserves.

There has been underground mining in the southern and western parts of the state, but that coal has been more expensive to produce and has fallen casualty more quickly to the general slack market for coal. In fact, only one underground mine in the whole state is open at the moment.

During its session just ended the state Legislature voted to cut severance taxes on underground coal; this was an effort to increase employment in this part of the industry, although it's unclear what effect it will have.

It was the energy upheavals of the mid-1970s that put this state back in the coal business in a big way for the first time since the railroads went diesel in the 1950s. (The state is now No. 3 in coal production behind Kentucky and West Virginia, and holding steady.) Federal environmental regulations favored the use of the Western states' clean-burning, low-sulfur coal, despite its relatively lower heat content.

But if federal regulation giveth, federal regulation taketh away. New rules require the best available technology - ''scrubbers'' - on all new power plants, no matter what kind of coal they burn. This leaves Western coal without its environmental edge but still hundreds of miles from market. Observers here decline to predict whether the Western states' political clout is enough to win another change in the rules.