Two things are on my mind today: (1) winter is coming – I
am so ready for some snow, hot cider and a refreshing chill to the
air (it is supposed to be in the 80s all weekend in Denver, but I
am still ready to unpack my sweaters and snow shoes!), and (2)
Wyoming is moving forward with opening a new coal mine near
On the concept of winter being just around the bend, the U.S.
Energy Information Administration ("EIA") released its Short-Term Energy and
Winter Fuels Outlook ("EIA Outlook"). The full report
of the EIA Outlook can be found here.
What is EIA's winter forecast?
In general, the EIA's Outlook is promising for the energy
industry in the upcoming winter months. "EIA projects
average U.S. household expenditures for natural gas, heating oil,
electricity, and propane will increase this winter (October 1
through March 31) compared with last winter."
Winter is coming – and it is predicted to be a cold
The Old Farmer's Almanac, even though
controversial as to its accuracy, is predicting "temperatures
in much of the nation to be much colder than last winter, but still
above normal." The National Oceanic and Atmospheric
Administration ("NOAA") is also projecting the same, reportedly forecasting temperatures colder than
last year, which was 15% warmer than the 10-year average
What else is the EIA predicting?
The EIA Outlook provides that U.S. crude oil
production averaged 9.4 million barrels per day in 2015 and is
forecasted to decrease to 8.7 million barrels per day in 2016 and
8.6 million barrels per day in 2017.
Brent crude oil prices are forecasted to average $43 per barrel in 2016
and $51 per barrel in 2017.
As I write this article, the price of oil is sliding slightly,
but the consensus is that the price is not so bad right now. Bloomberg
Energy is reporting that WTI Crude is currently $50.34 per
barrel and Brent Crude is $52.00 per barrel.
The EIA Outlook predicts that natural gas production will
increase 3.7 billion cubic feet per day (Bcf/d) in 2017.
This is consistent with other reports that are predicting an
increase in natural gas production. For example, Bloomberg released
a story yesterday entitled, "Oil Rebound's Dirty Little Secret Threatens
U.S. Gas Bulls," which discusses an increase in drilling
for oil in the Permian will also "unleash" the production
of more natural gas.
Coal exports have declined 32% in the first 7 months of 2016 and
are expected to decline an additional 5% in 2017, according to the
This brings me to the second thing on my mind...Wyoming is
opening a new coal mine.
The vote by the Wyoming Environmental Quality Council to allow
the Brook Mine to move forward was reported to be unanimous.
More on the Brook Mine...
Despite that coal is on the decline nationwide, there are
several distinctions about the Brook Mine's operations could
help it survive the coal industry's contraction.
What are the things about the Brook Mine that make it
It's on private land. Ramaco reportedly owns the mineral rights to the
coal. This is a major difference when compared to other coal mines
– this means that no federal royalties will be due to the
It's going to be a high-wall mine. According to the HCN article, "[u]nlike
most mines in the Powder River Basin, which are open-pit surface
mines, the Brook Mine would be a 'high-wall mine,' which
are less expensive to operate than open-pit or underground mines
that require drilling into deep contours with more expensive and
complicated machinery." More on the high-wall mining technique
can be found in this Brook Mine Overview power-point presentation
prepared by Ramaco in May of 2014 and publically available online
Little guy. The proposed mine is "starting off small"
and Ramaco is reportedly only planning to produce about 8
million tons of coal per year from the location.
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