A special report:
COUNTY BUCKS U.S. COAL TRENDS
By Austin R. Ramsey
Published Aug. 20, 2015 | McLean County News
The story of coal in western Kentucky is an old one that shaped a region and supported its people for decades.
Coal rose and fell on the banks of rivers in this region. Cities and towns followed the ebbing tides, too, and by the mid-century, a self-supported economy had formed. Coal was shallow and easy to extract from hillsides and it seemed to last forever.
But, as embodied by John Prine's hit song "Paradise," about the fall of a community on the Green River to the eastbound heels of a strip-mining company, the successes here of 100 years ago eventually came to an end.
The coal didn't last forever. As a nation realized the effects of this carbon-rich commodity, regulations dethroned coal mining kings in the Illinois Basin, and companies fled to the eastern mountains.
The coalfields here lay untouched for a century.
By the 1990s, deep mines in western Kentucky emerged, as stricter emissions laws made coal cleanliness irrelevant once again. But even that chapter in history was short-lived. This year alone saw dozens of those same mines in Illinois, Indiana and Kentucky shutter for good, laying off hundreds of skilled workers.
The fate of the region's most profitable export hangs in the balance and relies on the murky future of the nation's energy production outlook.
But experts say there's a fleeting heartbeat left to flourish underneath the soil in western Kentucky, and, oddly enough, some say the epicenter is in McLean County.
Earlier this month, Australian-based Paringa Resources Ltd. released up-to-date data on feasibility studies it has been conducting ahead of plans to excavate a new mine just southwest of Rumsey.
The project, which some experts predict could be one of the largest mining operations this side of the Mississippi River, is expected to buck the trend of depressed coal prices in the U.S. and represent an anomaly amid mine closures in Ohio, Webster and Muhlenberg counties expected as early as next month.
In a bankable feasibility study released Dec. 1, company officials called Buck Creek Mine No. 1 a "world-class," low-cost, high-margin coal mine that should generate almost $90 million a year and produce hundreds of jobs.
It won't be the first mine to start production in the county. Last year, Lexington-based Rhino Resource Partners began unearthing coal at the Pennyrile Mine in Beech Grove, and earlier this month, trade magazine "Coal Age" called that project key to the company's future, while it continues to divest in its central Appalachia holdings.
Indeed, western Kentucky, and perhaps McLean County in particular, may become a coal mining sanctuary in 2016. Kentucky Coal Association President Bill Bissett said third-quarter market reports showed another overall decline in the state's mineral production, signaling what he called "troubling times" for the industry. Yet, despite some mine closures, new companies like Paringa, or companies with new strategies, like Rhino Resources, are staking a claim on the wild west Kentucky coal fields.
"It's not over for coal," Bisset said. "Some of the layoffs we've seen in western Kentucky are company-specific actions. We're not seeing those big, systematic layoffs that have gone on in the eastern part of the state."
Armstrong Coal Co., the largest operator in the Illinois Coal Basin, issued possible layoff notices to 75 employees at its Midway Mine and preparation plant in Centertown and 58 notices at its Parkway Mine and preparation plant in Muhlenberg County last month. In total, 133 workers could face layoffs. In Webster County, Alliance Resource Partners issued Worker Adjustment and Retraining Notification (WARN Act) notices to all 140 of its employees at the Onton Mine in Sebree. Officials said they believe the layoffs will be permanent, as the company relies on its lowest-cost mines in light of an oversupplied market and weakening coal pricing. In addition to the Onton Mine, Alliance said it would also be drastically slashing production at two mines in Gibson County, Indiana.
In the midst of it all, what is soon to the Buck Creek Mining Complex off Pack Church Road in McLean County is seemingly immune. Nathan Ainsworth, business development manager for Hartshorne Mining Group LLC, which operates Paringa's U.S. holdings, said the company still believes it will soon operate one of the nation's most profitable coal mines.
Geologic survey results released in November showed that the company could expect to save $22 million more than expected in associated costs at the mining site. Paringa President and CEO David Gay said the mine's financial returns could come earlier than expected and provide for a faster turnaround on future mine sites. This month's feasibility reports indicate that Paringa has begun purchasing mineral rights for the excavation of a second and even third mine at the McLean County complex.
The Western Kentucky No. 9 Coal Seam, where both county mines operate, could soon become the nation's second largest producer of coal, said Tomasz S. Wiltowski of Southern Illinois University's Advanced Coal and Energy Research Center.
Both Wiltowski and Bissett said what is most remarkable about western Kentucky's coal comeback is not the mining operations that are underway but the purchase of mineral rights feasibility studies that dot the Green River.
"We are waiting for a better time for coal," Wiltowski said. "I believe coal will come back. We are far away from any other forms of energy."
In the energy labs at SIU, Wiltowski said he is working with doctoral students to develop ways of extracting energy from the toxic gases produced by burning coal. Research like that paints a drastically different future for coal production and use in the U.S.
About 80 percent of Kentucky's coal is used for energy production, but navigable waterways like the Green and Ohio rivers expand the markets to a potentially international scale. Paringa has not ruled out the possibility of Chinese exports.
Wiltowski said he believes the Illinois Coal Basin is preparing to play a center-stage role in an international showdown over energy production and environmental policy. The federal moratorium on construction of coal-fired power plants has hurt the industry nationwide, but the potential in western Kentucky makes for an attractive investor shift back toward nonrenewable energy, he said. Only time will tell what the final results will yield.
Meanwhile, Paringa said it has completed the construction bidding process at Buck Creek Mine No. 1 and is ending coal sales negotiations with what it called a "major Illinois Basin utility" company. Results of a similar scoping study on the second mine could be released as early as next month.
Mine construction could begin this spring.