Alpha CEO Preparing for Decline of Central Appalachian Coal — and Has West Virginia Talking

Ry Rivard, a reporter at the Charleston Daily Mail, had a great piece late last month on an interview with Alpha Natural Resources (and now Massey Energy)'s CEO Kevin Crutchfield. 

Rivard's story was significant for both the content, Cruchfield's thoughts on the company's "plans to deal with what's expected to be a sharp drop in Appalachian coal production", and for the fact that it was so prominently featured in the Daily Mail.  I did not come across this piece until the end of last week, and was impressed by the West Virginian media's ability to talk clearly, calmly and honestly about these really tough issues.  It saddens me that Kentucky's press didn't feature a similar article, taking a hard look at the recent U.S. Energy Information Administration's coal production projections, and thinking through — from a variety of perspectives– what that means for this area.

Cruchfield responded to the significant declines projected by the EIA –a 40% drop from 188 million tons in 2011 to 112 million in 2015, way down from 234 million in 2008 — by saying that the company is not afraid: "We've always believed that Central Appalachia as a basin would continue its decline. We still think you can make a nice living in Central Appalachia if you know what you're doing."  It is significant that the 'We' in his statement is certainly the company, and not necessarily workers — declines in production could certainly have a serious impact on employment.

Rivard is careful to point out that the EIA figures reflect a current policy landscape, assuming no new environmental regulations not in place as of January 1 of this year.  Rivard explains "The decline is predicted because coal left in this region is becoming harder to mine and production is expected to increase in the Illinois coal basin."

Adding additional context, Rivard observes that "Most of the production losses here will come from declines in thermal coal, which is used to generate electricity. There will be more stability in the market for the premium metallurgical coal used to make steel."  However, other EIA data shows that met coal exports takes up only about 3% of all US Coal production–very little of that comes from the Appalachian region as of now, meaning that the more stable met coal market might not present significant economic opportunities for Appalachian coal. 

One of the more interesting observations Crutchfield made was about a lack of coherent national energy policy: "In the absence of certainty and thoughtful policy, to the extent that you've got to build electricity capacity today, it's going to be gas," he said. "It's not coal, which is unfortunate. But it's the way it is and it's probably going to stay that way for a while."  That is a pretty frank comment coming from the CEO of a major coal company, and commendable of Rivard to make that observation known to readers.

Allowing for a different perspective, Rivard also interviewed Rory McIlmoil, a consultant at Downstream Strategies in Morgantown and co-author of the seminal report Decline of Central Appalachian Coal and the Need for Economic Diversification.  McIlmoil observes that Crutchfield's strategies may benefit Alpha/Massey, but won't work for the region as a whole.  He told Rivard:"That's a strategy for the industry, but that doesn't help the local economies that have been historically dependent on coal; that doesn't help them transition away as production declines."

Rivard closes the piece with a brief look at the boom in gas production and drilling in the Marcellus shale, an issue that has yet to enter Kentucky at the same scale.

The observations made by Crutchfield are significant — and part of a honest, frank realization that informs a dialogue all Central Appalachian coal communities need to take part in.  That dialogue can only happen if we, across the region, know about it.  I hope future stories like this one by Ry Rivard gain as much traction in Kentucky's press as they increasingly seem to in West Virginia's*.

*Update: Over the weekend, in between writing and posting this blog — the Herald Leader's Tom Eblen did write a piece that started out well regarding the false messaging of a perceived "War on Coal" — but landed in a place that still doesn't speak clearly enough about the tremendous changes facing the Central Appalachian coal industry in the coming weeks and months.  His conclusion, that clean coal needs to become a concrete reality, does not address the rapid decline in production we are expected to face.  Whether traditional or so-called "clean" combustion technologies, coal isn't going to be mined in the region at the same scale in the future.  Al Cross also had a piece in the Courier-Journal.  It is a start but we need to get serious about alternative sources of employment and economic development in the region, and taking a hard look at what that means through all media outlets.

Kristin Tracz

About Kristin Tracz

Kristin Tracz served MACED’s Research and Policy team from 2009-2012 working on clean energy policy, energy efficiency programs and the Appalachian Transition Initiative. She joined MACED after finishing her Master of Environmental Management degree at the Yale School of Forestry & Environmental Studies. She now lives and works in Washington, DC.