BENWOOD - At the same time Consol Energy is ramping up its natural gas drilling efforts, company officials are laying off 318 West Virginia coal miners, citing pressure from federal environmental regulators.
Consol is not alone in reducing its coal operations in West Virginia, as Arch Coal and Alpha Natural Resources also announced recently plans to cut back their work forces throughout the Mountain State. All three companies blame the U.S. Environmental Protection Agency for causing a downturn in coal demand, citing this as the reason for reducing their coal operations.
Consol is the parent company of the Marshall County Shoemaker and McElroy coal mines and the locally operating CNX Gas Corp. natural gas producer.
Consol Energy, parent company of the Shoemaker Mine in Marshall County, is laying off 318 employees from the Fola Operations in central West Virginia.
Photo by Casey Junkins
Consol expects companywide 2012 coal production to drop by about 800,000 tons compared to 2011.
Last week, Consol issued a Worker Adjustment and Retraining Notification Act (WARN notice) for a plan to lay off 318 employees at the Fola Operations in Bickmore, W.Va., east of Charleston. The layoffs are expected to take effect on Aug. 30.
Company information notes the Fola complex has produced 1.05 million tons of coal so far this year. Annual direct estimated economic impact of the Fola complex is $165 million. Unlike the McElroy and Shoemaker mines, the Fola facility does not have a longwall mining machine, relying instead on continuous mining machines, auger, stripping shovels and front-end loaders.
"The decision to idle our Fola operations is a difficult one, but in an effort to manage our inventory and to balance coal production with expected utility demand and shipping schedules, we are faced with making adjustments which unfortunately will impact our work force," said Consol President Nicholas J. DeIuliis.
"The domestic market for coal remains soft due to weak economic growth and activity. The warm winter resulted in the growth of our utility customers' stockpiles and their inability to accept committed coal shipments. Additionally, the escalating costs and uncertainty generated by recently advanced EPA regulations and interpretations have created a challenging business climate for the entire coal industry."
Arch Coal, due to "the unprecedented downturn in demand for coal-based electricity," is idling several operations in West Virginia, Kentucky and Virginia, impacting a total of 750 employees. Via these actions, St. Louis-based Arch will reduce its thermal coal production by more than 3 million tons annually.
"We sincerely regret the impact this announcement will have on our employees and their families as well as on the local communities where we operate. This decision was difficult but necessary in order to weather the current downturn and to position the company for long-term success," said John W. Eaves, Arch's president and chief executive officer.
Virginia-based Alpha Natural Resources, which acquired Massey Energy last year, is permanently closing two mines and a coal preparation plant in Logan County, while reducing some other southern West Virginia. There will be about 100 people laid off, with another 80 workers transferring to other Alpha job sites.
"I recognize that the coal industry is subject to the same market forces as anything else; there will be ups and downs, good times and bad. But the (Obama) Administration is actively trying to cripple the fossil fuel industry through regulation; The EPA is now enforcing political agendas and it has to stop," said U.S. Rep. Shelley Moore Capito, R-W.Va, regarding the coal mining reductions.
The reduction in coal production comes as Consol continues expanding its natural gas drilling programs in both Ohio and West Virginia.
Last year, Consol announced a $3.3 billion agreement with Texas-based Noble Energy to jointly develop Consol's Marcellus Shale assets in Pennsylvania and West Virginia.
Under the banner of subsidiary CNX Gas Corp., Consol's total daily gas production from Marcellus gas jumped from 14 million cubic feet per day in 2009 to 40 million cubic feet per day in 2010. That number then nearly doubled from 40 million cubic feet per day in 2010 to 77.5 million cubic feet per day in 2011.
During 2011, CNX drilled 78 wells, including 19 in central Pennsylvania, 50 in southwest Pennsylvania and nine in northern West Virginia. The cost to drill and frack the wells averaged $5 million each. This means Consol spent $390 million drilling these Marcellus wells in 2011.
Despite some current challenges, Consol posted a record $5.7 billion in sales revenue in 2011. Shoemaker Mine set an annual production record of 5.1 million tons of coal in 2011.