Task 1C Report for the Powder River Basin Coal Review Current Social and Economic Conditions

Environment Submitted to: Submitted by: Bureau of Land Management AECOM High Plains District Office and Fort Collins, Colorado Wyoming State Office December 2012 Task 1C Report for the Powder River Basin Coal Review Current Social and Economic Conditions AECOM ES-1 Executive Summary Introduction Energy development in the Wyoming portion of the Powder River Basin (PRB) has been occurring for well over a century. It has been a primary factor affecting social and economic conditions within the region, although the types and magnitude of effects vary by county, community, and timeframe. The first coal mine in the basin was developed near Glenrock, in Converse County, in 1883 (Foulke et al. 2002). Although coal and other energy resources can be found in many areas of Wyoming, the extensive surface-accessible coal resource located in the PRB sets it apart from most other energy-producing areas of the country. During the 1970s and 1980s, the PRB emerged as a major domestic coal-producing region. The surface coal mines that developed during that period are now mature operations, providing a stable economic and social foundation for the region. Historically, energy resource development has been volatile, driven by commodity price fluctuations associated with international and domestic energy demand and policies, environmental regulation and litigation, changing technologies, and transportation constraints and improvements. That volatility has resulted in surges and contractions in local population, employment, income, needs for public services and infrastructure, and other dimensions of social and economic conditions in the affected communities. The growth in domestic energy consumption coupled with the vast energy resource base in the PRB has resulted in a 50-year growth trend in the region without the major economic busts that characterize many other resource booms in the western United States. This period of extended energy development has been accompanied by substantial benefits, including economic growth, employment opportunity, and infrastructure development for local governments in the region and across Wyoming as tax revenues generated by coal and other energy resource production have funded statewide infrastructure development programs. At the same time, periods of rapid growth have stressed communities and their social structures, housing resources, and public infrastructure and service systems. The emergence of the coal and other energy resource development industries in the PRB has had a long-term cumulative influence on social and economic conditions in the region. In general, Campbell County and the entire PRB region now have a greater capacity to respond to and accommodate growth. The regional coal industry also provides a measure of insulation from dramatic economic and social dislocations. Over 90 percent of the coal reserves in the PRB are federally owned. The Bureau of Land Management (BLM) is required to complete a National Environmental Policy Act (NEPA) analysis (environmental impact statement [EIS] or environmental assessment [EA]) for each coal lease-by-application (LBA) as part of the leasing process. Initiated in 2003, Phase I of the PRB Coal Review included the description of current conditions (the Task 1series of reports); identification of reasonably foreseeable development (RFD) and future coal production scenarios for 2010, 2015, and 2020 (Task 2 report); and projected future cumulative impacts (Task 3 report series) in the PRB. Phase II of the PRB Coal Review was initiated in 2010 to update the analyses in light of the ongoing energy-related development in the PRB, the elapsed time since Phase I, and the BLM’s need to maintain current development projections and related future cumulative impact analyses for use in the agency LBA EISs and EAs. Under Phase II, the existing and projected future energy-related development activities have been updated (Task 2), with updates of the air quality, water resources, socioeconomic, and other environmental resources base year analyses (Task 1) and projected cumulative impact analyses (Task 3) to follow. The past and present energy-related development activities for base year 2008 as identified in the Task 2 report (AECOM 2011) provide the basis for the analysis of existing (base year 2008) social and economic conditions as documented in this Task 1C report. Task 1C Report December 2012 AECOM ES-2 The primary focus of the socioeconomic component of the PRB Coal Review is Campbell County, reflecting the geographic concentration of most of the active coal mines, mining service firms, and production in that county. However, since the coal resource and the associated mining industry is the economic driver for the entire Wyoming PRB, it is necessary to also examine changes and trends in the nearby counties affected most directly by coal mining. Therefore, the six-county study area for the socioeconomic analysis includes Campbell, Converse, Crook, Johnson, Sheridan, and Weston counties. Energy Resource Development Energy resource development and production are major factors affecting social and economic conditions in the six-county study area. Of the energy-related development in the study area, the primary industries affecting social and economic conditions include coal mining, conventional oil and gas development, coal bed natural gas (CBNG) development, and electrical power generation (including wind energy). Changes in these industries since completion of the Phase I report are discussed below. Coal Production Statewide production climbed from 376.6 million tons in 2003 to an all-time high of 466.3 million tons in 2008 (Figure ES-1). Approximately 444 million tons of the 2008 production came from mines in the Wyoming PRB (AECOM 2011). Statewide annual production subsequently declined, with 438.4 million tons produced in 2011. The majority of all coal produced in Wyoming originates from the PRB; more specifically, Campbell County. 500 450 Other Wyoming 400 Wyoming PRB 350 300 250 200 (million tons) (million Coal Production Coal 150 100 50 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: Wyoming State Inspector of Mines 2012. Figure ES-1 Historical Coal Production Trends in Wyoming (1970 – 2011) Oil Production Oil development also has been an important economic driver in the PRB. Historically, the Wyoming PRB (including production from all six counties) was the origin of 30 to 40 percent of all oil produced in Wyoming. From a high of more than 30 million barrels per year, oil production in Campbell County declined to 7.5 million barrels in 2009 (Figure ES-2). The pattern of long-term decline occurred across the study area. Stimulated by the effects of higher oil prices on production economics, annual production Task 1C Report December 2012 AECOM ES-3 of oil increased in Campbell and Converse counties in 2010 and 2011, raising the regional total to 15.3 million barrels in 2011, which represents 23.8 percent of the total statewide production. 40 Weston Johnson Crook 35 Converse Campbell 30 25 20 Oil Production Oil 15 (million barrels) 10 5 0 1990 1995 2000 2005 2010 Note: Oil production in Sheridan County was less than 0.25 million barrels per year. Sources: WOGCC 2003, 2012; WTA 2012. Figure ES-2 Oil Production in the Study Area (1990 – 2011) Natural Gas Production Although substantial, the share of statewide natural gas production from the six-county study area has been less than its share of coal and oil. Prior to 1998, most natural gas produced in the study area was from conventional sources (Figure ES-3). Beginning in the late 1990s, CBNG production increased in the PRB, eventually exceeding 20 percent of the total statewide natural gas production. CBNG development initially was concentrated in Campbell County, but shifted into Sheridan and Johnson counties over time. Annual production in Campbell County increased to a peak of 308 billion cubic feet (Bcf) in 2003. Production in 2011 was 138 Bcf. A similar pattern of a rapid rise in production, followed by a peak and then declining production occurred in Johnson and Sheridan counties between 2004 and 2009. The combined production of conventional gas and CBNG in the study area peaked at 581.3 Bcf in 2009, declining to 560.9 Bcf in 2010. Electrical Power Generation, Including Wind Recent expansion of the electrical generating capacity the region since the Phase I study has included the completion of the 422-megawatt (MW) Dry Fork Station power plant and 110-MW WYGEN III power plant, both coal-fired, plus more than 430 MWs of wind energy capacity (AECOM 2011). Task 1C Report December 2012 AECOM ES-4 700 600 Campbell Converse Crook Johnson Sheridan Weston 500 400 300 200 Natural Gas Production (Bcf) 100 0 1990 1994 1998 2002 2006 2010 Note: Includes production from conventional gas and CNBG sources. Sources: WOGCC 2003, 2012; WTA 2012. Figure ES-3 Annual Natural Gas Production by County (1990 – 2011) Current Social and Economic Conditions Current cumulative social and economic conditions for the six-county study area as a result of energy-related development are summarized below, many of which reflect the recent activities in the Wyoming PRB study area as defined in the Task 2 analysis (AECOM 2011). Population and Demographics Population Change. Population growth is the single best indicator of cumulative social and economic changes in the six-county study area. The impetus for growth as coal production increased was tempered by productivity increases in the mining industry, coupled with declining production of other energy resources. Consequently, the population in the six-county study area increased a relatively modest 11 percent (9,318 residents) between 1980 and 2000, reaching 91,916 (Table ES-1). Campbell County’s total population was 33,698 in 2000, which was the fourth highest in the state. Between 2000 and 2010, the six-county study area experienced renewed population growth, primarily linked to expanded coal production, residential and industrial construction, CBNG development, and most recently, oil development. Population counts from the 2010 Census registered a total population of 111,942 for the study area, nearly 22 percent higher than the population in 2000.

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