Chevron exiting coal mining

CHEYENNE, Wyo. - Petroleum giant Chevron Corp. said Friday it plans to get out of the coal industry by the end of the year.

The decision came after the company determined that new coal technologies were developing too slowly to make staying in the industry a good strategy, Chevron Mining Inc. spokeswoman Margaret Lejuste said.

One of the technologies is known as coal-to-liquids, in which coal is processed into diesel, gasoline or other fuels.

"Those technologies are so far into the future, 10 to 15 years in the future, they made the strategic decision to focus on other operations other than mining," she said of the company.

Chevron intends to sell off three coal mines in Wyoming, New Mexico and Alabama. The sites include the company's open pit mine outside Kemmerer in western Wyoming, which has been on the market for about a week.

"It's my understanding there are a number of interested parties who are looking at the mine," Lejuste said.

The company also is closing a deal with Tampa, Fla.-based Walter Energy to sell its North River underground mine in western Alabama. A tentative agreement with Walter Energy was announced last year.

San Ramon, Calif.-based Chevron also may sell reclaimed land from a surface coal mine in northwestern New Mexico that has been closed since 2009.

The three mines together produced nearly 10 million tons of coal in 2009.

Chevron also intends to sell its 50 percent stake in a proposed coal mine outside Sheridan in northern Wyoming.

The Kemmerer mine, which employs about 300 people and produces around 5 million tons of coal a year, is one of the world's largest open pit coal mines. Even so, it's a small producer compared with the strip mines of northeast Wyoming, which can yield upward of 100 million tons of coal a year.

Wyoming produces 40 percent of the nation's coal, more than any other state, and has invested heavily in coal technologies.

Coal-to-liquids should be viable at today's oil prices, said Mark Northam, director of the University of Wyoming School of Energy Resources.

But questions remain about the performance and long-term viability of coal-to-liquids plants, Northam said.

"Some folks can stomach that uncertainty and some can't," he said.

A company such as Chevron has other business besides coal to fall back on, he said, whereas a company such as St. Louis-based Arch Coal is all about coal.

Arch Coal has invested in a planned $2.7 billion coal-to-liquids plant tentatively set to open in southeast Wyoming in 2014.

"If you were looking at it from the point of view of Arch Coal, where coal is your product and you're looking to expand the market and protect its position, you would have a different view," Northam said.