|SNL, Joshua Learn, 2/24/2017|
|Coal producers in the Powder River Basin will benefit if the Trump administration, as expected, lifts the federal coal lease moratorium, according to analysts.
“We view the move as positive for PRB names in the long term because it alleviates future constraints and [stanches] what would likely have been an effort to significantly increase royalty rates,” said Benjamin Salisbury and Lucas Pipes, analysts with FBR & Co., in a Feb. 23 report. They added that royalties could have jumped from 12.5% to 18.75%.
“Additionally, the move is a symbolic step against the ‘Keep it in the ground’ movement and a sign of optimism for fossil fuel industry regulation,” the analysts said.
Salisbury and Pipes noted that lifting the moratorium would likely not have any near-term effect on coal production. It would allow coal producers to expand their reserves when needed and maintain long-term pro duction capacity, though.
The confirmation of Rep. Ryan Zinke, R-Mont., as secretary of the Interior could be the catalyst for the administration, which is reportedly drafting the moratorium repeal, according to the report. “Rescinding the moratorium was part of the Trump administration’s plans for the first 100 days,” the report said.
Other expected steps the Trump administration will take to “end the war on coal,” according to the analysts, include watering down the U.S. EPA’s Clean Power Plan and abandoning the Paris agreement on climate.