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Proposed royalty rules put long-term PRB coal exports at greater risk

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Report summary

The US Department of Interior (DOI) has proposed changes to the determination of royalties and coal lease sales as part of a general overhaul of energy valuation rules for coal, oil and gas. We find that the proposed royalty scheme may lower royalty revenues for many years. However, after 2025, when PRB coal is in greater demand, the new royalty scheme will result in much greater royalty revenues and lower producer margins which combination could threaten PRB exports.

What's included

This report contains

  • Document

    Proposed royalty rules put long-term PRB coal exports at greater risk

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Table of contents

  • Summary
  • Background
  • What part of the proposed new rule is relevant to export sales from the PRB?
    • Key elements of existing and proposed royalty schemes
    • Estimated royalty revenue for existing and proposed royalty rules (US$ millions)
  • Competition
  • Uncertainties
  • Conclusions

Tables and charts

This report includes 4 images and tables including:

Images

  • Competition for sub-bituminous markets in South Korea, 2015, existing royalties incl in mining costs
  • Competition for sub-bituminous markets in China, 2030, existing royalties incl in mining costs
  • Proposed royalty rules put long-term PRB coal exports at greater risk: Image 1

Tables

  • Proposed royalty rules put long-term PRB coal exports at greater risk: Table 1

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