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UMWA and Murray agree on drilling

• Low natural gas prices are making competition harder

April 23, 2012
By CASEY JUNKINS , For the Times Leader

ALLEDONIA - Although they may disagree in certain areas, Murray Energy Corp. and the United Mine Workers of America agree that drilling for natural gas near coal mining operations can be dangerous.

However, as gas producers continue collecting acreage for drilling in southern Belmont County and northern Monroe County, the company and union realize it is likely they will have to share the landscape with gas drillers for the foreseeable future.

"The fact that natural gas is being produced at all obviously is of concern to coal operators - and the UMWA - as long as that gas can be sold at the extremely depressed prices it is selling for today," said Phil Smith, director of communications for the UMWA. "The real issue is how we keep the opportunities for coal strong into the future so that it can continue to be competitive while being mined as safely as possible."

Robert Murray, founder and chief executive officer of Murray Energy, said President Obama's "war on coal" - combined with what he terms "non-efficient work rules imposed by the UMWA" - may force him to close the Powhatan No. 6 Mine, which he has operated since buying it in 1988. Union officials said there are now 487 UMWA employees at the Powhatan mine.

Murray continues building the $77 million addition to his nearby non-union Century Mine, which he said may serve as a replacement for the Powhatan mine if he needs to close it.

If Murray can keep the two current mines running, while opening the Century addition, he said this could create about 300 new jobs at his facilities. He now employees roughly 1,400 workers at the two mines and their supporting operations.

As Murray and the UMWA negotiate to find a way to keep the current coal operations in place and allow the expansion to also flourish, they also find themselves on the same side of the issue of gas drilling. Murray maintains that if wells are drilled near his mining operations without proper oversight by the Ohio Department of Natural Resources, this could endanger miners. Smith agrees, noting the "safety issue coal miners will confront is encountering a gas well that goes through the active coal seam."

"If they're Marcellus (Shale) wells, then the shale seam where the gas is lies several miles below the coal seam and really isn't a concern for miners' safety, as long as they're not drilling directly through the mine or through areas the company intends to mine in the future," said Smith.

Murray has said he does not want to stop oil and gas drilling in eastern Ohio, as he wants to see his friends and neighbors profit from the oil and natural gas leases they have signed with companies like Chesapeake Energy, XTO Energy, Gulfport Energy, Hess Corp. and Oxford Oil Co.

However, there is a debate over whether Murray's coal mining rights should continue to hold primacy over natural gas drilling rights, or if the Ohio Legislature will look to change this law.

Current law allows coal mining interests to object to wells scheduled to be drilled in coal-bearing townships. Murray said he had to object to some well plans that would have allowed gas companies to drill right into his coal seam.

"There are many areas ... where gas and oil wells can be sited without objection of our longwall mining companies," Murray wrote in August to the ODNR. "Again, directional wells may be drilled horizontally beneath any of our ... longwall panels laid out for mining. We are only concerned with the penetrations of our coal seam."

"I am not trying to hold up the gas wells," he said. "I just want them to work with me so everyone is safe."

Beyond matters of safety, Murray and the union also agree it is becoming increasingly more difficult for coal to compete with natural gas, especially when that gas is now selling for under $2 per unit.

"It is difficult for coal to compete right now, and that's frustrating for everyone involved in the coal industry," Smith said. "But natural gas prices have a consistent history of sharp spikes and equally sharp drops, and we believe that pattern will continue. Before long, gas will be much less economical than it is today."

Murray has said there are "multibillion-dollar oil and gas companies" now working in Ohio and West Virginia that are trying to "run over" coal.

Thomas Stewart, executive vice president of the Ohio Oil and Gas Association, has said his industry is not trying to endanger coal miners - or put operators out of business - noting he believes "Bob Murray is a great American."

 
 

 

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