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Page added on July 16, 2017

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Coal to edge out natural gas in 2017

Coal to edge out natural gas in 2017 thumbnail

By a thin margin, coal will be the top source for U.S. power generation in 2017, according to the U.S. Energy Information Administration’s monthly Short Term Energy Outlook released Tuesday.

The EIA report projects coal will fuel 31.3 percent of electricity in the U.S. in 2017, compared with 31.1 percent for natural gas. In 2016, natural gas surpassed coal as the nation’s top fuel for the first time, totaling 33.8 percent of generation compared with 30.4 percent for coal. Experts take differing views on the long-term significance of the recent uptick for coal, but the industry seems glad to have some good news.

“This report is a very positive sign for coal and that it is moving in the right direction,” said Bill Raney, president of the West Virginia Coal Association. “It shows that coal is still a very viable and most dependable energy source in the country.”

The agency has projected natural gas to be the top fuel in 2017 in most of its reports so far this year, including June’s edition, but increasing gas prices as well as higher hydro generation have pushed it below coal in the latest forecast.

Coal supply and production

The EIA estimates that coal production declined by 169 million short tons, or 19 percent, in 2016 to 728 million, the lowest level of coal production since 1978.

In 2017, growth in coal-fired electricity generation and exports is expected to lead to an increase of 57 million short tons, or 8 percent, in total U.S. coal production.

“Production of coal is up in the first six months of 2017 in West Virginia by approximately 18 to 19 percent,” Raney said. “After eight years of an administration that was attacking coal, now we are seeing the beginning of what can happen when there is support for coal on the federal level. We need to continue this positive momentum.”

Increases in production from the Appalachian region and the Interior region are expected to be 16 million and 15 million short tons, respectively, according to the EIA report. Production in the Western region is forecast to increase by 26 million.

In 2018, total coal production is expected to remain relatively unchanged, with declines in Appalachian region production offset by increases in Interior region and Western region production, the report showed.

“Coal production has been increasing recently because of the huge drop due to the Great Recession of 2008 together with employment,” said Dr. Tony Szwilski, a professor and director at Marshall University’s College of Engineering. “Coal production in Appalachian states was about 391 million short tons in 2008 compared to 222 million in 2015, a drop of 23 percent.”

According to the EIA report, electric power sector coal stockpiles were 166 million tons in April 2017, the last actual data point, up 1 percent from the previous month, according to the report. This increase in total coal stockpiles is normal during the spring when the power sector builds coal stockpiles for use during the summer months when demand for electricity is greater, the report stated.

Coal consumption

Electric power sector coal consumption is forecast to increase by 9 million short tons (1 percent) in 2017, mostly because of rising natural gas prices.

“I think the bigger story is the fall of natural gas and growth with renewable energy sources,” said Richard Bajura, director of the National Resource Center for Coal and Energy at West Virginia University. “It is good to see that coal is holding steady while it faces stiff competition with cheaper natural gas and renewables.

“I expect to continue to see increases in natural gas prices, but coal will continue to face increased competition with cheaper gas prices and cheaper renewable prices,” Bajura said. “There is really no data of big distinction with this short-term outlook report.”

In 2018, demand for coal in the power sector is expected to increase by 2 million short tons.

“There is no long-term forecast to be made based on this data,” Bajura said. “This is a very complex market, and I believe cheaper natural gas and renewables will continue to make gains in the future, while coal will continue to hold steady.”

Coal trade

The EIA reported coal exports for the first quarter of 2017 were 58 percent higher than in the same quarter last year, with steam coal exports increasing by 6 million short tons. The trend continued in April, with exports 58 percent higher than in April 2016.

“The coal industry is still trying to get its feet under it after eight years of a war on coal,” Raney said. “We still have a lot of work to do, but this forecast shows positive reports and that’s great news for everyone in the coal industry.”

EIA expects growth in coal exports to slow in the coming months, with exports for all of 2017 forecast at 72 million short tons, or 12 million (19 percent) above the 2016 level. Coal exports are expected to be 63 million short tons in 2018.

Atlantic and Gulf Coast electric power generators are forecast to generally maintain their current levels of coal imports, which are primarily from Latin America. Total U.S. imports are estimated to have been 10 million short tons in 2016 and are forecast to remain between 9 million and 10 million in 2017 and 2018, according to the EIA report.

Coal prices

EIA estimates the delivered coal price averaged $2.11 per million British thermal units (MMBtu) in 2016, which is 5 percent lower than the 2015 price.

Coal prices are forecast to increase in 2017 and in 2018 to $2.15/MMBtu and $2.21/MMBtu, respectively, the report showed. Henry Hub spot prices are projected to average $3.22/MMBtu in 2017 and $3.52/MMBtu in 2018. They averaged $2.60/MMBtu in 2016, it reported.

Delivered utility coal prices are projected to average $2.15/MMBtu in 2017 and $2.21/MMBtu in 2018, up from $2.12/MMBtu in 2016.

Coal future

Coal is not going away and will always be part of the energy mix for at least 20 to 30 years, according to Szwilski.

Power sector generation from coal in 2008 was 49.9 percent, in 2016 it was 31.4 percent, and a peak generation was 56.8 percent in 1985, he said.

“There are basically two coal markets: power generation and coking coal for steel production,” he explained. “Both markets have dropped significantly since 2008 in line with the overall domestic and world economy. Coking coal price is about double that of thermal coal, so as steel production rises, coking coal will rise, especially exports, which holds significant promise.”

Szwilski says thermal coal production has been hit significantly by the boom and future promise of an expected secure supply of lower price shale gas.

“The coal consumption market is being diminished by power plants replacing the coal fuel base with shale gas while many coal power plants have been decommissioned,” he said. “The cost of extracting coal from the ground will also steadily increase. Big picture … world coal production is projected to peak in about 2035.”

Although the positive data for the coal industry from the EIA appears to be short term, coal officials still welcome the good news.

“All of this news is very encouraging for the coal industry,” Raney said. “Some may think these are just small movements in the right direction, but at least we are moving in a positive direction for the first time in eight years.”

herald-dispatch.com



11 Comments on "Coal to edge out natural gas in 2017"

  1. bobinget on Sun, 16th Jul 2017 3:03 pm 

    Price isn’t everything.
    Foul air and water sickens Republicans and independents even Trump voters. Take away medical for 20 million and a case for mass murder is conceivably.

    NG travels fairly safely in established pipelines.
    Coal requires endless heavy trains on sometimes questionable tracks,,,, requiring as many as three diesel powered locomotives to move.

  2. rockman on Sun, 16th Jul 2017 3:07 pm 

    “After eight years of an administration that was attacking coal, now we are seeing the beginning of what can happen when there is support for coal on the federal level.” Complete bullsh*t. First, those “attacks” were mostly rhetorical as indicated by US coal exports (mostly from govt leases) reaching an all time record high under President Obama. Second, nothing of the change from the Obama to Trump administration with regards to coal mining regulations has had an effective result that would show up yet in production stats. Just as the fact that US coal EXPORTS have significantly DECREASED under President Trump compared to those under President Obama can be credited to the current POTUS.

    As pointed out in the article increasing NG would logically seem to be the primary reason for utilities switching back to coal…by a rather small amount so far. But the real question: what happens when NG prices double in the future? It was there not long ago they were. And not that much longer ago when they peaked shortly at 4X the current price?

    And the EU? Despite all the green rhetoric its coal consumption has been on a plateau since 2000 except for a dip in 2009. But in the last year or so EU NG prices have declined significantly. That should keep coal coal consumption down. But same question: what happens if EU NG prices increase significantly or if Russian imports become restricted for whatever reason?

    It’s easy for residential and commercial consumers to be green…as long as it’s an economical option. But what will they do when that greenest starts sucking tens of $BILLIONS out of their pockets?

  3. Apneaman on Sun, 16th Jul 2017 6:26 pm 

    If there is a war on coal the enemy is Natgas frackers because the environmental rules have been the same until last year.

    Power plants, which use 93 percent of the coal produced nationally, have been operating under the same EPA regulations signed into law by President George H.W. Bush in 1990. Proposed new rules since then have all been challenged in court and not implemented until June 2016, when the EPA’s restrictions on mercury and other toxic emissions were approved by the U.S. Supreme Court.

    Consumption of coal continued to grow under those 1990-era EPA rules until 2008, and then went into steady decline, dropping by 23 percent from 2008 thru 2015.

    The data show the drop in those years to be correlated with the shale revolution, as natural gas production increased by a factor of more than 10 and its price dropped in half, the researchers say. And, due to the continuing — and in some cases accelerating — technological and economic advantages of gas over coal, the decline in coal is expected to continue at least decades into the future.

    https://www.sciencedaily.com/releases/2016/10/161007105548.htm

    The fake war on coal is just one more conservatard think tank invention parroted by millions of unthinking tribal morons. Fact checking? We don’t need no stinking fact checking.

  4. deadlykillerbeaz on Sun, 16th Jul 2017 8:53 pm 

    When I was a child, maybe eight, I would shake the ash grate in the old coal burning furnace.

    There was a coal bin in the basement next to the coal burning furnace. A fire box, a heat exchanger, a bonnet surrounding the firebox with heat ducts sending hot air to various rooms.

    Around 1964 or so, the old coal furnace was hauled away and a new natural gas furnace was installed.

    No more hauling ashes to the alley, no more coal being fed into the firebox, just a blower and a burner to burn natural gas.

    Saved a lot of work hauling coal and ashes.

    I cried when I didn’t get to haul the coal ashes anymore.

    Coal to generate electricity is the way to use coal.

    Lots of coal used to make steel, that amount of consumption won’t change much.

  5. Apneaman on Sun, 16th Jul 2017 11:36 pm 

    Coal Plan Sparks Ire as Myanmar Struggles to Keep Lights On

    “Opposition to a planned $3 billion coal-fired power plant in eastern Myanmar is highlighting the challenges facing Aung San Suu Kyi’s government in crafting a coherent energy policy in one of Asia’s poorest and most electricity-starved countries.

    With only a third of the country’s 60 million people connected to the grid and major cities experiencing blackouts, finding investors is tough for Myanmar and it is now looking at options, from coal to deep-sea gas, to boost its power supply.

    Myanmar has reserves of natural gas, but most existing offshore production is exported under agreements struck during the junta era, while new blocks will not come on stream for some years.

    Coal would be one of the quickest ways to ramp up power generation but, as protests against the proposed 1,280 megawatts (MW) project in the eastern Kayin state show, the option is unpopular in Myanmar.

    More than 100 activist groups across the country have signed a joint statement calling for the project to be canceled and urging the government to look at renewable energy instead.”

    https://www.usnews.com/news/world/articles/2017-07-11/coal-plan-sparks-ire-as-myanmar-struggles-to-keep-lights-on

  6. bobinget on Mon, 17th Jul 2017 7:58 am 

    As long as wealthy folks are damned to breathe the same air as the other 99%, natural gas will prevail.

    Death and Disease from Power Plants – Clean Air Task Force (CATF)
    http://www.catf.us › Fossil Transition › Problems of Coal
    This latest report finds that over 7,500 deaths each year are attributable to fine particle pollution from U.S. power plants. … This was achieved through the near doubling of the amount of scrubbers (the technology used for reducing SO2 pollution) installed at power plants and additional retirements of coal capacity.
    Study: Air pollution causes 200,000 early deaths each year in the U.S. …

    news.mit.edu/…/study-air-pollution-causes-200000-early-deaths-each-year-in-the-us-…
    Aug 29, 2013 – To determine the number of early deaths from air pollution, the team … imagine [that] coal-fired power stations are burning relatively dirty fuel.”
    .
    Energy accidents – Wikipedia
    https://en.wikipedia.org/wiki/Energy_accidents
    Energy resources bring with them great social and economic promise, providing financial … In the US alone, more than 100,000 coal miners have been killed in … cut down on pollution related deaths from fossil fuel usage, US coal fired power plants … In 2013 a team of researchers estimated the number of premature deaths …

    Coal Burning Causes the Most Air Pollution Deaths in China, Study …
    https://www.nytimes.com/2016/08/18/world/…/china-coal-health-smog-pollution.html
    Aug 17, 2016 – Coal Burning Causes the Most Air Pollution Deaths in China, Study Finds … and caused 366,000 premature deaths in 2013, Chinese and American … That study estimated the number of premature deaths in China in 2013 …
    coal power: air pollution | Union of Concerned Scientists

    http://www.ucsusa.org/clean-energy/coal-and-other-fossil-fuels/coal-air-pollution
    In 2011, utility coal plants in the United States emitted a total of 1.7 billion tons … Burning coal is also a leading cause of smog, acid rain, and toxic air pollution. … fly ash) can cause chronic bronchitis, aggravated asthma, and premature death, …

  7. rockman on Mon, 17th Jul 2017 10:05 am 

    Bob – All those negatives from burning coal are certainly true. But what is also true: when NG prices increase 230% as they were just 9 years ago electricity prices in the US will jump. The good news: the time lag building new coal fired plants, given the short term volatility of NG prices, will make it difficult to justify such huge monetary commitments. OTOH power plants with the all ready built in fuel switch capability (as most in Texas) can respond quickly.

    As I said above: being green is much easier when it’s not a very expensive option. Not so much when the cost to US consumers adds tens of $BILLIONS to their electric bills.

    Same predicament for foreign consumers that are dependent on LNG for much of their supply. Current costs is 70%+ lower then they were not too long ago.

  8. Apneaman on Mon, 17th Jul 2017 10:18 am 

    rockman, there is no such thing as being Green – only pretending (very loudly) to be Green. Except when you’re dead – then you’re Green.

  9. Kenz300 on Mon, 17th Jul 2017 12:20 pm 

    Wind and solar are safer, cleaner and cheaper.

    Cheaper WINS !

    The cost of wind and solar with battery storage continues to fall every year making them the future of electricity generation.

  10. Southwest_PA on Mon, 17th Jul 2017 12:21 pm 

    Interesting to note that Coal + NG accounted for 64.2% of 2016 generation, and are forecast at 62.4% in 2017. I know those are percentages rather than absolutes, but other sources gained 1.8%, if you believe the numbers…

  11. DerHundistlos on Tue, 18th Jul 2017 2:04 am 

    Rockman

    Here we go again. While I appreciate your instinctive hatred of Obama, at least get the facts straight.
    You once again fail to provide the whole picture. When Obama came into office, US coal exports were 80 million tons. For 2016, US coal exports had declined to 60 million tons. A 25% reduction in exports hardly represents a record increase in exports.

    Here is a link to the US Energy Administration:

    https://www.eia.gov/todayinenergy/detail.php?id=30332

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