• 4 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 7 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 2 hours Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 5 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 6 hours Total nonsense in climate debate
  • 1 day IMO 2020 could create fierce competition for scarce water resources
  • 6 hours IRAN makes threats, rattles sabre . . . . U.S. makes threats, rattles sabre . . . . IRAQ steps up and plays the mediator. THIS ALLOWS BOTH SIDES TO "SAVE FACE". Then serious negotiations start.
  • 2 days IMO2020 To scrub or not to scrub
  • 17 hours Theresa May to Step Down
  • 2 days Devastating Sanctions: Iran and Venezuela hurting
  • 9 hours Will Canada drop Liberals, vote in Conservatives?
  • 5 hours Apple Boycott in China
  • 1 hour Australian Voters Reject 'Climate Change' Politicians
  • 1 day Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 1 day Level-Headed Analysis of the Future of U.S. Shale Oil Industry
Alt Text

This Supermajor Is Leading The Energy Sector

This supermajor has been standing…

Alt Text

What The Market Is Overlooking In The Occidental Deal

Occidental Petroleum has caught a…

Alt Text

How To Play A Recovery In Oil Prices?

A realistic correction in the…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Trending Discussions

Why You Might Want to Buy America's Dirtiest Coal

I know I've written a lot about coal this week. There's simply been a lot of "can't miss" items emerging. (Which in itself might an indicator--often when I find my attention drawn to a sector repeatedly in a short time, it's because something important is unfolding there.)

This item too, I believe, is a critical trend in motion for the coal industry: the rise of dirty coal.

Platts this week reported some shocking data on this front, in regards to U.S. coal buying.

Most significantly with respect to major U.S. utility and heavyweight coal buyer The Tennessee Valley Authority. A firm that has made some surprising changes of late in its coal-purchasing patterns.

The company's power plants are located primarily in the southeastern U.S. Therefore, they've traditionally relied on feed of Central Appalachian (CAPP) coal for electricity generation, from nearby Kentucky and Tennessee.

But the numbers show that Tennessee Valley Authority has lately ceased purchases of CAPP coal almost completely. In fact, a company spokesman said that by 2016 the firm expects to source only 1% of the 45 to 50 million short tons it uses annually from Appalachia.

The reason is: CAPP coal isn't dirty enough.

CAPP is in fact one of the cleaner coals produced in the U.S. Because of that, it's desired by environment-conscious power producers--who pay a significant premium for CAPP as compared to dirtier coals. Today, CAPP coal sells for $65 per ton, while dirtier coals like Illinois or Powder River go for $46 and $10 per ton, respectively.

But increasingly exacting environmental standards are eroding CAPP's appeal. Tightening standards recently prompted Tennessee Valley Authority to spend $5.4 billion on new emissions controls at its plants. With this new technology in place, the generators can burn even the dirtiest coals without infracting amounts of air pollution.

Thus eliminating the incentive to pay a premium for clean coal. The company has stated that it plans to increasingly source coal from cheap basins like the Illinois, Unita and Powder River--providing significant cost savings for its now environmentally-insulated operations.

This speaks to a sea change in the American coal business. With environmental pressure increasing, more coal burners will go high-tech like Tennessee Valley has. And in such an environment, cheap and dirty coal may in fact become one of the most saleable products around.

That's a major turn-around. And likely an investable opportunity, through producers focused in formerly-parriah dirty coal basins.

Here's to cleaning up the dirt,

By. Dave Forest




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News