• 2 hours OPEC, Russia Said To Announce Oil Pact Extension On Nov 30
  • 5 hours Wintershall And LetterOne In Talks For $12B Oil, Gas Merger
  • 7 hours India Exempts State Oil Firms Mergers From Competition Approval
  • 9 hours Turkey Targets $5B Investment In Wind Energy By End-2017
  • 11 hours Weatherford Looks To Sell Assets To Ease Some Of $8B Debt
  • 12 hours OPEC Set To Move Fast On Cut Extension Decision
  • 14 hours Nigeria Makes First Step Away From Oil
  • 1 day Russia Approves Profit-Based Oil Tax For 2019
  • 1 day French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 1 day Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 1 day Oil Production Cuts Taking A Toll On Russia’s Economy
  • 1 day Aramco In Talks With Chinese Petrochemical Producers
  • 2 days Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 2 days Maduro Names Chavez’ Cousin As Citgo Boss
  • 2 days Bidding Action Heats Up In UK’s Continental Shelf
  • 2 days Keystone Pipeline Restart Still Unknown
  • 2 days UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 2 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 2 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 3 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 3 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 3 days Oil Prices Rise After API Reports Major Crude Draw
  • 3 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 3 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 3 days Statoil Looks To Lighter Oil To Boost Profitability
  • 3 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 3 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 4 days Whitefish Energy Suspends Work In Puerto Rico
  • 4 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 4 days Thanksgiving Gas Prices At 3-Year High
  • 4 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 4 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 4 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 4 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 5 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 5 days ConocoPhillips Sets Price Ceiling For New Projects
  • 7 days Shell Oil Trading Head Steps Down After 29 Years
  • 7 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 7 days Statoil To Boost Exploration Drilling Offshore Norway In 2018

Coal Production Collapses To 35-Year Low

Coal Mine

Coal production in the first three months of 2016 was 173 million short tons, the lowest quarterly level in the United States since a major coal strike in the second quarter of 1981. Among the regions tracked by the EIA, the Powder River Basin (PBR) in Montana and Wyoming saw the largest decline both in terms of absolute tonnage and as a percentage of the previous quarter.

Demand for coal has dropped off steeply as natural gas becomes the primary fuel source for electrical generation. Electricity generation accounts for more than 90 percent of domestic coal use, but environmental regulations have caused the fuel source to fall out of favor. Compounding the problem for coal producers, electricity demand is growing more slowly, while historically-low natural gas prices are making it easier for electricity generators to switch to the cleaner burning fuel, reports the EIA.

A 17 percent decrease in coal production from the previous quarter marked the largest quarter-over-quarter decline since the fourth quarter of 1984. Mild winters both this year and last were likely responsible for the steep decline in production in the beginning of this year. Electric power plants purchased more coal than they needed throughout the fourth quarter of 2015, resulting in a 34 MMst build in coal stockpiles, the highest Q4 net increase on record.

Electric power generators were encouraged to burn coal from their stockpiles rather than purchase more from coal producers in the first quarter of the year. Data from the American Association of Railroads showed coal carloads were down 20 percent quarter-over-quarter as power generators ordered less coal.

The drop in demand for coal was not concentrated in any particular region, either, the EIA reports. Texas, Michigan, Illinois and Oklahoma accounted for an average quarterly demand of 37 MMst of Powder River Basin coal in 2015, or about 40 percent of total PBR production. Demand for PBR coal from those four states fell 49 percent to 19 MMst in the first quarter of the year. First-quarter PBR coal production of 69 MMst was the lowest since 1995.

By Oil & Gas 360

 

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • JHM on June 13 2016 said:
    In 2015, capacity factors for coal and combined cycle natural gas plants were 55% and 56%, respectively. This indicates that the US is substantially oversupplied with baseload capacity, and the two fuels are simply competing on price to stay in the market. Neither fuel can be profitable until about a third of the existing baseload capacity is retired.

    According to FERC over the last 12 months ending April 2016, coal has lost over 21 GW of operating capacity, which is a mere 6.7% annual decline, not nearly enough to balance the market. Meanwhile natural gas and renewables have gained 9.2 and 13.1 GW of operating capacity respectively. From a capacity perspective, renewables now lead natural gas in replacing coal capacity. What is more worrisome here is that actually capacity factors are lower for natural gas than they ought to be for good economic performance.

    So natural gas plants are oversupplying the market with new capacity, and coal plants are not retiring fast enough. This places even gas plants at risk of pre-mature retirement. The power markets simply do not need as much baseload as they once did. For natural gas to return to profitability, at least 100 GW of coal needs to be retired this year.
  • Ness on June 12 2016 said:
    Sounds like you are long some coal stocks :)

    Good luck in getting any jury or judge to side with you
  • mchentrp on June 11 2016 said:
    The coal industry needs to sue the EPA.

Leave a comment

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