U.S. coal production down 2.7% in 2013
Total coal distributions in the United States for 2013 were 976.0 million short tons (mmst), according to the Energy Information Administration’s (EIA) Annual Coal Distribution Report. Total coal distribution fell by 2.7% compared with 2012, reports the EIA.
Domestic distributions were 858.3 mmst while foreign distributions were 117.7 mmst. Domestic distributions were down 19.0 mmst, or 2.2%, while foreign distributions were down 8.1 mmst, or 6.4%. Wyoming was the leading state of origin for coal, accounting for 385.5 mmst, or nearly half, of domestic shipments. The next closest state of origin was West Virginia, which accounted for just 69.61 mmst, or just 18% of the coal that originated from Wyoming. Texas was the leading destination for coal, accounting for about 99.0 mmst of receipts in 2013.
Railroads moved about 67.9% of domestic coal, while river accounted for 12.6%, truck about 11.5% and tramway, conveyor and slurry pipeline accounting for 8.0% collectively. Great lakes and tidewater pier transport modes accounted for less than 0.1% of total shipments.
Electrical power generation moving towards greater efficiency
The electric power sector received the overwhelming majority of domestic coal, receiving 92.5% of the domestic distribution, according to the EIA. As part of the White House’s push to lower carbon pollution from power plants, many of the recipients of coal in the U.S. are working towards greater efficiency, both in energy gained from the coal being burned and in lower the amount of emissions from the process.
Newer coal-fueled power plants in the U.S., like the John W. Turk, Jr. Power Plant, use “ultra-supercritical” (USC) units for higher efficiency. USC technology allows for efficiencies of 39% to 40%, meaning they require less fuel than other coal-fired processes to produce the same amount of electricity. The higher plant efficiencies also mean the plant produces fewer emissions, including Co2, nitrogen oxide, mercury and particulate.
The Turk plant began operations in 2012 and has 600-megawatt capacity. The plant required an investment of $1.8 billion, the majority of which came from AEP Southwestern Electric Power Co. (SWEPCO), who owns a 73% interest in the plant. Compared to a conventional coal-fired plant of similar output, AEP/SWEPCO estimated the Turk facility’s ultra-supercritical process would use 180,000 fewer tons of coal and produce 320,000 fewer tons of carbon dioxide annually.
The standards proposed by the Environmental Protection Agency are calling for coal plant emissions to be lowered to 1,100 lbs of carbon monoxide per megawatt-hour (MWH), even though the advanced facilities produce around 1,800 lbs per MWH. At least 100 coal-fired plants either closed their doors or scheduled shut-downs in 2014 alone. Alpha Natural Resources accounted for 35 of those plants and its Chief Executive Officer, Kevin Crutchfield, has accused the Obama administration of waging a war on coal. More than 40 gigawatts of coal fired capacity will be retired by 2025 and there will be minimal new investment, according to the EIA’s 2015 Annual Energy Outlook.
Matt Mead, Governor of Wyoming, expressed his concerns on the future of coal in an exclusive interview with Oil & Gas 360® earlier this month. He said: “When coal produces forty percent of electricity and you think about suppressing coal or making it prohibitively expensive, that isn’t just a loss in terms of what coal means to Wyoming but it frankly puts the country at a competitive disadvantage not to have the low cost electricity that is produced by coal that helps in manufacturing; it helps in every way because energy prices touch everything we do.”
Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.