Coal to remain viable despite regs

June 23, 2014 | By Barbara Vergetis Lundin

Coal is in a good position to keep its majority share of the U.S. power market, based on winter 2014 consumption and inventory data from Bentek Energy. U.S. coal consumption in winter 2013-2014 increased 17 percent from winter 2012-2013 -- to 74.1 million short tons per month. Similarly, coal-fired generation accounted for an estimated 44 percent of the total U.S. power stack, compared to 41 percent during the previous two winters, according to Bentek.

"Based on our analysis, coal is expected to remain a viable fuel source in the U.S. power sector, despite increased environmental regulation and competition from cheap and plentiful shale natural gas," said Michael Bennett, a Bentek analyst and the report's lead author. "This contrasts sharply with the past decade, during which coal's market share dropped by 12 percent."

A major driver of heightened winter coal consumption was natural gas prices, which hit $7 per million British thermal units (MMBtu) several days this winter, according to the report. They also averaged $4.60/MMBtu at Henry Hub, the standard delivery point for the New York Mercantile Exchange (NYMEX) natural gas futures contract in the U.S. -- compared to $3.46/MMBtu during the winter of 2012-2013 and $2.75/MMBtu in winter 2011-2012. As a result, coal stockpiles at U.S. power facilities fell to the lowest levels since 2006.

Stockpiles peaked in mid-June 2012, but plunged to 113 million short tons in March, compared to a five-year average of 177.9 million short tons. Reserves have since rebounded to 141.5 million, according to the report, but based on historical trends, are unlikely to stretch beyond 136 million short tons by the end of June -- about 18 million short tons less than the five-year minimum.

For more:
- see this report

http://www.fierceenergy.com/story/coal-remain-viable-despite-regs/2014-06-23