Houston (Platts)--7Jul2015/456 pm EDT/2056 GMT

US coal production is expected to total an estimated 921.5 million st in 2015, down 7.5% from 2014 and the lowest total since 1987, a coal analyst for the Energy Information Administration said Tuesday.

Production totals could get pulled down further as a mild summer and continued low natural gas prices weaken domestic coal demand, said Elias Johnson, who co-authored the Short-Term Energy Outlook for July.

"If demand doesn't really rebound because of a warm summer, we could see consumption go even lower and that could lead to production going down," Johnson said. "We'll see what the summer does."

Production is expected to drop in each of the three coal producing regions. The Appalachian region will drop to 237.5 million st, down 12.1% from 2014, the Interior region will drop to 182.2 million st, down 2.7%, and the West will drop to 501.8 million st, down 6.9%, according to the EIA.

Coal exports also are expected to drop to 87.4 million st, down 10.2% from 2014. In 2016, the EIA projects exports will total 88.2 million st.

The EIA also projects coal consumption for electricity generation will decline to 794.8 million st, down 6.6% from 851.4 million st in 2014. In 2016, the agency estimates electric power consumption will total 805 million st, up 1.3% from this year.

Factors behind the drop in consumption include low natural gas prices and less demand due to a mild winter. A mild summer could bring down those totals further, Johnson said.

Last week's Supreme Court ruling that remanded the Environmental Protection Agency's Mercury and Air Toxic Standards, or MATS, back to lower courts, also is not expected to help as the EIA has not heard of any generator changing course on retiring coal plants, Johnson said.

One bright spot for the coal industry in the report shows that as production and consumption for electricity generation are expected to drop in 2015, both are expected to have modest upticks in 2016.

"We're expecting gas prices to rise and expect a little more demand for electricity," he said. "Even though we are expecting more retirements for MATS, we're making the assumption that the remaining generators will be used at a higher capacity."

For all sectors, coal consumption is estimated to total 856.5 million st in 2015, down from 916.9 million st in 2014. In 2016, the agency estimates US coal consumption will total 864.7 million st.

The agency predicts a 0.5% uptick in coal production in 2016 to 926.5 million st, largely due to the expectation that natural gas prices will increase to $4.12/MMBtu in 2016 from $3.84/MMBtu in 2015.

--Jeffrey McDonald, jeffrey.mcdonald@platts.com
--Edited by Derek Sands, derek.sands@platts.com

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