August 16, 2017 - Neither the dead nor the living read their obituaries. Coal isn’t reading them because it isn’t dead.

From the 2nd quarter of 2016 to the same period this year, coal production rose almost 17 percent. The number of new met mines in Central Appalachia rose from 155 to 212 in the year ending in June, said Argus Coal. 

Offshore demand for U.S. met coal has soared by 60 percent this year. In fact, the U.S. is exporting more coal to every major region, including the EU, where shipments are up by more than a third over 2016. Nuclear plants are struggling in the UK and in France, creating surprisingly strong demand for U.S. coal. Steam coal exports to Asia, where grids are still growing, have doubled.

Here at home, coal at least for now is holding its own. EIA’s recent short-term forecast has coal narrowly edging out national gas for power generation this year, as it has most every year before 2016. That year, an anomaly, gas grabbed 34 percent of the market, pushing down coal’s share to 30 percent.

But the gas inventory glut that dampened gas prices last year is waning, leading EIA to project coal to continue its recovery next year when it narrowly wins the market share rivalry with gas. With each energy source claiming about a third of the market, nuclear power’s growth stagnant and renewables sans hydropower at not yet 10 percent of the market, baseload power still relies heavily on fossil energy.

Attribute part of the nascent coal revival to the unshackling of myriad regulations that drove coal plants into retirement and production down sharply. But it’s Darwinian logic that explains most of the revival. Producers that survived the brutal stress test from both shale gas and federal regulation squeezed costs out of their operations, positioning the U.S. to become more than a swing supplier to off shore markets. EIA analyst Elias Johnson told Reuters [July 28, 2017] that it’s possible “the U.S. will become more of a primary player in global coal trade market.”

Exports could be the key to coal’s longer-term revival, but not necessarily of coal. It may be natural gas exports.

Hungry for better prices abroad, both LNG and piped gas to Mexico and Canada could affect the game if not change it completely.  Although shipping, liquification, etc. double the price of U.S. LNG for sale in Europe, the low cost of shale production makes our basins competitive with Russia’s. The cheap gas that tormented U.S. miners may soon be Gazprom’s headache. “Greater LNG exports raise domestic prices and lower prices internationally,” concluded a 2015 report for EIA [Utility Dive, Aug. 11, 2017]. Already analysts expect U.S. gas prices to climb steadily. EIA sees $3 MMBtu gas rising to $3.29 next year.

That could be just the beginning. LNG potential has been restricted in part by infrastructure.  Not for long.  The sole LNG terminal, Sabine Pass, may be joined by four others on the Gulf and Atlantic coasts by 2021 that already have permit approvals. Last week Continental Resources’ CEO Harold Hamm told The Financial Times [4 August 2017] to expect gas exports to triple over the longer term, eventually taking 40 percent of current domestic production.

“If energy supplies are sent into higher-priced global markets, will there be an impact on consumers in the United States?” asks the Utility Dive’s [Aug. 9, 2017] Robert Walton. Good question, with no certain answer. But unless more coal plants are kept in operation, any impact American consumers feel is likely to be worse.