By Darrell Proctor
September 9, 2018 - More than 10% of the coal mined from eight U.S. regions in the first half of 2018 was sent to coal plants scheduled for retirement between this year and 2032, according to a report from S&P Global Market Intelligence. The trend is another troubling sign for the struggling coal industry.
The analysis released September 7 comes two weeks after the Trump administration announced changes to emissions regulations in an effort to allow coal-fired plants to run longer. The administration has made helping the coal industry a priority, citing coal generation’s importance to national security.
The report also said that more than 6% of the coal mined in the United States in 2017 was delivered to power plants that are scheduled for closure over the next decade. The information comes from an S&P Global Market Intelligence analysis of coal production and fuel delivery data.
S&P said just more than 330 million tons of coal was produced by U.S. basins in the first six months of this year, and at least 33.6 million tons went to plants that are scheduled to be shuttered by 2032. The report also said just less than 6 million tons sent to coal plants last year went to facilities that have closed or will close by the end of this year. Another 11.8 million tons went to plants scheduled to retire in 2019.
The analysis said 10.4 million tons delivered in 2017 went to plants scheduled to close in 2022. The report said 8 million tons in 2017 was sent to plants expected to close in 2025.
S&P said that on a tonnage basis, the Powder River Basin, located mostly in Wyoming, “is the most exposed to coal plants set to retire,” with at least 17.8 million tons of coal, or 11.3% of the basin’s total production in 1H2018, sent to U.S. power plants with announced retirement dates.
The report said that the Four Corners region of the U.S. Southwest, which includes parts of Colorado, Utah, Arizona, and New Mexico, had 64.2% of the coal produced in the region in 2017 delivered to coal plants with set retirement dates.
Two areas—the Illinois Basin and Northern Appalachia—had just 5.5% and 3.5%, respectively, of their total 1H2018 production delivered to plants with scheduled retirements. Utility demand for coal in the Appalachia region has fallen in recent years due to prior closures of coal plants, and much of the area’s coal is now exported or used in metallurgical production.
The S&P report also noted coal companies with more exposure to scheduled power plant closures, including Westmoreland Coal. The analysis said Westmoreland produced about 7.4 million tons of coal in 1H2018, and 92% of that output was sent to plants already planning to retire in the next 15 years. It said other coal producers with large exposure to planned retirements are Peabody Energy, Arch Coal, Cloud Peak Energy, Blackjewel, and Murray Energy.
S&P said its analysis does not include coal deliveries impacted by FirstEnergy’s recent announcement that it will shutter four plants, including its Bruce Mansfield and W.H. Sammis power plants, which burned 3.3 million tons and 2.9 million tons of coal, respectively, in 2017. Murray Energy is the lead supplier of coal to those plants.