With 14.9 GW of coal-fired capacity to retire in 2022, the Energy Information Administration July 12 estimated 2022 coal consumption at 481.7 million st, down 3.9% on the year.
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The EIA projected that power-sector coal consumption will decline by another 4.8% to 458.8 million st in 2023. Coal generation is expected to decline from 22.5% in 2021 to 21.1% in 2022, before falling to 19.9% in 2023 – the same coal generation share as 2020.
Natural gas is expected to make up for some of coal's declining share of the power stack in 2022 and beyond. The EIA estimates natural gas generation nearly flat on the year at 37.1% in 2022, before declining to 36.4% in 2023.
"The similar share of natural gas generation despite higher prices results partly from our forecast that electricity generation from coal will decline from 23% of the total in 2021 to 21% in 2022 and to 20% in 2023, which reflects the continued retirement of coal-fired generating capacity and other coal market constraints," the EIA said.
On a $/MMBtu basis, coal is projected to be much cheaper than natural gas in 2022 at $2.10/MMBtu versus $6.25/MMbtu, respectively. The EIA projected in its July 12 report that delivered utility coal prices will average $1.99/MMBtu in 2023, while spot Henry Hub prices are estimated at $4.94/MMBtu. Despite coal's lower cost, it's projected to continue losing generation share to natural gas due to coal plant retirements, transportation limitations and logistical constraints, such as the lack of investment in new mines.
Total coal consumption was revised downward in the latest report to 526.8 million st, 0.3% lower than the previous month's estimate and 3.5% lower than actual 2021 consumption. The EIA projected that 2023 total coal consumption will be 505.6 million st, up 1.7% from the June estimate.
Meanwhile, the EIA projected that coal production and exports will increase in 2022 by 2.8% and 3%, respectively. The EIA projected that 594.6 million st of coal will be produced in 2022, and that 87.8 million st will be exported. Those figures or projected to fall in 2023, with production down 0.1% on the year to 594 million st, and exports falling 5.5% to 82.9 million st.
Dry gas production is estimated to rise 3% from 2021 levels to 96.2 Bcf/d in 2022, and again by 3.9% in 2023 to 100 Bcf/d, according to the EIA's report. Of that volume, an estimated 10.85 Bcf/d are expected to be exported in 2022. The EIA said it revised the 2022 LNG export figure downward from the previous month's estimate due to an outage at a major terminal.
"We reduced our forecast for LNG exports in 2H22 as a result of the outage at the Freeport LNG export facility in Texas," the EIA said. "Our forecast assumes the facility will return to near full operations in January 2023."
The EIA estimated that total natural gas consumption will rise 3.4% on the year to 85.96 Bcf/d in 2022 before slightly falling to 85.44 Bcf/d in 2023. An estimated 31.82 Bcf/d of natural gas will be consumed by the power sector in 2022, up 3.5% from 2021 levels. That figure is projected to fall 1.5% in 2023 to 31.34 Bcf/d.