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North Dakota overtakes Texas as top US lignite producer in 2018

A sharp decrease in Texas lignite coal output handed North Dakota the title of top U.S. lignite producer in 2018 for the first time in at least a decade, as mine closures and alternative energy sources continue to reduce coal's share of the energy mix in Texas.

Year over year, Texas's lignite production declined 33.2% to 22.7 million tons, while North Dakota's grew by about 3% to 29.6 million tons, according to data compiled by S&P Global Market Intelligence. Total U.S. lignite production dropped 15.7% to 57 million tons.

Texas mined 50.6% less lignite in 2018 than it did in 2011; over the same period, North Dakota's output increased by 5%.

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Ches Blevins, executive director of the Texas Mining and Reclamation Association in Austin, said he is not surprised North Dakota overtook Texas, which has seen several coal mine closures in recent years coupled with power plants shifting toward natural gas generation. With low natural gas prices as well as more wind and solar coming onto Texas's grid, "you're not going to see the increase in demand that would justify opening new coal or lignite operations" or expanding existing sites, he said.

Blevins said the state's lignite production has "probably stabilized somewhat" and he does not foresee any mine closures in 2019.

Mining operations and coal-fired power will remain a large part of Texas's energy portfolio for at least the next 10 to 15 years given the current regulatory environment and support for the fuel, he said.

Other Texas energy experts have said coal mining in the state could shut down entirely within a decade if coal plant retirements continue, natural gas remains cheap and renewable generation from wind and solar continues entering the grid at low price points.

"This has nothing to do with politics," said Fred Beach, assistant director for policy studies at the University of Texas at Austin's Energy Institute, in January. "This is just pure economics."

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Steve Van Dyke, vice president of communications for the Lignite Energy Council, said major, planned outages at power plants help dictate the rise and fall of North Dakota's coal production and consumption. Plant owners typically schedule an outage at each unit about once every three years, generally in the spring or fall when energy demand is reduced, for roughly six to eight weeks to add new systems or perform other major enhancements to the plant. In 2018 Coal Creek, the largest lignite-fueled plant in North Dakota, did not have a major outage, so the state burned more coal.

He forecasts that North Dakota lignite demand will remain "relatively stable" in 2019, though it may be down slightly depending on the plant outage schedule. Coal-fired electricity also costs less in North Dakota than in other parts of the nation because power plants are located adjacent to coal mines, eliminating transportation costs.

"I think it's the price, it's the quantity, it's where the mines and plants are located," Van Dyke said. "All of that stuff really signals that we're probably going to be using coal-based electricity for a long time."

Among the top 15 lignite mines in the U.S., Vistra Energy Corp.'s Kosse Strip mine in Texas, saw one of the biggest year-over-year drops in output, posting a 21% decrease to 8.7 million tons.

NACCO Industries Inc.'s Falkirk mine in North Dakota increased production 14% to 8.2 million tons in 2018, and its Coyote Creek mine raised output 17.4% to 2.5 million tons. The company's Freedom mine was the top producer for the year with 14.2 million tons, a 3.6% decline.

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