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EIA projects more decline in coal production; Longview Power to diversify plant

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


EIA projects more decline in coal production; Longview Power to diversify plant

Numerous developments this week cast doubt on coal's future in the domestic space, including a grim forecast from the U.S. Energy Information Administration.

The agency projected that U.S. coal production will decline 3% from 2018 levels to 729 million tons in 2019, and estimated that 2020 will be the first year since 1978 that annual production will fall below 700 million tons.

The company behind one of the newest and most efficient coal-fired power plants in the nation wants to add solar and natural gas facilities to the West Virginia plant, making it a diversified energy operation. Longview Power LLC COO Steve Nelson said the company wants to complete the additions by late 2022 or early 2023.

"At the end of the day, we don't see ourselves as a coal-fired generation service supplier," he said. "We just see this overall as a responsible and viable business decision to diversify our fuel supply and the type of electricity product we're going to offer."

Colorado may be accelerating its shift away from coal-fired power as well. A state representative introduced a bill that would create consumer-backed bonds to retire coal plants sooner, with some of the proceeds helping workers and the surrounding communities. Since Democrats control both chambers of the legislature and the governorship, the bill has a strong chance of passing.

While coal in Texas faces less political opposition than in Colorado, some experts project economics could run the fuel out of the state within a decade. Should Texas move away from coal-fired generation entirely, its lignite mining sector would dry up; Wyoming producers would also take a hit. An S&P Global Market Intelligence analysis revealed that five Texas mines send all their coal to plants in the state, while 11 Wyoming operations delivered anywhere between 2.4% and 69.3% of their 2018 shipments through October to Texas generators.

Cloud Peak Energy Inc. is among the Wyoming miners that would suffer from a decline in coal demand from Texas. The pure-play Powder River Basin producer is already struggling financially, and this week Cloud Peak adopted a stockholder rights plan to protect its tax benefits from changes in stock ownership. Investment bank B. Riley FBR discontinued coverage of the coal producer as well.

In more positive news, the U.S. Department of Energy has $9.5 million available to fund cost-share research and development projects to make upgraded coal fuel, high-value products and for other advanced research.

Federal judges also heard oral arguments this week in a case to determine whether Murray Energy Corp. interfered with its employees' rights to report safety concerns to federal regulators. The U.S. Court of Appeals for the District of Columbia Circuit did not say when it will rule on the case.

Two other federal courts agreed on a mediator to address allegations that consulting firm McKinsey & Co. has conflicts of interest in the bankruptcy cases of Westmoreland Coal Co. and Alpha Natural Resources Inc.

Upcoming events

Energy forum: The United States Energy Association will hold its State of Energy Forum at 9 a.m. Jan. 24 at the National Press Club in Washington, D.C.

Carbon capture discussion: The Atlantic Council and the Global CCS Institute will host a discussion on the institute's report "The Global Status of CCS" from 3-6 p.m. on Jan. 28 at the Atlantic Council's headquarters in Washington, D.C.

West Virginia Coal Association: The 42nd annual West Virginia Mining Symposium will take place Jan. 29-30 in Charleston, W.Va.

Coaltrans USA: The 19th Coaltrans USA conference will be held Jan. 31-Feb. 1 in Miami.

Smart Mining: A mining and metallurgy conference will be take place Feb. 24-27 in Denver.

S&P Global Platts and S&P Global Market Intelligence are both owned by S&P Global Inc.