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Northern Appalachia coal production edged up at end of 2016


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Northern Appalachia coal production edged up at end of 2016

Production from the top 25 producing coal mines in Northern Appalachia cumulatively edged upward about 2.0% from the third quarter to the fourth quarter of 2016.

The mines produced about 24.2 million tons of coal in the last quarter of 2016, up slightly from 23.0 million tons produced in the same period a year ago. Cumulative production from the mines was down 4.0% for the 12 months ending with the final 2016 quarter compared to the year-ago period.

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The top-producing mine in the region, CONSOL Energy Inc.'s Bailey mine, produced 3.5 million tons of coal in the fourth quarter, up from 3.1 million tons in the prior quarter and 2.1 million tons in the year-ago quarter. The mine is operated by CONSOL's master limited partnership CNX Coal Resources LP. Other mines operated by CNX Coal as part of its Pennsylvania complex include Enlow Fork and Harvey. Harvey saw reduced production in the quarter compared to the prior quarter, while Enlow Fork production grew 2.0 million tons to 2.7 million tons quarter to quarter.

"We know our mines are ready to run the tons," CNX Coal CFO and Chief Accounting Officer Lori Ritter said on a recent earnings call. "If the markets will accept them at the price, we're ready to produce."

Murray Energy Corp. owns seven of the top producing mines in Northern Appalachia basin. Cumulative production from Murray's mines in the region was down to 10.5 million tons in the fourth quarter compared to 10.7 million tons in the prior quarter and 11.5 million tons in the year-ago period.

Murray's top mine, the Marshall County mine, produced 10.5 million tons of coal in 2016, up from 10.3 million tons in the prior year.

In an interview with S&P Global Market Intelligence, Murray Energy CEO Robert Murray said he focused on Northern Appalachia because the basin, along with the Illinois Basin, has the lowest cost, highest heating value coal in the U.S. on a cents-per-million-Btu basis.

"That's what you're selling — heat," Murray said. "I focused on longwall mining which is ten times more productive than continuous mining underground. I stayed away from surface mining because of environmental regulations and I focused on the waterway systems which are much cheaper than railroads."

Contura Energy, Inc., the company that was spun out of Alpha Natural Resources Inc. bankruptcy reorganization, mined 1.7 million tons of coal from the Cumberland mine in the recent quarter, up from 1.5 million tons in the prior quarter but less than the 2.1 million tons mined from Cumberland a year ago.

Alliance Resource Partners LP reported increased production from its Tunnel Ridge mine in the fourth quarter, beating both the prior period and year-ago figure. Tunnel Ridge coal production was up 11.9% in 2016 compared to 2015. Alliance's other Northern Appalachia mine, Mountain View, boosted production quarter-to-quarter at the end of the year, but cumulative production in 2016 was still down 4.5% compared to 2015.

Arch Coal Inc. reported lower coal production from both its Leer and Sentinel mines in the fourth quarter compared to the prior quarter.

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