Coal’s Rebound is Good for West Virginia
As the effects of the Obama administration’s “War on Coal” have been pared back by President Trump, the coalfields of West Virginia are seeing a rebound in demand and production.
The numbers show that coal is rebounding in West Virginia, especially in the southern counties where the decline has been devastating to the region’s and state’s economy.
The northern counties’ coal production did not suffer as great a hit due to two factors: The demand for metallurgical coal used to make steel that is being exported and steam coal used to power the Harrison and Longview power stations.
Sadly, while FirstEnergy continues to use primarily West Virginia coal to generate power at its West Virginia facilities, American Electric Power, which serves much of Southern West Virginia, has transitioned to importing much of its steam coal from Illinois.
According to the federal Energy Information Administration, West Virginia mines produced about 23 percent more coal in the first half of this year when compared to last year. Production at mines in the northern part of the state was up 18.6 percent, while production in the southern counties increased by 29 percent.
In its third-quarter earnings report, Arch Coal, which operates the Leer mine near Grafton, said demand and pricing for seaborne coking coal remains healthy, even with the ongoing recovery of Australian exports following Cyclone Debbie and modest supply growth elsewhere. The cyclone in Australia knocked out some production there, allowing U.S. coal to move into markets that Australian producers had dominated.
Arch said it believes the outlook for global metallurgical markets is attractive, “given buoyant steel markets, strong Chinese manufacturing activity, an improving economic outlook in other key countries and the high cost structure of much of the recently added coking coal supply.”
Bill Raney, president of the West Virginia Coal Association, said the production increase in West Virginia is spread throughout the state.
“Everybody’s attitude’s a lot better. When you have a guy in the White House who appreciates what you do, it’s better than having a guy that fights you every step of the way,” Raney said.
The use of coal in electricity generation is down nationwide as older coal-burning plants are retired and low-cost natural gas takes market share from coal. In West Virginia, coal still dominates electric power generation.
According to preliminary data compiled by the EIA, in the 12 months that ended in August, coal accounted for about 94 percent of electricity generated in West Virginia. Wind was 2.2 percent; hydropower was 2 percent; and natural gas was 1.8 percent.
The rebound in coal has also helped West Virginia’s severance tax collections.
For the first four months of this fiscal year, the state collected $80.2 million in severance taxes, up 68 percent from $47.9 million in the same period last year, according to the state Budget Office.
October collections alone were up 153 percent over October 2016, from $9.6 million last year to $24.3 million this year.
In 2016, West Virginia was the largest coal producer east of the Mississippi River and the second largest in the nation after Wyoming; the state accounted for 11 percent of total U.S. coal production that year. Almost half of the 96 million short tons of coal mined in West Virginia was shipped to other states, and one-fourth was exported to foreign countries.
Coal-fired electric power plants accounted for 94 percent of West Virginia’s net electricity generation in 2016; natural gas contributed 1.6 percent; and renewable energy resources — primarily hydroelectric power and wind energy — contributed about 3.8 percent.
Coal will remain critical to America’s energy mix for several more decades. West Virginia is blessed as an energy state to have an abundance of coal, natural gas, hydroelectric and wind-powered generating resources that will continue to create jobs and economic growth for years to come.
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- On November 20, 2017