Coal news and updates

When New Hampshire’s largest utility needed to rebuild coal supplies after the past frigid winter, it turned to Russia rather than Appalachia in the U.S. Northeast or Wyoming’s Powder River Basin.

 

The Doric Victory, a bulk carrier the length of two football fields, transported the fuel almost 4,000 miles (6,436 kilometers) from Riga, Latvia, last month to Public Service of New Hampshire’s Schiller power plant in Portsmouth, a 150-megawatt facility that’s produced electricity since 1952.

 

Utilities in the U.S. are scrambling for coal, on pace to increase imports 26 percent this year, as railroad bottlenecks slow deliveries and electricity demand climbs with an improving economy. Russia, the world’s third-largest exporter of the fuel, will boost shipments 3.9 percent to 106 million metric tons this year, IHS Energy forecasts, part of President Vladimir Putin’s plan to expand Russia’s role in the global coal market.

 

“Everyone’s aware that a number of plants have low stockpiles, so you hear Russian coal and they say, ‘Oh wow, people must really be desperate,’” James Stevenson, Houston-based director of North American coal at IHS, said in a July 8 telephone interview.

 

The New Hampshire utility declined to disclose the amount of coal that it purchased from Russia. U.S. bill of lading data show that 38,500 metric tons of steam coal were delivered.

 

Russian Coal

 

“A shipment of coal was contracted from Russia that met our operational and economic needs,” was all the utility was willing to say in an e-mail.

 

U.S.-Russia relations are at a post-Cold War low after Russia’s annexation of Ukraine’s Crimea. The U.S. and European Union have imposed sanctions on companies and individuals tied to Putin’s inner circle and are considering further penalties.

 

The Russian fuel appeals to power producers because it emits less sulfur than other coals, making it easier to comply with environmental rules, and has a high heat content, meaning it can produce more power per measure of fuel, Stevenson said.

 

In 2012, Putin pledged to spend $120 billion in public and private funds to expand Russia’s coal mining capacity and boost exports through 2030. The country has the second-largest reserves behind the U.S., government data show.

 

Russia’s abundant supply of natural gas, also used to generate electricity, gives it the ability to flood the seaborne coal market, the U.S. Energy Department says. Exports from Russia have swelled 94 percent from January 2010 through May, data compiled by Bloomberg show.

 

Coal Burning

 

U.S. utilities burned 30 million tons of coal inventories in the first quarter, EIA data show. March was the coldest for the month since 2002 in the contiguous 48 U.S. states, according to the National Climatic Data center, boosting power demand. In spring, an increase in oil and ethanol transport clogged the railways and slowed efforts by power generators to rebuild supply.

 

Some utilities have as little as 20 days of reserves, Bill Davison, vice president of thermal coal sales at Alpha Natural Resources Inc. (ANR:US), said last month at a conference in New York.

 

Tennessee Valley Authority temporarily idled the Bull Run plant in May to rebuild supply, Vince Stroud, the company’s director of coal origination, said last month in an interview at the IHS McCloskey Coal USA conference in New York.

 

Rail Service

 

Power producers have placed an emphasis on reliability of supply, whether it’s domestic or imported, as they try to increase inventories and navigate spotty rail service, said Frank Kolojeski, director of marketing at Exporting Commodities International Inc., a brokerage in Marlton, New Jersey.

 

“A lot of companies were reluctant to go out and buy spot coal because they weren’t sure it would get delivered,” he said in a July 2 telephone interview.

 

The U.S. imported 34 million tons of coal in 2008, a year in which the fuel accounted for 48 percent of electricity generation, government data show. Foreign purchases tumbled to 8.9 million tons by last year as coal’s share of electricity consumption dropped to 39 percent while gas use gained.

 

Coal buyers, producers and shippers responded to shrinking imports by idling or reallocating equipment, Kolojeski said.

 

“Everybody had been used to five years of dormancy,” he said. “All of a sudden there was a surge in demand. It caught everybody off guard.”

 

 

 

Source: Bloomberg