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New UserUS coal output to slip in 2015-2016 after rising 1.2% in 2014: EIA
14 Jan 2015
US coal production rose 1.2% in 2014 but is expected to drop each of the next two years, according to the US Energy Information Administration's latest Short-Term Energy Outlook, issued Tuesday.
Total coal production is expected to drop from 994.2 million st in 2014 to 984 million st in 2015 and 977 million st in 2016, annual decreases of 1% and 0.7%, respectively, according to the EIA.
Eastern coal output, which totaled 272 million st in 2014, is projected to decline 3.6% in 2015 and nearly 2.9% in 2016 as a result of higher mining costs, weak demand from export markets and a shift to higher-sulfur, lower-cost "interior coal" from the Illinois Basin, according to the report.
Western region output, which averaged 535 million st in 2014, is projected to remain largely unchanged.
Utility coal consumption, which dropped 0.2% in 2014, should remain nearly flat in 2015 at 925.4 million st, a 0.3% increase.
The slight increase will come despite a 0.8% increase in electricity demand as natural gas prices decline and coal power plants are retired in response to the US Environmental Protection Agency's Mercury and Air Toxics Standards rule in 2015.
"The full effect of the coal plant retirements is felt in 2016 as projected electric power sector coal consumption declines by 1.4%," the EIA said.
Natural gas is expected to take on much of coal's lost share of generation, a trend that has been fueled by lower natural gas prices and regulations.
Henry Hub spot prices for natural gas, which were up to $4.39/MMBtu in 2014, are expected to fall to $3.44/MMBtu in 2015, then climb to $3.86/MMBtu in 2016, according to the EIA.
Natural gas generation, meanwhile, is expected to increase from a 27.3% share in 2014 to 27.8% in 2015 and 28.1% in 2016.
Coal-generated electricity dropped slightly to a 39% share of total electricity in 2014 and the EIA projects coal to generate 38.7% of electricity in 2015 and 37.6% in 2016, according to the EIA.
Source: Platts