Coal news and updates

The downward trend for coal production is expected to continue far into the future, two recent reports found.

 

Southern West Virginia’s future is even bleaker as significant declines in the state’s mining industry will continue to weigh heavily on the state over the next two decades.

 

The coal production report, written by the Bureau of Business and Economic Research in the College of Business and Economics at West Virginia University, outlines major production declines in the recent past that will continue for the next several years. The decline primarily is attributed to declining coal use in power plants driven by stricter emissions standards, low natural gas prices and weak export demands.

 

“After reaching nearly 158 million short tons in 2008, the state’s coal mine output has plummeted to 95 million short tons in 2015,” read the study. “The drop in statewide coal production has even accelerated in recent quarters, falling to an annualized pace of less than 73 million short tons through the first half of 2016.”

 

The study shows that West Virginia’s coal production is a tale of two regions. “As recently as 2011, southern West Virginia mines accounted for more than two-thirds of state coal production, but that share fell to roughly half by 2015 as southern West Virginia mines produced 59 percent less coal tonnage since 2008. Northern West Virginia coal production increased 16 percent between 2008 and 2015, though mine output has fallen appreciably over the past few quarters,” the report stated.

 

A long-term forecast shows even greater challenges between the state’s two coalfields. The southern coalfields will account for all of the downward trend in coal production. The northern coalfields are expected to remain relatively stable, the report found. 

 

In the short term, the forecast calls for coal production in West Virginia to continue to slow to a total of less than 68 million short tons for 2016 as a whole — likely a historic low, the report reads. 

“Absent any unexpected improvements over the remainder of the year, total coal tonnage in 2016 could fall to its lowest, nonstrike-influenced level in nearly a century,” said Brian Lego, BBER research assistant professor and author of the coal production report.

 

The report forecasts a slight increase during 2017 up to nearly 70 million short tons, followed by weak domestic and global market conditions for both of the state’s coal-producing regions going forward.

 

“Large stockpiles of coal at mines and power plants, along with the precipitous drop in coal use by utilities, will weigh heavily on thermal coal production,” the report read. “At the same time, domestic industrial use and export demand for both metallurgical and thermal coal will remain weak well into 2017.”

 

The long-term forecast sees a short uptick for West Virginia coal production. Mining will experience a “temperate rebound” between 2018 and 2020, eventually climbing to an annual production total of 75 million tons in 2020, the report predicts. 

 

Coal-fired generation facilities coming offline will peter out when natural gas prices increase, which should allow coal to regain some share of electricity generation, according to the report. 

 

Meanwhile, global market for thermal and metallurgical coal should also stabilize. For the remainder of the outlook period, after 2020, statewide coal production is expected to fall, contracting to less than 67 million short tons in 2036, the report states. 

 

“The state’s southern coalfields will account for all of the downward trend in production, as northern West Virginia production should remain at a relatively stable level over the remaining portion of the forecast,” according to the study.