Industry struggles, experts say production will stabilize

Coal production in West Virginia likely will continue to decline. But one of the Mountain State’s major industries will continue to exist, according to the West Virginia Coal Association and a recent government report.

Last year, coal-fired power plants produced 42 percent of the nation’s electricity. Shortly after World War II, West Virginia coal production reached a high of 173.7 million tons, then dropped to 120 million tons or less between 1958 and 1962.

West Virginia coal production reached an all-time high of 181.9 million tons in 1997. But production dropped as the new century began, hitting a low of 139.4 million tons in 2011, according to the West Virginia Office of Miners’ Health, Safety and Training. Coal production in the state dropped by 18.4 percent between 2008 and 2011.

Employment reached its all-time peak in West Virginia shortly after World War II — 125,669 jobs in 1948. But mining jobs dropped to fewer than 50,000 from 1960 through 1974 primarily because of widespread mechanization using continuous mining machines. Longwall mining machines and an increase in surface mining then continued to increase productivity and cut jobs.

Between 1996 and 2005, coal employment dropped below 20,000, hitting a low of 14,282 in 2000. By 2009, employment had risen to 27,892. As of September, 21,141 miners were still working in West Virginia’s mines.

“We believe coal provides the bedrock of the nation’s economy — the lowest-cost, most dependable form of energy available,” said Bill Raney, president of the West Virginia Coal Association.

This year coal production is off as a result of factors that have converged concurrently, said Chris Hamilton, senior vice president of the West Virginia Coal Association. Those factors include:

·         An “unseasonably mild weather pattern” began last winter and continued into the spring. Last summer was not as hot as it sometimes is, and relatively mild weather continued in the fall, reducing demand for electricity for air conditioning and heating.

·         National and worldwide recessions also caused energy consumption to drop.

·         “China and India have had recent annual growth rates of 15 percent to 16 percent,” Hamilton said. “Today, their growth rates are 6 percent to 7 percent. At home, the growth rate is about 1 percent.”

·         “New regulatory requirements stifled new mining permits on the operational side,” Hamilton said. “There have been closures of power plants on the consumptive side.”

·         Recent drops in natural gas prices are encouraging some companies to build power plants to generate electricity from gas.

The production decline in Central Appalachia likely will continue, said Phil Smith, spokesman for United Mine Workers President Cecil Roberts.

“But that does not mean there is not going to be coal mined,” Smith said. “There is still plenty of coal in Central Appalachia, and people are going to be mining it. That is especially true with metallurgical coal in the region. People absolutely aren’t going to stop making steel. That is a very technical industry based on the health of the world’s economy. When we see a bounce back in the economy, we will see a bounce back in steelmaking. We are beginning to see that trend emerge. Most of our metallurgical coal is exported today because there is not a whole lot of steel made in the country any more. The export market is definitely down. But it looks like it will remain stable in 2013.”

Hamilton said most experts believe coal production will stabilize in the near future.

“Production will be in the 110 million- to 130 million-ton range for the next couple of decades,” Hamilton said. “The industry will be somewhat smaller but much more efficient. Two added dimensions today are the assault from the EPA (Environmental Protection Agency) and this administration, as well as the new abundance of natural gas.”

Future Coal Production

Coal has a diminishing reserve base, Hamilton said. There are enough reserves to continue coal production for at least 200 years, but a 5-year-old report from the National Academy of Sciences states its best confirmable estimate was about half that, and there were “significant uncertainties in generating reliable estimates of the nation’s coal resources and reserves.”

Hamilton said there is still plenty of coal.

“And the lion’s share is mineable,” he said. “How much will be mined is a question.”

Coal seams that will be mined in future years will probably be deeper, thinner and farther away from “points of access,” Hamilton said.

The U.S. Energy Information Administration’s 2010 “Annual Coal Report” estimates the country had 486.1 billion tons of coal reserves left at the end of 2009. The states with the most reserves are: Montana, 119 billion tons; Illinois, 104 billion tons; Wyoming, 62 billion tons; and West Virginia, 32 billion tons.

According to a federal General Accountability Office report released Oct. 29, “Coal is a key domestic fuel source and an important contributor to the U.S. economy. Most coal produced in the United States is used to generate electricity. In 2011, 1,387 coal-fueled electricity generating units produced about 42 percent of the nation’s electricity.”

The Energy Information Administration assessed several scenarios of future fuel prices and forecasts coal’s share of U.S. electricity generation will fall to 30 percent in 2035 if natural gas prices are low or 40 percent if natural gas prices are high. Health and environmental problems also are cited in the report.

“Compared with natural gas-fueled units, coal-fueled units produced, on average, over twice as much carbon dioxide per unit of electricity as natural gas units in 2010,” the report states.

The report also mentions other toxic pollutants from burning coal, including mercury often ingested by fish and later eaten by humans.

“Mercury can harm fetuses and cause neurological disorders in children, resulting in, among other things, impaired cognitive disabilities,” the report states. “Other toxic metals emitted from power plants, such as arsenic, chromium and nickel can cause cancer.”

Geographical Distribution of Coal Production

Hamilton said competition from the western coalfields will remain strong, especially because states such as Wyoming have coal seams near the earth’s surface up to 100-feet thick.

“We need real technology and ingenuity,” Hamilton said. “We have the best miners here in West Virginia.”

The energy content of coal mined in West Virginia is also higher, ranging between 12,000 and 13,000 British thermal units (Btu) per ton, compared with only 6,000 to 7,000 Btu per ton in states such as Wyoming.

Western states produced little coal before the 1970s, when Wyoming opened its first mine, Hamilton said. By 2010, Wyoming was producing 443 million tons of coal a year. West Virginia and Kentucky, which ranked second and third, produced 136 million tons and 104 tons respectively.

The country produced nearly 1.1 billion tons of coal in 2010. Today, coal provides West Virginia’s state government with a major source of income: the severance tax.

“Coal severance taxes have doubled over the past five years,” Hamilton said. “They reached about half a billion last year.”

West Virginia has two distinct coal regions. The state’s northern counties produce primarily steam coal used to generate electric power. The southern coal counties produce some of the highest-quality metallurgical coal mined in the world, in addition to steam coal.

“China and India are both major importers of met and steam coal,” Hamilton said. “Met coal may double in price during the next six or seven years. Europe and Africa also import our coal. The West Virginia coal market and industry should stabilize over the next few years.”

Hamilton said the coal industry employs about 5,000 workers at preparation plants and maintenance facilities in addition to 22,000 working miners.

Last year, underground mines produced 91.4 million tons of coal — nearly 66 percent of West Virginia’s total production — while surface mines produced 48.1 million tons.

Thirty-one percent of all coal mined in the U.S. came from Appalachia in 2010, while 14 percent was mined in the interior region, including Illinois and Indiana. Western states produced the remaining 55 percent of the nation’s coal.

The Energy Information Administration expects to see declining coal production in southern West Virginia, Virginia, eastern Kentucky and northern Tennessee.

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