EIA: U.S. Coal Production to Drop in 2018-19 After Gain in 2017

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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. coal production increased 6% last year on the back of strong exports, but much of those gains will evaporate through 2019 as export demand falters and natural gas prices stay low, according to the U.S. Energy Information Administration's (EIA) new outlook report.

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Coal production increased by 45 million short tons (6%) in 2017 to 773 million short tons as demand for U.S. coal exports increased, according to the EIA's latest Short-Term Energy Outlook (STEO), which was released earlier this week. For related information, see July 26, 2017, article - Will Exports Drive a Revival of the U.S. Coal Industry?

But in 2018, coal production is expected to decrease by 14 million short tons. This includes a 5 million-short-ton decrease in the Western region, and a 25 million-short-ton decrease in the Appalachia region. Declines in these regions are expected to be partially offset by a 15 million-short-ton increase in the Interior region, according to the STEO.

The EIA estimated total coal exports for 2017 were 95 million short tons, with steam coal exports at 41 million short tons. Metallurgical coal exports will be more than 50 million short tons in both 2018 and 2019, the EIA said, but steam coal exports will decline by 34% in 2018 and by 15% in 2019. Total coal exports are expected to be 80 million short tons in 2018 and 75 million short tons in 2019.

In 2019, total coal production is expected to fall by 18 million short tons (2%), with declines in the Appalachian region and Western region, again partially offset by increases in Interior region production.

Coal consumption in the electric power sector is estimated to have declined by 12 million short tons (2%) in 2017, as several coal-fired power plants retired. Consumption in the electric power sector is forecast to decrease by 10 million short tons (1%) in 2018 and by 27 million short tons (4%) in 2019. The decrease in power sector consumption reflects lower natural gas prices and coal power plant retirements.

The place of coal in the U.S. power mix has become a focal point among federal officials. The Federal Energy Regulatory Commission this week turned down a proposal by U.S. Energy Secretary Rick Perry to give subsidies to both coal-fired and nuclear power plants in recognition to their contribution to grid reliability and resilience. For more information, see January 9, 2017, report - FERC Rejects Awarding Subsidies to Coal and Nuclear Units.

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