2012. 2. 16.

Coal Country Losing Luster

Coal Country Losing Luster
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While Obama’s team thinks old coal should be tossed out or cleaned up, it is also donning shale gas the new fuel champion. But if you think the Environmental Protection Agency is the primary source of coal’s troubles, think again. Abundant shale gas supplies are one reason. But so too are diminishing reserves, all of which take more labor and more money to dig out.

It’s okay to take shots at environmental regulators. With the slew of rules coming down the pike that include everything from mercury to coal ash to greenhouse gases, it is more expensive to burn coal. But even some coal companies are saying that they need to migrate away from Central Appalachia and into potentially richer areas such as those in Wyoming that have low-sulfur coal.

“The increased competition from other sources of coal and energy has negatively impacted production in Central Appalachia, illustrating that the existence of coal reserves does not guarantee that the coal will be economical to produce or competitive with other regions,” says a report by Downstream Strategies.


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“The declining competitiveness is due in large part to the increased cost of producing coal in Central Appalachia, for both surface and underground mining.”

Arch Coal agrees, saying in its annual outlook that production in Kentucky, West Virginia and Tennessee could fall from 200 million tons today to 99 million tons by 2035. A decade ago, it was 300 million tons. Coal companies will move west where the U.S. Energy Information Administration says that development will increase by at least 1 percent a year until 2035.

In this country, most of the coal comes from Wyoming, West Virginia and Kentucky. Wyoming provides about 41 percent of U.S. coal production, which is an increase from 18 percent two decades earlier. Today, the roughly 443 million tons of coal mined from the Wyoming Powder River Basin is shipped to 34 states, including those in the east. With an expanding rail transportation network, coal emanating from that area could flourish. It’s also easier to mine.

Underground mining is one issue. Surface mining, or mountaintop mining, is another. The EPA has proposed rules to restrict the ability of mining companies to toss aside debris by setting tougher water quality standards. It would require buffer zones around the streams while requesting mining enterprises to move in phases so that they can better monitor their environmental footprints.

No doubt, the assault on EPA will continue. Coal interests keep talking about “clean coal” but they also keep bitching that it’s too expensive to actually become cleaner. So shutting down and throwing folks out of work is the only option left, all while the cost of doing business keeps rising, they say. Their friends in Congress are introducing bills to get EPA off their tails. But, in the end, those are going no where because there is a lack of consensus.

Shale gas, though, might save the day for both the region, and Obama. Dubbed by the president as the bridge fuel until green energy can get its legs, Central Appalachia is rife with both the unconventional gas, and voters.

The Marcellus Region that stretches down the east coast is estimated to hold as much as 500 trillion cubic feet of shale gas. Penn State University says that such assets would create 200,000 jobs and the American Chemical Council says that 12,000 chemical-related jobs would be formed in West Virginia alone. PriceWaterHouseCoopers adds that their energy prices will dramatically fall, making them more competitive.

By comparison, the coal mining industry in all of Appalachia employs 31,000 people, says the National Mining Association. As production falls there and as EPA regs kick in, that number will decline.

Blaming coal’s woes on the proposed environmental regulations tells only a fraction of the story. The rest can be explained by competition from other coal states as well as from cheaper and cleaner fuels.

That makes the labor-intensive pursuit for coal in Central Appalachia a tougher sell and the need for fuel diversity there more essential than ever. The president will make his appeal to the region but the voters there are likely to reject it.

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