What is surprising here is just
how fast the power industry is now jettisoning the coal industry. This could only happen if the long term
supply situation was completely convincing.
Coal was the only long term secure fuel source that allowed you to lock
in costs years ahead. Natural gas was
always far better but impossible to source long term. That has now changed thanks to the fracking
revolution and there is a flood of gas available decades into the future.
In the oil industry, tight gas
has always been everywhere and completely unattainable. Horizontal drilling and fracking changed all
that by taking a fifty foot pay zone and turning it into a one mile pay zone
that drew from a block of rock to either side that was hydraulically fractured
its entire length. The technical issues
were only fully solved in only the past three years or so. Well yields have been leaping in both gas
and oil wells.
I expect even old depleted fields
can now be successfully reworked to get at the remaining reserves.
This has given the power industry
the opportunity to finally bolt the coal industry forever and shed the bulk of
their environmental costs as well. Power
plants will no longer be mining limestone to turn into gypsum to absorb sulphur
dioxide and then pay to dispose of the gypsum as well.
The speed of the conversion is
already faster than I expected but I now suspect that the conversion is on the
front burner for every plant out there.
And for once there is no cycle of
recovery coming for coal this time around.
Cold fusion thermal plants are presently been demonstrated and will soon
be the other better alternative. In the
meantime reliable natural gas will speed coal on its way.
A Big Shift from Coal to Natural Gas Because of Cheap Natural Gas
JUNE 12, 2012
The share of U.S. electricity that comes from coal is forecast to
fall below 40 percent for the year — the lowest level since the
government began collecting this data in 1949. Four years ago, it was 50
percent. By the end of this decade, it is likely to be near 30 percent.
Utilities are aggressively ditching coal in favor of natural gas, which
has become cheaper as supplies grow. Natural gas has other advantages over
coal: It produces far fewer emissions of toxic chemicals and gases that
contribute to climate change, key attributes as tougher environmental rules go
into effect.
Natural gas will be used to produce 29 percent of the country's electricity this year, up from 20 percent in 2008.
The shift is because shale gas has increased supplies and made natural gas cheap. It is not because of concerns over health effects. Coal is more harmful for health.
Coal is being beaten at its own game. Natural gas has become a cheap
and abundant domestic resource, too. And it is more environmentally friendly.
Power plants that burn coal produce more than 90 times as much sulfur dioxide, five times as much nitrogen oxide and twice as much carbon dioxide as those that run on natural gas, according to the Government Accountability Office, the regulatory arm of Congress. Sulfur dioxide causes acid rain; nitrogen oxides cause smog; and carbon dioxide is a so-called greenhouse gas that traps heat in the atmosphere.
A pair of clean air rules enacted by the Environmental Protection Agency over the past year tightens limits on power-plant emissions of sulfur dioxide and nitrogen dioxide, and place new limits on mercury, a poison found in coal. This will force between 32 and 68 of the dirtiest and oldest coal plants in the country to close over the next three years as the rules go into effect.
Coal was hit with a potentially bigger environmental blow in March when the EPA issued guidelines that could limit greenhouse gas emissions from new power plants as early as 2013. Once the guidelines go into effect, no coal plants will be built unless utilities can develop a cost-effective way to capture carbon dioxide, analysts say. That technology has been slow to develop and is very expensive.
"Even without the EPA rules, coal is not really competitive," Wang says.
Nick DeIuliis, President of Consol Energy, a coal and natural gas producer based in Canonsburg, Pa., doubts the EPA's restrictions on greenhouse gases will survive long term because of the economic harm he says they will inflict.
Consol and other
DeIuliis says the price of natural gas will rebound over time and that coal will once again account for half the nation's electricity. "This is a cycle," he says.
The futures price of natural gas hit a 10-year low of $1.91 per thousand cubic feet in April. It closed Tuesday at $2.23 but would have to more than double from there to convince utilities that have a choice of fuels to return to coal whenever possible.
Utilities are forecast to burn 808 million tons of coal this year, a 13 percent decline from last year and the fewest tons since 1992, according to Energy Department data.
US coal use falling fast; utilities switch to gas
Share of US power from coal at lowest level on record as use of cleaner
natural gas grows
FILE - In this Thursday, April 29, 2010 file photo, a pair of coal
trains idle on the tracks near Dry Fork Station, a coal-fired power plant being
built by the Basin Electric Power Cooperative near Gillette , Wyo. U.S.
The fuel that powered the U.S.
The share of U.S.
"The peak has passed," says Jone-Lin Wang, head of Global
Power for the energy research firm IHS CERA.
Utilities are aggressively ditching coal in favor of natural gas,
which has become cheaper as supplies grow. Natural gas has other advantages
over coal: It produces far fewer emissions of toxic chemicals and gases that
contribute to climate change, key attributes as tougher environmental rules go into
effect.
Natural gas will be used to produce 29 percent of the country's
electricity this year, up from 20 percent in 2008. Nuclear accounts for 20
percent. Hydroelectric, wind, solar and other renewables make up the rest.
The shift from coal is reverberating across Appalachia ,
where mining companies are laying off workers and cutting production. Utilities
across the country are grappling with how to store growing piles of unused
coal. And legal disputes are breaking out as they try to cancel contracts and
defer deliveries:
— Mining company Alpha Natural Resources of Bristol, Va.,
plans to produce 11.5 million fewer tons of coal this year, a decline of 11
percent, because so many customers have requested deferrals. The company has
announced that 12 mining operations in Kentucky
and West Virginia
— Patriot Coal, a mining company based in St. Louis ,
closed a mine in Kentucky , idled several
others in Kentucky and West Virginia
— GenOn, a wholesale power producer based in Houston
Coal has dominated the U.S. U.S. is the world's
second-largest coal producer after China
Coal has also enjoyed strong political support because of the jobs it
provides in mining and transportation. That helped coal thrive even as
environmental concerns over mining practices and air quality grew.
Just five years ago, coal was flourishing in the U.S.
But around the same time, a revolution was under way in the natural gas
industry. Drillers figured how to tap enormous deposits of previously
inaccessible reserves. As supplies grew and the price of natural gas plummeted,
the ground shifted under the electric-power industry.
Now coal is being beaten at its own game. Natural gas has become a
cheap and abundant domestic resource, too. And it is more environmentally friendly.
Power plants that burn coal produce more than 90 times as much sulfur
dioxide, five times as much nitrogen oxide and twice as much carbon dioxide as
those that run on natural gas, according to the Government Accountability
Office, the regulatory arm of Congress. Sulfur dioxide causes acid rain;
nitrogen oxides cause smog; and carbon dioxide is a so-called greenhouse
gas that traps heat in the atmosphere.
A pair of clean air rules enacted by the Environmental Protection
Agency over the past year tightens limits on power-plant emissions of sulfur
dioxide and nitrogen dioxide, and place new limits on mercury, a poison found
in coal. This will force between 32 and 68 of the dirtiest and oldest coal
plants in the country to close over the next three years as the rules go
into effect, according to an AP survey of power plant operators conducted late
last year.
Coal was hit with a potentially bigger environmental blow in March when
the EPA issued guidelines that could limit greenhouse gas emissions from new
power plants as early as 2013. Once the guidelines go into effect, no coal
plants will be built unless utilities can develop a cost-effective way to
capture carbon dioxide, analysts say. That technology has been slow to develop
and is very expensive.
"Even without the EPA rules, coal is not really competitive,"
Wang says.
Coal executives are hardly giving up. Nick DeIuliis, President of
Consol Energy, a coal and natural gas producer based in Canonsburg, Pa., doubts
the EPA's restrictions on greenhouse gases will survive long term because of
the economic harm he says they will inflict.
Consol and other U.S. U.S. China , India
and Brazil
DeIuliis says the price of natural gas will rebound over time and that
coal will once again account for half the nation's electricity. "This is a
cycle," he says.
The futures price of natural gas hit a 10-year low of $1.91 per
thousand cubic feet in April. It closed Tuesday at $2.23 but would have to more
than double from there to convince utilities that have a choice of fuels to
return to coal whenever possible.
Utilities are forecast to burn 808 million tons of coal this year, a 13
percent decline from last year and the fewest tons since 1992, according to
Energy Department data.
Demand for coal has fallen even faster than the environmentalists who
have been lobbying against coal had anticipated.
Bruce Nilles, director of the Sierra Club's Beyond Coal campaign, says
the shift was accelerated by the low price of natural gas. That, along
with tougher environmental rules and alternatives such as wind and solar will
keep the pressure on coal. "We won't go backwards," he says.
___
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