Led by the Powder River Basin, U.S. coal output slumps in Q2

U.S. coal production during the second quarter totaled 241.4 million tons, which was 9.4% lower than the previous quarter and 8.7% lower than the second quarter of 2011, said the U.S. Energy Information Administration in a quarterly coal report released Oct. 4.

The most significant coal production decrease was in the state of Wyoming, home to the highly-prolific Powder River Basin, where production declined by 16.8% from first quarter 2012 and 13.8% from the second quarter in 2011, the EIA reported.

The EIA figures are backed up by data from the U.S. Mine Safety and Health Administration. Examples are data for the two biggest PRB mines, Black Thunder and North Antelope Rochelle, which are also by far the two biggest coal mines in the U.S.

MSHA reports that Arch Coal’s (NYSE: ACI) Black Thunder mine produced 43.4 million tons in the first half of this year (24.2 million in the first quarter and 19.2 million in the second quarter), against full-year 2011 production of 105 million tons. Peabody Energy’s (NYSE: BTU) North Antelope Rochelle mine produced 51.5 million tons in the first half of this year (27.4 million in the first quarter and 24.2 million in the second quarter), against 109 million tons in all of 2011.

The U.S. coal market has been slammed this year by slumping electricity demand due to a weak economy, plus switching to cheaper gas-fired generation by power producers to meet the electricity demand that is there. Many coal producers, including Arch and Peabody, have slashed production to meet this new market reality that they hope is only temporary. A number of little-used coal-fired power plants nationwide are being shut due to new air emissions limits, but the coal industry hopes the surviving plants will eventually be run harder and make up the coal burn difference.

Wyoming is not the only state suffering a production drop. For example, West Virginia, the second largest coal producing state in the U.S., turned out 63 million tons of coal in the first half of this year, down from 70.3 million tons in the first half of 2011. In the second quarter of this year, EIA figures show West Virginia production of 30.2 million tons, down from 34.8 million tons in the year-ago quarter.

U.S. coal exports in the second quarter totaled 37.5 million tons, 31.1% higher than first quarter 2012 and up 39.1% from the second quarter 2011 level, the EIA report said. U.S. steam coal exports totaled 17.4 million tones, 56.2% higher than the prior quarter. U.S. metallurgical coal exports were 20.2 million tons, 15.1% above the first quarter 2012 level. Coal exports have been the lone bright spot for coal producers, though export demand and especially pricing have also slumped lately due to a worldwide economic slowdown.

U.S. coal imports totaled 2.3 million tons in second quarter 2012. Imports increased by 15.2% from first quarter 2012, but decreased 31.9% from second quarter 2011, EIA noted. Imports are mostly steam coal from Colombia and they have been hurt by slumping coal demand at Gulf and Atlantic coast power plants.

Total U.S. consumption was 201.3 million tons for the second quarter of 2012, which was 2.7% lower than in the first quarter 2012 and down 16.3% from the second quarter 2011 level.

Consumer stocks of coal increased slightly to 205.5 million tons from 203.1 million tons in the first quarter of 2012. However, this was 19.2% higher than in the second quarter 2011, EIA added. This is mostly inventory at coal-fired power plants, with power generators obviously making little headway in burning down those stocks.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.