By June 29, 2017 Read More →

WV coal production decline expected to continue

By KEN WARD JR.

Charleston Gazette-Mail

CHARLESTON, W.Va. — While West Virginia’s coal industry might stabilize over the next few years, it will then likely resume a long-term decline in the decades to come, according to the projections published Wednesday by researchers at West Virginia University.

The estimates, from the WVU Bureau of Business and Economic Research, generally are in line with other projections that don’t see the sort of sustained comeback for the state’s coal production that industry backers and miners are hoping for or that President Donald Trump promised would come once he reduced regulations on mining and on coal-fired power plants.

Coal output statewide totaled about 80 million tons last year, which was just more than half of the 158 million tons produced in 2008, according to the WVU report. While the baseline WVU forecast calls for production to approach 89 million tons this year, and remain in the upper-80-million-ton-range into the early 2020s, the decline in demand for West Virginia coal will continue to lead to output sinking below 80 million tons by 2030, the report said.

“Coal production in West Virginia is expected to hold in a relatively steady range between 2019 and 2022, averaging roughly 87-88 million tons each year,” said the 32-page WVU report. “For the remainder of the outlook period, however, the state’s total coal output will trend steadily lower, falling from the mid-80-million-ton-range in 2025 down to roughly 78 million tons in 2040.”

The report noted that West Virginia coal’s historic downturn has been driven by the declining use of coal by electrical power plants, driven largely by competition from low-priced natural gas but also stricter air pollution standards, along with weak export demand. Coal output has rebounded in the past few quarters, the report noted, “reflecting an upturn in metallurgical coal markets and increased coal-fired electricity generation.” But, the report said, production remains below levels observed during the first half of 2015.

WVU researchers also pointed out that, while coal production fell in each of the state’s producing regions last year, the two regions have seen output trend in different directions in recent years.

“Southern West Virginia mines accounted for more than two-thirds of state coal production in 2011, but that share fell to 46 percent in 2016 as the region’s coal output plunged 61 percent,” the report said. “Even after recording a decline in production during 2016, Northern West Virginia coal output remained 8 percent above 2008 levels.”

Over the long term, coal tonnage in Northern West Virginia — focused on larger underground mines producing steam coal — “should hold in a relatively small range” as retirements of power plants subside. By comparison, output from Southern West Virginia will fall as shrinking reserves raise production costs and make the region’s coal “even less competitive for domestic use,” the report said.

“These cost issues will weigh on Southern West Virginia coal on global markets, but lower coal use by the electric power sector in the [European Union] and other nations will also hurt,” the report said. “Statewide coal production is expected to fall below 80 million tons by 2030 and decline further over the rest of the outlook period.”

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