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Page added on November 4, 2013
Peak Coal: Will the US Run Out of Coal in 20 Years or 200 Years?
“Most U.S. coal is buried too deeply to be mined at a profit.”
U.S. coal production has peaked, and the miscalculations that have led to estimates of a 200-year supply could create a serious electricity deficit for the nation, according to a new report from advocacy group Clean Energy Action.
“The belief that the U.S. has a ‘200-year’ supply of coal is based on faulty reporting by the EIA,” concludes the report, Warning: Faulty Reporting of U.S. Coal Reserves. “Most U.S. coal is buried too deeply to be mined at a profit and should not be categorized as reserves, but rather as ‘resources.’”
“The U.S. Energy Information Administration’s estimate of the nation’s coal is ‘a faulty fuel gauge’ because the U.S. is rapidly approaching the end of economically recoverable coal,” explained report co-author Leslie Glustrom of Clean Energy Action. “We’re acting like we have a full tank. No one knows exactly when empty will come, but we should be prepared.”
The economic viability of the U.S. coal resource is compromised because “it is buried too deeply and costs too much to mine it,” Glustrom said. Peabody Coal CEO Greg Boyce’s Q3 2013 earnings report call remarks about reduced capital expenditures in Wyoming’s Powder River Basin seem to confirm that coal is becoming “too expensive to mine,” according to Glustrom.
“Nationally, coal production appears to have peaked in 2008 at 1.171 billion tons,” the report states. “U.S. coal production in 2012 had fallen by about 155 million tons to 1.016 billion tons.”
EIA data puts production for the first half of 2013 at 488 million tons, Glustrom added. “We are not even on track to get to a billion tons. That would be back to 1993 levels.”
Source: Clean Energy Action’s Warning: Faulty Reporting of U.S. Coal Reserves
The EIA’s projection of a 200-year supply of coal is overly dependent on data from the 1980s and 1990s, when the price remained around $1.00 per million British thermal units (MMBTU) because coal producers were “ripping open surface mines,” Glustrom said.
But there was an inflection point in 2004. Since then, the cost of coal used by electric utilities rose more than 7 percent per year, two to three times faster than inflation, the reports states. Three key factors continue to drive costs up and production down: increased production costs, increased transportation costs, and increased export pressure.
“Easily accessible coal has already been mined and burned. Now reaching the remaining coal is becoming increasingly difficult and expensive,” the report claims. And the price of diesel fuel for the trains that transport most U.S. coal is rising. Finally, supply-constrained European, South American and Asian countries “are often willing to pay more for coal.”
The top sixteen states, which combined produce over 95 percent of U.S. coal, are cumulatively “past their peak production,” the report asserts.
Eastern coal is typically in the $3.00 per MMBTU to $4.00 per MMBTU price range. Western coal is slightly less, but its cost is rising, especially in states that incur transportation costs by importing from the West.
Examples are New Jersey, where the price rose 7.5 percent per year to $4.05 per MMBTU since 2004, and Mississippi, where coal it rose 12.5 percent per year to $4.45 per MMBTU.
New technology is not a viable solution, according to the report: “Even if coal were perfectly clean — or could be made to be so — it would still be the wrong choice due to serious questions about long-term U.S. coal supplies.”
Source: Clean Energy Action’s Warning: Faulty Reporting of U.S. Coal Reserves
Another factor compromising coal’s economic viability is that the top three U.S. coal companies have huge debts coming due between now and 2021 at interest rates much higher than those available to better-positioned companies, the report contends.
Peabody Energy, the biggest U.S. coal company, has $650 million of 7.375 percent debt due in 2016; $1.5 billion of 6 percent debt due in 2018; $650 million of 6.5 percent debt due in 2020; and $1.34 billion of 6.25 percent debt due in 2021.
Second-ranked Arch Coal Inc. has $600 million of 8.75 percent debt due in 2016; $1 billion of 7 percent debt due in 2019; $375 million of 9.875 percent debt due in 2019; and $500 million of 7.25 percent debt due in 2020.
“U.S. coal production very likely has peaked,” Glustrom said. “And it is no longer cheap. Arch, they say, is in the land of the walking dead.”
U.S. decision-makers should, the reports says, develop “scenarios that require moving the U.S. beyond coal in significantly less than twenty years.”
Based on recent wind and solar bids in the western United States, the report adds, once coal costs rise above about $1.50 per MMBTU, “it can no longer be assumed that coal is the lowest-cost way to generate electricity.”
22 Comments on "Peak Coal: Will the US Run Out of Coal in 20 Years or 200 Years?"
TIKIMAN on Mon, 4th Nov 2013 9:23 pm
Well look at that. Coal production drops when liberals take over. We wont run out fo coal, the dems will makeus stop using it way before then.
ohanian on Mon, 4th Nov 2013 10:24 pm
When I was a liitle kid less than 10 years of age back in the early nineteen seventies. My teacher told me that United States have 500 years supply of coal.
Now that was like 40 years ago. Are you telling me that in just 40 years, United States went from 500 years supply of coal to 20 years supply of coal?
J-Gav on Mon, 4th Nov 2013 10:24 pm
Another Greentech fluff piece. It’s not just coal for Chrissakes, it’s ALL the fossil fuels, fools! But there is an ounce of veracity here – 20 years should be enough to make it clear even to most numb-skulls that there is no free energy pass awaiting us when we come off the present net-energy plateau for good.
Dave Thompson on Mon, 4th Nov 2013 10:31 pm
Tkiman. Go on Facebook you will find plenty of people that have your mindset. This is not the place to make such remarks Thank You.
rockman on Mon, 4th Nov 2013 10:53 pm
The same factors the ultimate recovery of any resources, including coal, first hinges on future price assumptions. Offering that we have X years of any commodity first hinges on it future price. Without that assumption clearly documented any projections of future production in meaningless. The current shale oil boom is a good example. One could have projected hugely different future production trends depending upon the price assumptions. In 2000 assume an increase in oil to $50/bbl and no one would have predicted what’s happening today. But assume $100+/bbl and a very different future would have been predicted.
Once a price assumption is made for that X years in the future then the geology controls the amount of resource life remains. There will come a point at which there will be very few shale wells frac’d for oil because there will be very few locations left to provide opportunities to drill.
Coal has 50 years? At what price? Coal has 250 years? At what price? If the cost basis isn’t included with the lifetime projection there’s no basis to debate either prediction.
Mike on Mon, 4th Nov 2013 11:30 pm
Thanks rockman!
So coal-price will rise as we still need energy, or we will shift to nuclear when we want to do so.
Nuclear costs are to 90% for infrastructure/technology and to ~10% for fuel. Technology costs are a matter of experience and economy of scale. -Even the so called security-matter is ridiculous as long as exhaust of fossil fuels(and biomass) kills more people than radiation(~100times as much). -The time when we shift to nuke is more a question of psychology than anything else.
MrEnergyCzar on Tue, 5th Nov 2013 12:08 am
What’s left is the dirty lower quality coal, to be shipped to Chindia….
MrEnergyCzar
GregT on Tue, 5th Nov 2013 1:22 am
Nuclear won’t do anything to solve the predicament that we are in. At the most, it could keep the lights on for a while longer, at great risk to all future life on earth. Nothing more.
J-Gav gets it.
In 20 years time, human existence on this planet will be dramatically different than it is today, and not in what most would consider to be a good way. I suspect that we will all have a very serious dose of reality, within the next 10 years. There is still an opportunity for those that have their eyes open, to make plans for a sustainable future, but that opportunity is rapidly running out.
rollin on Tue, 5th Nov 2013 1:35 am
Beyond the direct environmental issues of mercury and SO2 pollution wrecking the environment and injuring (and killing) many people, the newer problem of global warming will slow use of coal. As CO2 emission laws and taxes are implemented, coal use may fall enough that we essentially have a near infinite supply. It’s all in the price and the rate. The price is the eco-system and the rate of production will fall off dramatically over the next 30 years.
BillT on Tue, 5th Nov 2013 1:38 am
“…Nuclear costs are to 90% for infrastructure/technology and to ~10% for fuel….”
Mike, ask Japan how cheap nuclear fuel is AFTER it is burned. Nuclear is the most expensive, destructive energy we have ever dreamed up. It should have ALL stayed in the ground where it was put, for safety, by Mother Nature.
And, yes MeEnergyCzar, what we call ‘coal’ today is not much better than wood or lignite. The high density anthracite and bituminous coal is almost gone. We are also scraping under the coal bin now for leftovers.
GregT on Tue, 5th Nov 2013 2:42 am
rollin,
Coal exports in Canada are expected to double in the next 10 years. The infrastructure is being built as we speak. Eco-system, be damned. There’s money to be made.
rollin on Tue, 5th Nov 2013 3:11 am
GregT, sounds like you have been eating a lot of freshwater fish caught downwind of coal power plants.
GregT on Tue, 5th Nov 2013 3:24 am
Sorry rollin. Just the facts man.
http://www.vancouversun.com/technology/Industry+predicts+bright+future+coal/8906116/story.html
GregT on Tue, 5th Nov 2013 3:30 am
Oh, and normally I do catch, and eat, a lot of fresh water fish. Not this year though, the fishery was shut down due to abnormally high water temperatures, and decimated fish stocks.
Mike on Tue, 5th Nov 2013 7:04 am
“Mike, ask Japan how cheap nuclear fuel is AFTER it is burned.”
How many dead(and ill) are caused by the fukushima accident? zero?!!!
Even if there are a hand full of cancer illnesses over the next ~6decades its clearly less then a coal ore heavy oil power plant of same power would cause over 40years of runtime(in the same district). A solar farm of the same power would need more area then the permanent evacuation zone!(and don’t talk about storage of such amounts of energy… because there is no way to do it)
Bye the way, opposing nuke(and coal?!?) and favoring electric heating sounds quite strange to me!
simonr on Tue, 5th Nov 2013 11:46 am
Out of interest how many years of Nuclear power do we have.
We have apparently passed peak uranium.
So if we all switch to nuclear, then the demand will rocket and the supply is declining, so cost will go …. up up up.
Burn Sticks, Carbon neutral and pretty to look at.
rockman on Tue, 5th Nov 2013 12:39 pm
Mike – probably will see coal prices fluctuate as demand grows and ebbs with economic activity. As far as shifting to nuclear or any other energy source such as solar/wind I have to question how much “shifting” will be done vs. additions. That will vary with country/locale. China and Texas are two obvious regions of additions exceeding substitutions IMHO. Growth will demand it in both areas. Which is one reason I think the major GHG sequestration project planned for a coal-fired plant in Texas is critical: they project a significant growth in electric demand in Texas and we have a significant reserve of relatively cheap (and nasty) lignite. In the case of China not only do they continue to ramp up domestic coal production capabilities they are increasing imports including a 500% increase for the US high sulfur fields out west.
steveo on Tue, 5th Nov 2013 1:02 pm
“How many dead(and ill) are caused by the fukushima accident? zero?!!!”
Correct as of today. It will be “interesting” to see how rising Cesium and Strontium levels in Pacific fish change that over the next 10-20 years. Fukushima is an on going slow motion disaster, it’s not one big explosion like Chernobyl was. It has the potential to render all Pacific fish inedible.
rollin on Tue, 5th Nov 2013 2:58 pm
Interesting article from the Vancouver sun, GregT. I didn’t know that Canadians were allowed to publicly protest against fossil fuels.
rollin on Tue, 5th Nov 2013 3:53 pm
All deaths related to the Fukishima incident will be published as caused by other factors, primarily cancer.
http://enenews.com/physician-on-cancer-calculations-epidemic-of-fukushima-radiation-related-deaths-from-fish-in-pacific-may-have-started-vast-implications-for-human-health-i-eat-so-much-salmon-im-vulne
http://www.prnewswire.com/news-releases/medical-journal-article–14000-us-deaths-tied-to-fukushima-reactor-disaster-fallout-135859288.html
Mike on Tue, 5th Nov 2013 7:08 pm
rockman -I also fear more the fact, that we have to much coal, than having to less. 🙂 GHG sequestration can be a “nice to have”, at least for the “shortterm” but on the longer rund I don’ want energy by burning fossile fuels, but more the way: using energy to make new fuel out of CO2. 🙂
With nuclear power, this is a achievable solution(HTGR). But the main effect is, that ALL the coal and most of gas and oil powerplant can be substituted by reactorpower(like the rrench di it). I also have now doubt that there is pretty much uranium still out there, far way from a geological peak production(the one in the seventies was political/demand side).
An when peak production will come near, we can change to reprocessing, re-enrichment and even breeding as source of fuel. I’m pretty optimistic that human society NEVER will fall, because of a lack of energy(as King Hubbert predicted)
Mike on Tue, 5th Nov 2013 7:21 pm
” It will be “interesting” to see how rising Cesium and Strontium levels in Pacific fish change that over the next 10-20 years. Fukushima is an on going slow motion disaster, it’s not one big explosion like Chernobyl was. It has the potential to render all Pacific fish inedible.” steveo: most of the cesium(and strontium) that is out there in the pacific was emitted in the fist ~50days of the accident. This amount has now climbed the food chin up to big fish that could be eaten by man(or even whale). And it’s quite localized to the scores of fukushima at least by now. If it spreads out to open sea it will dilute and get more harmless. We have boar and mushrooms in Austria having the same amount of radiation in it, than fukushima fish, people also eating that boar and mushrooms but not getting ill. Even our environmentalists paid money for scientific survey about radiation impact on healt(in middle Europe, Sweden,..) but didn’t find anything by now!