West Virginia coal has been significantly depleted, alternatives are available

Opinion Editorial by C. Blaine Cecil, Charleston Gazette Mail, April 15, 2017

Over the past couple of years, I have followed claims about the restoration of the coal industry in the Appalachian region. As a native West Virginian and someone who still has a strong allegiance to the state, I feel compelled to offer a different perspective on the future of coal.

I am a retired geologist who has invested most of my professional career to the study of coal geology in Appalachia. These studies included, but were not limited to, geologic controls on the origin of coal and coal-bearing strata; geological and chemical characteristics of coal that effect coal cleaning; and mineral and chemical characteristics of coal and coal-bearing strata that effect mine drainage water quality. These, and other studies, were always related to coal resources (the amount of coal in the ground) and coal reserves (the amount of mineable coal).

As a result of those studies, it became evident many years ago that the amount of coal resources and reserves are finite; reserves will not last forever.

As far back as the mid-1970s, a coal company executive who was responsible for coal exploration in Southern West Virginia told me that mineable coal was getting “dirtier and deeper (and thinner)” meaning that the best coal reserves had already been mined. Since that time, newer mining technologies (such as mountaintop surface mining) have continued to deplete coal reserves. As a result of reserve depletion, it is highly unlikely that coal mining (and jobs) can be restored in a significant and sustainable manner; recovery of remaining reserves will be increasingly difficult and expensive, thereby resulting in a steady and rapid decline in coal production and associated jobs.

Much of the remaining coal resources occur in beds that are thin, discontinuous, often deeply buried and uneconomical to mine, and that will never be included in reserve calculations. If these resources are ever to be recovered, it will most likely be through underground (in situ) gasification rather than conventional mining methods.

Unless some unknown factors intervene, coal production and mining jobs in Appalachia are unlikely to recover because of the following:

>>Reserve depletion. Coal reserves are nearly depleted; increases in coal production will only accelerate reserve depletion and hasten the end of a significant coal mining industry in Appalachia. This is particularly true of southern West Virginia.

>> Electricity demand. The demand for electricity from coal-fired power plants has slowed because many major industrial consumers (e.g., steel, aluminum, and chemical manufacturing) have closed most of their plants in the United States, giving rise to the “rust belt.” The demise of these industries can also be attributed, by in large, to resource/reserve depletion of raw materials.

>> Natural gas replacement. Coal is being replaced by natural gas in the generation of electricity because recently discovered natural gas is now abundant, relatively inexpensive to produce, cleaner to burn and has higher heat content than coal (on a BTU/pound basis). Natural gas-fired power plants are also cheaper to build and operate than coal-fired power plants.

>> Energy transportation. Natural gas is easier, cheaper, and more energy efficient to transport (via pipelines) to power plants located near points of consumption (e.g., large metropolitan areas) relative to transportation of electricity over power lines from mine-mouth power plants to major markets. In addition, gas is cheaper and more energy efficient for home heating than electricity. Simply put, natural gas is currently a cheaper source of energy than coal.

In summary, economic recovery and sustainability in coal-producing regions in Appalachia must refocus economic development on commercially viable activities other than coal production. The nearly total collapse of the coal industry in Great Britain and Germany in the latter part of the 20th century is a stark reminder that coal reserves become depleted.

Readers who wish to further explore the future of coal mining in Appalachia may consult resource and reserve data that are available online from both federal and state agencies.

>>> C. Blaine Cecil, of Rockbridge Baths, Virginia, originally from Moundsville, was an adjunct professor of geology at WVU, a research associate at the Smithsonian Institution and a research geologist emeritus for the U.S. Geologic Survey.

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See also: Longview Power Files Prepackaged Chapter 11 To Facilitate Ownership Change, City Biz, Wash., DC, April 14, 2020

Longview Power LLC has filed for Chapter 11 bankruptcy protection under a prepackaged reorganization plan as a result of substantially lessened demand for electricity due to long term power-pricing pressure caused by cheap natural gas, an unseasonably warm winter, and the COVID-19 pandemic and resulting economic impact, which collectively have severely depressed power prices. The Company will continue to operate in the ordinary course as it quickly restructures its balance sheet.

EIA: Year over Year Change in Coal Production

A career in coal geology says WV must bank on new industries

From the Opinion-Editorial by C. Blaine Cecil, Charleston Gazette-Mail, April 15, 2017

Over the past couple of years, I have followed claims about the restoration of the coal industry in the Appalachian region. As a native West Virginian and someone who still has a strong allegiance to the state, I feel compelled to offer a different perspective on the future of coal.

I am a retired geologist who has invested most of my professional career to the study of coal geology in Appalachia. These studies included, but were not limited to, geologic controls on the origin of coal and coal-bearing strata; geological and chemical characteristics of coal that effect coal cleaning; and mineral and chemical characteristics of coal and coal-bearing strata that effect mine drainage water quality. These, and other studies, were always related to coal resources (the amount of coal in the ground) and coal reserves (the amount of mineable coal).

As a result of those studies, it became evident many years ago that the amount of coal resources and reserves are finite; reserves will not last forever.

As far back as the mid-1970s, a coal company executive who was responsible for coal exploration in Southern West Virginia told me that mineable coal was getting “dirtier and deeper (and thinner)” meaning that the best coal reserves had already been mined. Since that time, newer mining technologies (such as mountaintop surface mining) have continued to deplete coal reserves. As a result of reserve depletion, it is highly unlikely that coal mining (and jobs) can be restored in a significant and sustainable manner; recovery of remaining reserves will be increasingly difficult and expensive, thereby resulting in a steady and rapid decline in coal production and associated jobs.

Much of the remaining coal resources occur in beds that are thin, discontinuous, often deeply buried and uneconomical to mine, and that will never be included in reserve calculations. If these resources are ever to be recovered, it will most likely be through underground (in situ) gasification rather than conventional mining methods.

Unless some unknown factors intervene, coal production and mining jobs in Appalachia are unlikely to recover because of the following:

Reserve depletion. Coal reserves are nearly depleted; increases in coal production will only accelerate reserve depletion and hasten the end of a significant coal mining industry in Appalachia. This is particularly true of southern West Virginia.

Electricity demand. The demand for electricity from coal-fired power plants has slowed because many major industrial consumers (e.g., steel, aluminum, and chemical manufacturing) have closed most of their plants in the United States, giving rise to the “rust belt.” The demise of these industries can also be attributed, by in large, to resource/reserve depletion of raw materials.

Natural gas replacement. Coal is being replaced by natural gas in the generation of electricity because recently discovered natural gas is now abundant, relatively inexpensive to produce, cleaner to burn and has higher heat content than coal (on a BTU/pound basis). Natural gas-fired power plants are also cheaper to build and operate than coal-fired power plants.

Energy transportation. Natural gas is easier, cheaper, and more energy efficient to transport (via pipelines) to power plants located near points of consumption (e.g., large metropolitan areas) relative to transportation of electricity over power lines from mine-mouth power plants to major markets. In addition, gas is cheaper and more energy efficient for home heating than electricity. Simply put, natural gas is currently a cheaper source of energy than coal.

In summary, economic recovery and sustainability in coal-producing regions in Appalachia must refocus economic development on commercially viable activities other than coal production. The nearly total collapse of the coal industry in Great Britain and Germany in the latter part of the 20th century is a stark reminder that coal reserves become depleted.

Readers who wish to further explore the future of coal mining in Appalachia may consult resource and reserve data that are available online from both federal and state agencies.

>>> C. Blaine Cecil, of Rockbridge Baths, Virginia, originally from Moundsville, is an adjunct professor of geology at WVU, a research associate at the Smithsonian Institution and a research geologist emeritus for the U.S. Geologic Survey.

RISKS ASSOCIATED WITH NATURAL GAS PIPELINE EXPANSION IN APPALACHIA

Report of the Institute for Energy Economics & Financial Analysis, April 2016

[EXECUTIVE SUMMARY]

Major utilities, pipeline companies and natural gas producers are proposing construction of two new natural gas pipelines into Virginia and North Carolina from the Marcellus and Utica shale region of West Virginia. Developers of the Atlantic Coast Pipeline and the Mountain Valley Pipeline, which would cost a total of nearly $9 billion to complete, have applied to the Federal Energy Regulatory Commission for approval. The pipelines are proposed to go into service in 2018. 

They would be part of a larger expansion of natural gas pipeline infrastructure from the Marcellus and Utica shale region in Appalachia that has been described by Moody’s Investors Services as an “once-in-a-lifetime build-out cycle” driven by the recent boom in natural gas production. 

Some participants have openly acknowledged the likelihood of overbuilding, as when Kelcy Warren, CEO of Energy Transfer Partners, said in an earnings call last year that overbuilding is part-and-parcel of the industry (“The pipeline business will overbuild until the end of time,” Warren said).

This report shows how the Atlantic Coast and Mountain Valley pipelines are emblematic of the risks that such expansion creates for ratepayers, investors and landowners. Among its conclusions:

 · Pipelines out of the Marcellus and Utica region are being overbuilt. 

· Overbuilding puts ratepayers at risk of paying for excess capacity, landowners at risk of sacrificing property to unnecessary projects, and investors at risk of loss if shipping contracts are not renewed and pipelines are underused. 

· The Federal Energy Regulatory Commission facilitates overbuilding. The high rates of return on equity that FERC grants to pipeline companies (allowable rates of up to 14%), along with the lack of a comprehensive planning process for natural gas infrastructure, attracts more capital into pipeline development than is necessary. · FERC’s approach to assessing the need for such projects is insufficient.

 · Industry leaders recognize and acknowledge that current expansion plans will likely result in overbuilding.

· The arguments for the Atlantic Coast Pipeline have not been adequately scrutinized. While the pipeline developers have asserted that some of the gas supplied is needed by Dominion Resources for its new Brunswick and Greensville natural gas plants, Dominion has told the Virginia State Corporation Commission that it can supply those plants through the existing Transco pipeline. 

· While ratepayers of the utilities (largely Duke Energy and Dominion Virginia Electric and Power) that have contracted to ship gas through the Atlantic Coast Pipeline would be burdened with the costs of building the pipeline (which would include a profit to the developers, largely Duke and Dominion), they will probably not realize the economic benefits promised by the developers. 

· Communities along the Mountain Valley Pipeline face the risk that EQT Corporation (which owns the largest stake in that pipeline and has contracted for the largest volume of capacity on the pipeline) will continue to be harmed financially by weak natural gas prices and will not be a long-term, stable partner for these communities. This report notes also that much of the $9 billion costs of the projects—aside from the costs embedded in the price of any natural gas that is exported—would ultimately be either added to the price consumers pay for natural gas or absorbed as a loss to project investors. And it points out that regulators have not considered whether these pipelines are the best use of ratepayer dollars. None of the economic interests within the natural gas industry have any incentive to seriously consider whether alternatives to natural gas – energy efficiency, renewable energy or other forms of power generation – may be cheaper. Given all of these circumstances, IEEFA recommends the following: 

· That the applications for the Atlantic Coast and Mountain Valley pipelines be suspended until a regional planning process can be developed for pipeline infrastructure;

 · That FERC lower the returns on equity granted to pipeline developers; and 

· That an investigation be conducted into the relatively high failure rate of new pipelines.

NOTE —  ”Kelcy Warren, CEO of Energy Transfer Partners, said in an earnings call last year that overbuilding is part-and-parcel of the industry (“The pipeline business will overbuild until the end of time,” Warren said).”