Peak coal: Coming to Appalachia sooner than you think?

August 6, 2009 by Ken Ward Jr.

coalusgs1.JPG

Peak coal is an important topic for coalfield communities, and one that we’ve covered many times on this blog. See previous posts here, here, here, and here.

For years, one of the major problems with coal policy has been the lack of reliable estimates for how much coal there is left that is mineable. Coal industry backers like to say there are hundreds of years of coal left.  But the National Research Council warned a few years ago that there was not reliable information available to support such conclusions.

Now, the U.S. Geological Survey has published its new National Coal Resource Assessment Overview, a detailed report that examines such issues. Erica Peterson over at West Virginia Public Broadcasting had a nice piece that explained parts of the study. But it didn’t hit on what some other experts have pointed out to me as the really important finding …

USGS officials projected that Appalachia will reach “peak coal” (my term, not theirs) in perhaps about 10 years — by 2020.  Check out the graphic above … Click on it to get a bigger version, or read Chapter H of the USGS study, Production and Depletion of Appalachian and Illinois Basin Coal Resources.

What is peak coal? Like peak oil, it is the point where the maximum rate of production is reached, after which the rate of production “enters terminal decline.

Here are some of the study’s key findings:

— The Energy Information Administration has estimated that there are about 53 billion tons of coal reserves in the Appalachian Basin. These reserve estimate, plus 2005 cumulative production (37.5 billion tons), equals about 90 billion tons as a potential for the maximum cumulative production of coal from this basin.

— Of the estimates reserves in the Appalachian Basin, about 40 percent is classified as high-sulfur coal. Although much of the high-sulfur coal may be technically recoverable, under current economic and environmental conditions, it is not generally economic.

— The potential reserve of low- and medium-sulfur coal in the Appalachian Basin is about 31 billion tons. Accordingly, the amount of low- and medium-sulfur coal reserves plus the cumulative production yields an estimate of about 67 billion tons for the amount of coal that may be produced from the basin under current economic conditions, technology and environmental restrictions.

Now, that is regarded, the USGS concedes, as a low estimate, because high-sulfur coal is currently being burned by power plants. But, the USGS says, it still provides “a reasonable estimate of the minimum amount of coal that may be produced from the Appalachian Basin.

They add:

Most likely, widespread use of flue-gas scrubbers and alternative users of high-sulfur coal, such as feedstock for synfuel plans, may eventually increase the amount of coal that will ultimately be produced from the basin, perhaps close to the 90-billion-ton estimate.

Also:

The large remaining resources of high-sulfur coal in Ohio and Pennsylvania, which are currently uneconomic or have limited markets, will be the coal reserves of the future when competitively priced low-sulfur coal reserves in the central Appalachian Basin are exhausted and as the technology for mining, reclamation, and combustion improves. Indeed, these high-sulfur coals may eventually be used as the preferred feedstock for coal-to-methane synthetic fuel plants as prices for natural gas and oil increase.

OK … but that’s still all somewhat speculation by USGS. Their published report contains two “decline curves” that estimate how they think coal production — the high-sulfur issues aside — could play out in the region.

One of them, shown above, is based on the 31 billion tons of low- and medium-sulfur coal in the ground across Appalachia. According to the USGS:

… Annual production from the Appalachian Basin will fall below 200 million tons sometime between the middle and end of the 21st Century.

Of, if you consider just the 11 billion tons of low-sulfur coal in the region, the decline is steeper and annual coal production from Appalachia falls below 100 million tons prior to the middle of the 21st Century. Here’s that curve:

coalusgs2.JPG

It’s most important to remember that these illustrations do not “illustrate potential changes in environmental regulations, technology and economics that might make more or less of the coal profitable to mine.”

25 Responses to “Peak coal: Coming to Appalachia sooner than you think?”

  1. Thomas Rodd says:

    Great post. “Snap judgments” about the quality/value/significance of the information and opinion in this report may run the risk of being more about beliefs and feelings than about balanced, well-founded, analysis and reasoning. I’m going to try to read it carefully. I’m hoping that people with good levels of expertise in economics, engineering, finance, etc. will take this information and put it in context. Having said this, this report appears to contain exactly the kind of information that citizens, business/finance, government, and markets badly need. I hope it turns out to be of good quality.

  2. Clem Guttata says:

    If you look at the energy returned from energy invested to extract the coal, I wonder if we haven’t already hit peak coal-sourced energy in West Virginia. The coal we mine today doesn’t provide as much energy per ton as the coal we used to mine and the coal we mine in 5-10 years is going to be more difficult to mine than what we extract today.

    This study shows why any technology for burning coal more cleanly 10-20 years from now is too little too late for West Virginia (it may well be too little too late for our planet, too, but that’s a completely different topic).

    We need to forward Sen. Rockefeller’s office a copy of this report so he won’t say again that “We have a 400 year supply in this country of coal” (see: http://www.wvablue.com/diary/3942/sen-rockefeller-says-clean-coal-is-dirty 1/25/2009).

    This study demonstrates that any public policy planning for West Virginia still based on the assumption that *generations* of coal wealth remains is seriously flawed. It’ll be a major step forward for West Virginia once our Sens., Reps., Gov., legislature and other civic leaders finally start acting like major coal production in W.Va. is down to 100-200 months–not 100-200 years.

  3. Matthew Cook says:

    Mr. Gutata,
    I guess this would seem to be an example of two reasonable(I’m making the stretch to include myself in the reasonable category) people looking at the same information and coming to two different conclusions. A report that says 30-50 billion economically recoverable tons sounds like a lot of coal to me. Even at 400 million tons per year that is up to 120 years of production. I’m not sure what the U.S. energy landscape will look like 100 years from now, but neither does anyone else. In my experience it is hard to read too much into these surveys because there are too many variables. For example the difference in price between high and low sulfur coal has narrowed greatly just in the last few years as more and more power plants have installed scrubbers. In fact the high sulfur Illinois basin is the only basin to increase tonnage in this down year. Also, although U.S. oil production peaked years ago, cumulative U.S. oil production has significantly exceeded the total estimated reserves based on the reports prepared in the ’70s. To summarize I guess I would contend that government regulation and policy have far more to do with future production in the short to medium term than the reserve calculation. If U.S. policy creates an environment that allows investment in coal power plants and coal mines than coal can continue to be a significant portion of West Virginia’s economy. If investors are worried that they will never be able to make a return than your time frame is optimistic.
    Regards.
    MC

  4. Lewis Baker says:

    Coal production may have already peaked in Appalachia. The great recession and a cooler than normal summer have temporarily reduced demand. Production is off 10% from last year. Large stockpiles at power both plants and mines may mean more mines will shut down soon as coal prices plummet even further.

    Some of the local mines which have already been or soon will be shut down will be reopened later. Others may not.

    Sure we will still have plenty of coal left, but it will be more difficult to mine than in the past. Permits may be harder to get and comply with, both to mine it and burn it.

    Over the next few years electricity produced from coal will probably continue to become relatively more expensive compared to power from alternatives such as wind, or even natural gas. Not only will coal fired power plants have to capture the sulfur and ash, and then safely dispose of that, but they will also have to capture the mercury and carbon dioxide emmissions, and safely dispose of them too. This will cost too much to be competitive.

    If the demand for coal decreases over time because burning it is no longer cost competitive, then the price per ton will go too low to mine it at a profit here. The minable reserves, based on what is profitable to mine in the near future, could become a much smaller amount than estimated by the geologic survey.

    It may well be that coal production has peaked in WV. We may produce only half as much coal ten years from now, and very little in twenty.

  5. montanus says:

    The argument that technology will radically increase future WV coal tonnage is flawed. Central Appalachian coal production has already declined 15% since 1997, and the companies that know the most about these coal seams & markets have sent an exceedingly strong message by their continued divestment from Appalachian coal mines (honestly, Alpha Coal had to beg its shareholders for permission to buy Appalachian coal miner Foundation last month — Alpha’s largest shareholder tried to block the acquisition, suggesting that Appalachia was a place for consolidation instead of growth, unlike in the IB or PRB, and suggesting that metallurgical coal and coal exports are better places to focus). WV probably already hit peak coal in 1997 (and certainly southern WV / Central Appalachia has already hit it).

    Technology will not be our salvation because it’s far cheaper for companies like Peabody and Arch to pick up camp and move to the many places in the world where reserves are much more plentiful than in southern West Virginia. And, as we have seen, that is precisely what the major coal companies have done. Most of the remaining big players are either a) the “left behind” companies that Peabody and Arch created, such as Patriot Coal, which has more pensioners than it has active miners, or b) the ICGs and Masseys of the world, who make money on the moral-free margins where safety and environmental costs are externalized onto miners and the public. There is also Consol, but it must be by and large just riding the wave of its existing longwalls –in any case any of its expansion would be focused in the Northern Appalachian fields. The geology is so bad now in Central Appalachia, even the star-in-the-crown of the remaining top coal firms in the region (Consol) had to shutter its big Buchanan mine in VA due to chronic roof falls.

    The only way we start to see technology make major inroads toward increasing the amount of recoverable reserves is if government regulations force the adoption of leap-frog technologies like in-situ gasification of deep coal (which is so far out there as to be laughable). That type of centrally-coordinated industrial policy might happen in China, but not in the free-market US. Like it or not, southern West Virginia is stuck with a very bleak horizon for coal production in the coming three or four decades. Northern West Virginia might see coal production grow, or at least maintain its current levels, thanks to the SO2 scrubbers that were mandated by the Clean Air Act, and thanks to the carbon capture systems that draw substantially greater parasitic power from coal plants (and hence require about 30% more coal for the same amount of electricity).

  6. Casey says:

    I agree with Matt as usual. The future of coal will be dependent much more on gov’t regulations than it will be on the large resource base of coal and free enterprise. The technology is already there to recover U.S. coal for many decades so the only question will be if the “love-to-hate-coal” types are able to successfully promote their agenda. Without a carbon electrical baseload (or nuclear) our society will drastically change.

  7. Scott 14 says:

    High sulfer coal unmarketable, huh , Ill call Pittsburg and tell CONSOL that they had better shut down the 49 million tons of high sulfer Pitt 8 we will mine this year. We have about 400 million tons of Pitt 8 reserves left in front of our longwalls all 9 of them. We are buying reserves in centeral App also, such as our purchase of AMVEST 2 years ago. For the record Buchanan was shut down for roof conditions last year. The 3 month shut down this year was for market conditions and water issues. With 1 billion tons of proven and probable reserves left in 5 states we’ll be mining coal long into the future,as we have for 145 years.

  8. montanus says:

    The biggest thing government regulation might do –good, bad, or indifferent– is help bolster the plummeting demand for WV coal, by adding parasitic power demand at CCS plants. The amount of mountaintop-mined coal was declining even before the Obama Administration came into power and started suggesting it would contemplate enforcing SMCRA –Randy Huffman himself agrees with that, since he’s noted that the number of draglines in WV has fallen to less than half the amount that were here in the late 1990s (peak coal time). Erica Peterson pointed out that USGS found (& explained not in Chapter H but in Chapter D) that “few large surface-minable resources remain” in the Central Appalachian fields.

    I challenge anyone reading this blog to produce a scientific or economic analysis that shows Central Appalachian coal production could grow above its current levels during the next fifty years, even under business as usual (i.e. presuming there is no cap-and-trade bill, which is almost a moot point, but useful to demonstrate the fallacy of the “govt regulation” argument). Central Appalachian coal is just sadly, permanently, undoubtedly, on the skids.

    Coal is down to providing only 43% of America’s electricity, a decline from the much-touted 50+% not so long ago. The energy efficiency being driven by the stimulus will help to keep electricity demand to a slower-growth trajectory, and –just as they have in recent years– private investors (not government) will limit the construction of coal plants in favor of cleaner sources of energy. Thus, whether or not there’s new gov’t regulation, overall demand for thermal coal will likely continue to be pretty weak (unless Congress passes a big cap-and-trade bill that requires and heavily subsidizes CCS). There might be growth in exports and met coal, but that’s not enough to keep Central Appalachian production at its current levels. So, although the western coalfields and the Illinois Basin might have better days to come, we in Central Appalachia have to accept that peak coal has come and gone for us, and the slippery slope of a declining coalfield will continue to be our lot.

  9. montanus says:

    Sorry, Scott, but even after Consol’s purchase of AMVEST, Central Appalachia still only constituted 13% of the company’s reserves — hardly a refutation of the peak coal argument. Just because you have peak coal doesn’t mean that some companies won’t invest a little here and there. There will be a few (like ICG and Massey) that continue to try to make a profit at the margins in this declining coal basin. But anyway your other points about Consol are well-taken –Consol is a great company and is bringing an incredible service ..predominately to northern West Virginia, although true enough also in southern WV somewhat. SO2 scrubbers will indeed help to bolster demand for high-sulfur coal –but even scrubbers won’t override the fundamentals that drove peak coal in southern WV.

  10. Mitch Casto says:

    It may be necessary to account for mining methods that make some coal deposits physically impossible or uneconomic to recover. For decades, to compete and make good profits, coal companies have mined the easiest to retrieve/best quality coal and left the less profitable coal. In some cases this human activity made the overburden unstable and cave-ins, water, etc. took their natural course. In the case of Long Wall mining, the mountain is deliberately dropped on the less desirable parts of coal seams. The energy market is competitive and difficult to predict, which discourages risk to retrieve the less profitable coal. ( I’m no expert on this, but haven’t seen this issue raised and it might be an important factor in accounting for future reserves.)

  11. […] Appalachia will reach “peak coal” in perhaps about 10 years — by 2020, according to Coal Tattoo. Peak coal is the point where the maximum rate of production is reached, after which the rate of […]

  12. […] Peak coal: Coming to Appalachia sooner than you think? Peak coal is an important topic for coalfield communities, and one that we’ve covered many times on this blog. See previous posts here, here, here, and here. For years, one of the major problems with coal policy has been the lack of reliable estimates for how much coal there is left that is mineable. Coal industry backers like to say there are hundreds of years of coal left. But the National Research Council warned a few years ago that there was not reliable information available to support such conclusions. […]

  13. john says:

    most of your posters are correct. the overwhelming majority of research incl. us geo survey puts our recoverable reserves well over 100 yrs. as usual your blog is predictably framed, but i do enjoy reading your viewer comments. keep slogging.

  14. Ken Ward Jr. says:

    john,

    Please provide links to this research you say shows that … we’d all like to see.

    Thanks, Ken.

  15. csx employee says:

    i’ve wondered to myself, if the reason mountaintop removal has exploded in the past 10 years, is because their mining coal with this method that is consider not recoverable or nearly not recoverable ?,because the seems are to small so they have to take the whole mountain down rather than deep mine it?

  16. Just a quick moment of mathematical checking on Scott 14’s post. If the one operation you are speaking of is putting out 49 million tons a year and there are 1 billion in “proven or probable” reserves, that means there is 20 years of coal left. Not long into the future by my standards.

    It’s probably worth noting as well as this analysis: http://www.grist.org/article/2009-07-27-blackout-heinberg-on-dwindling-coal-reserves-and-the-siren-song-

    that points out that we are approaching peak coal worldwide. Of particular interest is the fact that the estimates of worldwide reserves have steadily DECLINED as better and better information has become available, not increased as technology improves. I’m no expert, but this is scary stuff. West Virginia needs a real future, not one depended on a swiftly dwindling and increasingly destructive (and unpopular nationwide) resources. And it deserves one for all the sacrifices it has made for this country.

  17. Scott 14 says:

    Sorry about the lie about there being 400 million tons of northern app reserves left. Its actually 800 million and a total of 2.1 billion tons of proven and probable reserves the company contols. Go to CONSOL’s website if you need proof. This country and the world in general will need coal well into the future. Sorry but the truth hurts.

  18. jkotcon says:

    The report is useful, but it is solely a supply-side estimate, while coal use depends heavily on the demand-side projections. The coal industry likes the assumption that demand will continue to grow exponentially forever. This is the same kind of thinking that got the real estate industry into their current mess. But as energy gets more expensive, energy efficiency becomes more and more atractive. While electricity demand is currently down due to the recession, there is a lot of evidence to suggest that efficiency will lead to a permanent downturn in demand. If demand continues to shrink, the peak for Appalachian coal may occur well before the reserves are exhausted. This is the real threat that the coal induustry wories about. Wth cap and trade, other energy sources become more attractive while demand shrinks, and the coal companies may end up sitting on coal reseves that never get mined. If West Virginia continues to invest in coal-based infrastructure, we all will end up paying the bill on enormous white elephants for which there is no market. If West Virginia invests heavily in alternatives and efficiency, we still have plenty of energy and jobs, and only those owners of soon-to-be-worthless coal reserves get hurt.

  19. […] Peak coal: Coming to Appalachia sooner than you think? Peak coal is an important topic for coalfield communities, and one that we’ve covered many times on this blog. See previous posts here, here, here, and here. For years, one of the major problems with coal policy has been the lack of reliable estimates for how much coal there is left that is mineable. Coal industry backers like to say there are hundreds of years of coal left. But the National Research Council warned a few years ago that there was not reliable information available to support such conclusions. […]

  20. Clem Guttata says:

    Scott 14 – As others have mentioned in comments above, energy reserves (e.g., oil and coal) have consistently been revised downward as technology improves measurement.

    Here’s how one commenter on a peak coal report back in 2007 put it, “…conventional wisdom has it that reserves will increase as more exploration takes place and prices rise. Yet, in truth, estimates for global coal resources have been consistently revised down, and by 55% over the past 25 years, from 10 trillion tons hce (hard coal equivalent) in 1980 to around 4.5 trillion tons hce in 2005″ (http://europe.theoildrum.com/node/2396).

    (There’s more peak coal coverage at the same site: http://www.theoildrum.com/tag/peak_coal .)

  21. montanus says:

    Kotcon makes a good point. EIA uses an econometric model that gives a more realistic sense of the decline that we should expect in Appalachian coal production –and they break it down by northern/central/southern. EIA’s annual energy outlook has Central Appalachian coal production falling by 40% from 2006 to 2030 (from 236 mst to 144), and that’s under business as usual, with no cap-and-trade bill. http://www.eia.doe.gov/oiaf/aeo/supplement/stimulus/regionalarra.html You can read their assumptions, which generally reflect the fact that demand grows slowly because people and companies already recognize the need for energy efficiency, having slowed the growth of electricity consumption and having financed three times as much wind power as coal power in 2007; the stimulus and other existing policies provide considerable support for efficiency; and GDP growth will not be at historically high levels, although we’ll still be growing.

    If you could assume there’s roughly a one-to-one correlation between tonnage and jobs, that’s a decline of roughly 6,750 jobs over the next 20 years in Workforce Development Areas 1, 2, and 3 (=Central Appalachian portion of WV, which has 16875 coal-mining jobs, including coal-mining contractors). http://workforcewv.org/lmi/EW2008/default.htm And that doesn’t include the famous multiplier effect of coal jobs. So, depending on whether you believe coal mining creates 4, 6, or 8 other jobs for each direct mining job, the impact would be enormous.

    But, that’s with no cap-and-trade. If we do get a cap-and-trade bill passed very soon, we could have a credible prospect of offsetting those 6,750+ job-losses by big gains in non-fossil industries, while also helping to bolster faltering demand for thermal coal (due to the considerable amount of extra power/coal required to run carbon capture systems at electric generating units, which would be required under a cap-and-trade system). Under the current Waxman-Markey cap-and-trade proposal, as modeled by EIA, there wouldn’t be any decline in northern WV coal production, so the jobs question really only applies in southern WV.

  22. Rory McIlmoil says:

    Montanus – would you like to have a detailed discussion over email? I’ve enjoyed reading your comments and would like to know more about the work you do and your interest in coal data, peak coal, etc. If so please email me at rorygep@gmail.com. Thanks, and great comments.

  23. […] An excellent Editorial putting coal in context of how much is left was printed on August 16 by the Roanoke Times. The editorial cites Richard Heinberg’s recently published book, Blackout (intro and review here) which as the editorial puts it, “lays out the case that America’s coal reserves are far shallower than thought.” The Editorial also goes on to mention a recently completed United States Geological Survey study that says basically the same thing. Since they don’t provide a link to an article explaining this momentous study I thought it would be prudent to provide it here. […]

  24. […] declined of the industry in the perhaps not-too-distant future.  As I wrote in one post, Peak Coal might be coming to Appalachia sooner than you think. See other previous posts here, here, here, and […]

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