US coal generation to decline into 2019 as gas prices stay under $3/MMBtu: EIA

15 January 2018

While coal crept closer to natural gas in total US electricity generation share in 2017, gas will widen the gap between the fuels this year and though 2019 on expected lower prices and new capacity, the US Energy Information Administration said Tuesday.

In its monthly Short-Term Energy Outlook, and its first report looking ahead to 2019, the EIA predicts gas’ generation share will increase to 33.1% this year, up from 31.7% in 2017, and rise again to 34.3% in 2019.

At the same time, coal’s generation share will fall to 29.6% this year, down from 31.7% in 2017, and dip further to 28.1% in 2019.

The EIA said gas’ generation shared slipped 2.1% in 2017 primarily because of a 16% year-over-year increase in average delivered fuel cost to $3.33/MMBtu. But the agency predicts delivered costs to slightly decline this year.

The Henry Hub gas price, which averaged $2.99/MMBtu in 2017, is predicted to dip to an average of $2.88/MMBtu this year and stay well under the $3/MMBtu mark in 2019 at an average of $2.92/MMBtu.

An EIA survey shows 20 GW of new gas-fired generating capacity will come online this year, much of it using combined-cycle technology, marking the largest increase in gas capacity since 2004, while about 13 GW of coal-fired capacity will retire this year.

With the loss of generation share, coal consumption by utilities is expected to decline this year by 1% from a total of 666.4 million st in 2017 and fall another 4% in 2019 to 629.5 million st.

Exports, Production to slide

Coal export volumes surged in 2017, the EIA said, to 95 million st, with thermal coal accounting for 41 million st.

The agency noted export volumes though the first 10 months of 2017 were up 70% from the year-ago period and the 78 million st exported through October was 29%, or 18 million st, more than exports in all of 2016.

The EIA predicts exports to fall to 80 million st this year and to 75 million st in 2019 on declining thermal volumes.

Metallurgical export volumes are expected to remain above 50 million st this year and the next, while thermal volumes fall by 34% in 2018 and 15% in 2019.

Coal production increased by an estimated 45 million st in 2017 to 773 million st in response to the improved export market.

Production is predicted to decline by 2% this year to 759 million st and another 2% in 2019 to 741 million st on waning seaborne demand and low gas prices.

Western output — primarily from the Powder River Basin — is predicted to fall from 432 million in 2017 to 427 million st this year and to 424 million in 2019.

Appalachian production is expected to fall from 196 million in 2017 to 171 million this year and to 150 million st in 2019.

But the EIA noted it expects production improvements from the interior region, which includes Illinois Basin, lignite and anthracite mines.

Interior production is expected to rise from 145 million in 2017 to 160 million this year and to 167 million st in 2019.

Source: PLATTS