Top coal customers by US production region

Central Appalachia

Coal deliveries to power plants from Central Appalachian mines experienced an increase of about 1%, or 326,325 tons, in the first half of 2014 compared to the same period last year. Despite the slight increase in coal deliveries to power generators, Central Appalachia is facing a stiff challenge as coal plants switch to burning lower-cost Illinois Basin coal.

To put it into perspective, the 1,956-MW Ghent generating station Carroll County, Ky., received 1.9 million tons of Central Appalachian coal in the whole of 2008 compared to 2 million tons of Illinois Basin coal. In contrast, the coal-fired plant took 82,629 tons of Central Appalachian coal in the first half of 2014 and 2.9 million tons of Illinois Basin coal.

The top five mines in Central Appalachia delivered almost 20%, or 4.9 million tons, of all coal deliveries by the region. The region served 88 power plants in 2014, supporting 79,968 MW of coal-fired capacity, of which the top five mines in the region delivered coal to 16 power plants supporting 17,452 MW.

Almost 13%, or 10,254 MW, of capacity served by Central Appalachian mines in the first half of 2014 is slated for retirement, raising further concerns for mines in the region.

The 873-MW Clover plant in Halifax County, Va., was the largest purchaser of Central Appalachian coal in 2014. Co-owned by Dominion Resources Inc. subsidiaryVirginia Electric and Power Co. and Old Dominion Electric Cooperative, the plant purchased almost 1.3 million tons of thermal coal in the first half of 2014, an increase of almost 44%, or 388,000 tons, from the same period last year.

Clover is one of five coal-fired plants that purchased more than 1 million tons of Central Appalachian coal in the first half of 2014. In total, 14 mines served the plant, with the top five making up about 77%, or 981,000 tons, of the total.

Located in Person County, N.C., the Roxboro plant purchased the second-largest amount of Central Appalachian coal in the first six months of 2014. The 2,457-MW coal-fired generator is co-owned by Duke Energy Progress Inc. — a subsidiary of Duke Energy Corp. — and North Carolina Eastern Municipal Power Authority and received 1.2 million tons of coal from the region — an increase of almost 6%, or 64,019 tons, from the same period last year.

Central Appalachian mines serving the plant are facing competition from mines in the neighboring Northern Appalachian region. The quantity of coal purchased from Northern Appalachia by Roxboro increased about 77%, or 311,354 tons, in the first half of 2014 to 715,581 tons compared to the same period last year.

Illinois Basin

According to SNL Energy data, mines in the Illinois Basin delivered more than 13%, or 52.5 million tons, of coal to power generators in the first half of 2014. Despite only an increase of roughly 1% from the same period last year, the basin continues to pry market share away from Central Appalachia.

Scrubbers equipped to handle high-sulfur coal and low SO2 emissions allowance costs have made switching to the cheaper Illinois Basin coal much easier for power generators. The Ghent plant is an example of building a scrubber and switching to the cheaper Illinois Basin coal.

The top five mines in the Illinois Basin delivered about 28%, or 14.7 million tons, of all coal fuel deliveries made by the mines in the basin in the first half of 2014. The region served 78 power plants, supporting 82,040 MW of coal-generated capacity, of which the top five mines in the region transported coal to 37 power plants supporting 46,300 MW.

Of the power plants that received coal deliveries from mines in the Illinois Basin, three plants, or 1,217 MW, are slated for retirement by 2020. An additional three units, or 1,399 MW, are also announced for retirement during the same time period, while the 808-MW Walter C. Beckjord, which took coal deliveries from mines in the Illinois Basin as well as Northern Appalachia, was taken offline recently.

The 3,157-MW Gibson power plant in Gibson County, Ind., received the highest amount of Illinois Basin coal — 4.2 million tons in the first half of the year. The plant is jointly owned by Duke Energy Corp. subsidiary Duke Energy Indiana Inc., Wabash Valley Power Association Inc. and Indiana Municipal Power Agency.

The plant was served by six mines in the first half of 2014, of which more than 92%, or 3.9 million tons, of its coal was delivered by the Francisco, Charger No. 1, Gibson and Bear Run mines.

Owned by Kentucky Utilities Co., a subsidiary of PPL Corp., the 1,956-MW Ghent power plant purchased the second-largest amount of coal from mines in Illinois Basin in the first half of 2014. Located in Carroll County, Ky., the plant received close to 3 million tons of coal, of which about 97% was supplied by mines in Illinois Basin, with Central Appalachian coal making up the remainder of the deliveries to the plant.

The plant was served by 15 mines — 10 from Illinois Basin and five from Central Appalachia. Almost 72%, or 2.2 million tons, was delivered by four mines: Midway, American Coal Co.’s New Era, River View and Highland 9.

Northern Appalachia

Mines in Northern Appalachia supplied almost 15%, or 56.8 million tons, of the total coal deliveries in the first half of 2014. The region saw the largest year-over-year increase, with an upturn of almost 15%, or 7.3 million tons, of coal fuel deliveries from the same period last year.

Northern Appalachia has become an increasingly popular region for power generators, given its lower-cost, high-margin coal production and close proximity to Central Appalachia. Along with the Illinois Basin, Northern Appalachia is supplying large quantities of coal to Southern utilities — a market traditionally dominated by Central Appalachia. However, weak metallurgical coal prices, caused by an influx of oversupply from Australia, could result in production cuts and mine idlings.

The top five mines in Northern Appalachia delivered 45%, or 25.6 million tons, of all coal deliveries by the region. The region served 78 power plants, supporting 84,109 MW of coal-fueled capacity of which the top five mines in the region directly supplied coal to 58 power plants supporting 73,050 MW.

Of the power plants that received coal deliveries from mines in Northern Appalachia in the first half of 2014, five plants totaling 3,690 MW of capacity are slated for retirement by 2020. Retirements set for the same period have been announced at an additional three units totaling 1,229 MW of capacity.

Located in Beaver County, Pa., the Bruce Mansfield plant purchased the largest amount of Northern Appalachian coal in the first six months of 2014. The 2,510-MW coal-fired plant is owned by FirstEnergy Corp. subsidiary FirstEnergy Generation Corp. and received 3.8 million tons of coal from the region — an increase of more than 29%, or 861,425 tons, from the same period last year.

In total, the plant was served by 15 mines in Northern Appalachia, with the top three mines — McElroy, Shoemaker and Cumberland — delivering more than 80%, or 3.1 million tons, of total coal received by Bruce Mansfield in the first six months of 2014. The McElroy mine alone delivered more than 42%, or 1.6 million tons, of coal to the plant.

Coal supplied to Bruce Mansfield accounted for more than 35% of all deliveries made to power generating facilities by the mine in the first half of 2014. If the construction of a new water treatment facility is not completed by Dec. 31, 2016, the plant will not be allowed to operate, which may hurt suppliers.

Co-owned by General Electric Capital Corp. — a subsidiary of General Electric Co. — and MetLife Inc.‘s subsidiary, Metropolitan Life Insurance Co., the 1,884-MW Homer City coal-fired plant purchased the second-largest amount of Northern Appalachian coal in the first half of 2014. Located in Indiana County, Pa., the plant purchased more than 3 million tons of coal, and was supplied by 19 mines in the region.

Almost 52%, or 1.6 million tons, was delivered by three mines: Bailey, Logansport Preparation Plant and Emerald No. 1.

Powder River Basin

Among the top four coal-producing regions, more than half of the coal deliveries to power generators in the first half of 2014 were supplied by mines in Powder River Basin. The basin supplied almost 58% of the total coal deliveries originating from the top four coal-producing regions in the first six months of 2014.

Unreliable rail service in Iowa, Michigan, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin impacted coal deliveries received by the six states from the PRB during the first half of 2014, declining 1.77 percentage points from the same period last year. The rail service difficulties are projected to continue through the second half of 2014, which will further disrupt deliveries to power plants by the basin.

The top five mines in the PRB account for just over 76%, or 140.6 million tons, of the total coal deliveries made to power plants by the region in first half of 2014. A total of 156 power plants supporting 131,508 MW of capacity were served by mines in the PRB, of which 140 plants, or 121,380 MW, were served by the top five mines in the region.

Of the power plants that received coal deliveries from mines in PRB in the first half of 2014, 10 plants, or 3,259 MW, are slated for retirement by 2020. An additional 12 individual units, or 5,458 MW, are also expected to retire by 2020 year-end.

Scherer, the largest coal-fired plant in U.S., received the most coal deliveries from mines in the PRB in the first six months of 2014. Located in Monroe County, Ga., the 3,423-MW plant is owned by Oglethorpe Power Corp., Georgia Power Co., Florida Power & Light Co., Municipal Electric Authority of Georgia, Gulf Power Co.,JEA and Dalton Utilities. All of the 5.7 million tons of coal deliveries to Scherer in the first half of 2014 were delivered by six mines in the PRB — an increase of more than 10% from the same period last year.

The Buckskin mine supplied the highest amount of coal to Scherer — a little more than 33%, or 1.9 million tons, in the first half of 2014. In total, the Buckskin, Black Thunder, North Antelope Rochelle and Eagle Butte mines transported almost 94% of total coal purchased by the plant in the first six months of 2014.

The 2,675-MW James H. Miller Jr. plant in Jefferson County, Ala., received the second-largest amount of coal from mines in the PRB in the first six months of 2014. Co-owned by Alabama Power Co., a subsidiary of Southern Co., and PowerSouth Energy Cooperative, the coal-fired generation facility purchased the entirety of 4.9 million tons of coal from five mines in the PRB.

Almost 99% of the deliveries to the plant were made by the North Antelope Rochelle, Antelope Coal, Black Thunder and School Creek mines.