As a redneck kid going to college where I’d never been before, I arrived in Cleveland in 1955 and saw what coal can do to an environment. It is very dirty but cheap in fueling industry.
Then when I got my first “job” after engineering school and moved to West Virginia, I saw another view. Children would pick up lump coal along the road or rail track, fill a basket, dump it when full into a hopper car and place a chalk mark by their name on the car. Once a month a railroad man came by and gave each child a nickel for every mark by their name. There is a sad human side to the coal industry in addition to the dangers in mining it. Still, 52% of U.S. electric power today is generated by burning coal.
In the upper Midwest alone, where 75% of electric power comes from coal, 10 of 95 GWt of capacity will be retired over the next few years. Fully 2.234 GWt of Midwest coal-fired electric generation was retired in 2015. This is bad news for coal folks but good news for gas replacements from Marcellus and Utica shale, which supplies 95% of new U.S. gas production used for electricity.
So, a decline in coal use is offset by increased gas use, necessitating new pipelines and storage capacity that heralds a business boost for many readers. Concurrently, there are concerns over this Administration’s rejection of the Keystone XL pipeline, a 1,179-mile-long system to bring 830,000 barrels per day of Canadian crude into the U.S. Keystone is not the first or only trans-border pipeline, but when the U.S. government denies such a permit it sends a strong signal that the people and industry of America are in jeopardy. Government manipulation of our private energy sector is not appropriate.
Let’s take a look at gas supplies and prices as well as the outlook for 2016. (This is all based on data from Natural Gas Supply Association, reports from Energy Ventures Analysis and the Energy Information Administration.)
Over the 2014-15 winter, gas prices averaged $3.21 per MMBtu and, according to the National Oceanic and Atmospheric Administration (NOAA), there were 3,685 “heating degree days” (HDD). NOAA expects a decline of 6.87% to 3,432 HDD this winter of 2015-16. Retirement of 20 GWt of coal-fired electricity in 2015 will be replaced by gas, and an additional 24 GWt of coal-use reduction will occur by 2020. Further, 51 new projects (37 petrochemical, 11 fertilizer and three steel) plus 15 plant expansion projects are planned between now and 2020. During this winter, gas production is predicted to be 74.4 Bcf/d (billion cubic feet/day), an increase of 1 Bcf/d. With this gas-supply glut and more coming online, gas prices at the onset of this winter season (Nov. 1, 2015) fell to $2.10 per MMBtu. Experts say “$3 per MMBtu gas is really not sustainable in the long run. A movement toward $4-5/MMBtu is likely.”
Now let’s discuss recent failed federal legislation. Congress had two bills pending that would allow export sale of American energy products. House bill H.R.702 was to allow export of oil for the first time in 40 years, and it passed the House 261-159 on Oct. 19, 2015. The bill was to repeal Section 103 of the Energy Policy and Conservation Act, which allows the President to restrict exports of petroleum products, natural gas, petrochemical feedstocks and coal. This House-passed bill was never addressed in the Senate.
However, Senate bill S.2011 (Offshore Production and Energizing National Security Act of 2015) was introduced Sept. 9, 2015. It was an abomination that did not address any problems discussed here. Remember that this legislative process must start over from scratch with each new Congress.
America now has energy excesses. Private producers must be allowed to sell it to create jobs, and stabilize domestic energy prices. No other nation is as blessed as the U.S. with various energy supplies, but the federal government is stifling private enterprise’s ability to produce, transport and use these commodities. It is past time to coerce a change in government to reflect the will of the people.