Coal has rosy outlook for exports, but its future may depend on sequestration

Coal has rosy outlook for exports, but its future may depend on sequestration

August 15, 2013
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In this October 2012 file photo, a Norfolk Southern Railroad train pulls transport cars full of coal through central Illinois near Goodfield, Ill. Associated Press
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James Grech, chief commercial officer for Consol Energy Inc., says coal’s use will grow in the years ahead, with world demand predicted to jump by 55 percent in the next decade and U.S. demand increasing 20 percent over the next two decades.

The U.S. coal industry has an optimistic outlook for exports in the coming years, with predictions that demand from China, India and Europe will jump more than 50 percent in the next two decades.

While achieving the rosy outlook would be a boon to coal companies’ bottom lines, not to mention a boost to the economy, the industry’s future in producing the fuel for domestic use may lie in the development of a technology now in experimental stages in a West Virginia laboratory.

During a July 29 visit to the National Energy and Technology Laboratory in Morgantown, W.Va., Energy Secretary Ernest Moniz said that technology for carbon storage and sequestration – still in the developmental stages – will probably be the key ensuring the future of coal in America’s energy portfolio.

Carbon capture technology is seen as a key to reducing the greenhouse gas released by coal-fired power plants.

Sequestration is a new, expensive technology that separates carbon from emissions and stores it deep beneath the Earth’s surface.

After touring the expansive NETL campus in Morgantown – the only one of 17 government energy labs across the country that’s dedicated to developing new technologies for fossil fuels – Moniz told reporters that carbon capture and sequestration will be the keys to keeping coal burning for energy production in a “carbon constrained” world.

During his tour, Moniz was shown the energy center’s latest research on a “chemical looping reactor,” which researchers said could eventually replace boilers used in coal-fired power plants as a more efficient and environmentally friendly way of producing energy.

Later, in an address to several hundred employees in the NETL campus auditorium, Moniz noted that the Obama administration recently committed $6 billion for research in carbon capture and sequestration.

The commitment may be an acknowledgment of coal’s long-term importance in helping to meet future energy demands here and around the world.

A few days later at the fourth annual Energy Summit at Southpointe, James Grech, executive vice president and chief commercial officer for Consol Energy Inc., which operates the world’s largest underground coal mine in Greene County, said that coal’s use will actually grow in the years ahead, with world demand predicted to jump by 55 percent in the next decade and U.S. demand increasing 20 percent over the next two decades.

Grech’s comments about coal’s highly active future were echoed later that day by Karen Alderman Harbert, chief executive officer of the Institute for 21st Century Energy, an initiative of the U.S. Chamber of Commerce. She was keynote speaker at the symposium sponsored by the Washington County Chamber of Commerce and the Washington County Energy Partners.

“Coal consumption is down right now, but its obituary shouldn’t be written,” Harbert said. “The good news is global coal demand is way up. Coal exports to Europe are up 27 percent and 80 percent to China. By 2020, coal will be bigger than oil.

“We have to invest in technologies and infrastructure and (process coal) more cleanly now.”

Coal exports climb

An Ernst & Young study of coal exports prepared for the National Mining Association and released in May, demonstrated the significance of coal not just as a way to help meet U.S. energy demand, but as its major economic value as an export commodity.

According Ernst & Young, U.S. coal exports in 2011 totaled 107 million short tons, the highest level in 20 years.

According to the study, domestic coal exports accounted for nearly 10 percent of all U.S. coal mined that year, and supported the employment of thousands of workers.

Each million short tons of U.S. coal exported in 2011 contributed an estimated 1,320 jobs in the U.S. economy, the study found.

At 107 million short tons, coal exports contributed 141,270 total direct, indirect and induced jobs in the U.S.

E&Y also found that direct employees in coal export-related industries earned nearly 50 percent more than the national average in wages and benefits in 2011, earning an annual average of $96,100 in wages and benefits compared to the U.S. average for all employees of $64,500.

Regionally, coal remained a big employer where exports are concerned.

In 2011, Pennsylvania produced 57.4 million short tons of coal, of which 14.6 million tons or 25 percent of the total output went to exports. The amount was 14 percent of all U.S. coal exports.

In West Virginia, where 131.2 million short tons of coal were mined, 35 million short tons, or 22 percent of the total were exported. West Virginia’s coal exports for 2011 were 33 percent of U.S. total coal exports.

The Ernst & Young study also found that in 2011, coal exports in Pennsylvania supported 3,450 direct jobs, another 660 in downstream transportation and 10 in port and cargo services for a total of 4,210 active jobs. With another 8,280 indirect and induced jobs, Pennsylvania coal exports were responsible for a total of 12,490 positions.

In West Virginia, there were 9,760 jobs directly related to coal exports in 2011, with another 1,530 in downstream transportation, for a total of 11,290 active coal export jobs. The exports were also responsible for another 12,610 indirect and induced jobs for a total of 23,900 positions.

Consol, which exported a record 12.9 million tons of coal and has operations in both Pennsylvania and West Virginia, was a major force behind the exports and job numbers in 2011.

Grech noted in his remarks at the Energy Symposium that Consol, which has 9,000 employees, has been on a hiring spree over the past several years, as it works to replace employees who are approaching retirement age.

“In the last five years, we’ve hired 6,000 people,” he said.

Enhancing oil recovery

In a June interview on Platts Energy Week, Moniz said he also sees carbon capture playing a role in storing the carbon dioxide produced from burning fossil fuels, but using more of it to glean oil from aging fields in a method called enhanced oil recovery.

“We’re producing about 300,000 barrels per day using carbon dioxide to enhance oil recovery from older fields,” Moniz told the energy news show. “The estimates are that could increase by a factor of 10 to about 3 million barrels a day.”

To reach that level would require vast amounts of CO2, about 600 million tons per year.

“We could only get that by capturing it from industrial sources, power plants,” Moniz said.

Michael Bradwell has been business editor for the Observer-Reporter since 1995, and was named editor of The Energy Report in 2012. He joined the newspaper in 1990 as a general assignment reporter in the Greene County bureau and has also worked as a copy editor. A 1974 graduate of Pennsylvania State University with a degree in English, he began his career at the Bedford (Pa.) Gazette. Prior to joining the O-R, he served as public relations director for Old Bedford Village, account executive at two Pittsburgh public relations agencies and copywriter for the country’s largest wholesaler of mutual funds.

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