US coal production to slump 22% this year – EIA

8th April 2020 By: Mariaan Webb - Creamer Media Deputy Editor Online

US coal production to slump 22% this year – EIA

US coal production will fall by 22% in 2020, as coronavirus-related stay-at-home orders drag down demand for electricity and coal mines have been idled for extended periods as a result of Covid-19.

The US Energy Information Administration (EIA) says in its short-term energy outlook that the country’s coal production is forecast to total 537-million tons in 2020, down 153-million tons from 2019.

Last week, two US coal miners announced the closure of their mines in response to the fast-spreading virus pandemic, which has shut nearly entire economies in some countries. Nasdaq-listed Alliance Resources Partners announced that it would cease coal production at all its Illinois basin mines, as demand for coal had been crushed by the actions taken to combat Covid-19.

NYSE-listed Consol Energy also said on March 30 it would curtailed production for two weeks at its Bailey mine, in the Pennsylvania Complex, for two weeks.

Cash-strapped Murray Energy has also idled mines.

Total coal consumption is forecast to decrease by 19%, driven primarily by electric power sector demand, which will fall by 107-million tons (20%).

The largest impact on electricity demand will be felt in the commercial sector, where forecast retail sales of electricity will fall by 4.7% in 2020, owing to the closure of many businesses, EIA says. Sales of electricity to the industrial sector will fall by 4.2% in 2020, as many factories cut back production. To the residential sector sales will dip by 0.8% as reduced power usage resulting from milder winter and summer weather is offset by increased household electricity consumption as much of the population stays at home.

Total coal exports will also decline on the back of an economic slowdown in Covid-19-hit Europe.

EIA forecasts that total US electric power sector generation will decline by 3% in 2020. Renewable energy sources account for the largest proportion of new generating capacity in 2020, driving EIA’s forecast that renewable generation by the electric power sector will grow by 11% this year. Renewable energy is typically dispatched whenever it is available because of its low operating cost.

Meanwhile, the EIA is also forecasting that the US will again become a net importer of crude oil and petroleum products in the third quarter of 2020 and remain a net importer in most months through the end of 2021. Fewer barrels are available for export as US crude oil production continues to decline. In addition, net exports of petroleum products will be lowest in the third quarter of 2020, when US refinery runs decline in response to lower demand for refined products.

In September 2019, the US exported 89 000 bbl/d more crude oil and petroleum products than it imported and became a net exporter of crude oil and petroleum products for the first time since monthly records began in 1973. The US continued to be a net exporter through February when net exports reached 1.79-million barrels a day and the April short-term energy outlook forecasts that net exports will continue through May 2020.

However, as a result of recent significant changes in global oil market dynamics, EIA is revising its March forecast that US net exports would average 0.6-million barrels a day in 2020 and 0.3-million barrels a day in 2021. EIA now forecasts that US imports and exports will be nearly equal in 2020 and that US net imports will average 1.4-million barrels a day in 2021.