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Article from "Argus Coal Daily" PRB Shortfall Most Acute In Texas, Nearby States |
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A shortage of coal from the Powder River Basin has forced generators in Texas, Oklahoma and Arkansas to burn alternative fuels since last spring. Coal burn in the west South Central region this year so far is down about 1.9 pct, while electricity demand is up 4 pct in that same period. In the past four weeks, deliveries of coal to the region, which also includes Louisiana, are down 5 pct or more versus a year earlier, data from industry analysts Genscape show. At the same time, plants further north in the Midwest have seen shipments improve or hold steady compared with 2004. Plants in west South Central have used about 152 million tons of coal this year, compared with 154 million through early November 2004. Weekly electricity demand figures from Edison Electric Institute show use up more than 4 pct through Oct. 22, the latest week for which figures are available. The decreased coal burn has in part come following Hurricanes Rita and Katrina. As of Aug. 25, just prior to Katrina hitting New Orleans, coal use in the west South Central was up 0.2 pct. While gas prices and production since then have made coal even more economic for generators to burn, they have burned less than a year earlier in that region. Part of that is the demand reduction and temporary plant shutdowns in parts of Texas and Louisiana following the storms. Also, October is the start of maintenance season for coal-fired generators. TXU’s Big Brown unit, which burns PRB and local lignite coal, has been shut for two weeks, although the reasons for it being off line were not known. Shipments out of the Powder River Basin continue to suffer following the derailments that snarled traffic out of the US’ most prolific coal basin in May. Maintenance, further derailments and weather-related issues led October to have the worst performance since the May. Meanwhile, the PRB trouble is seriously crimping generator inventories throughout the region. In the west South Central US, coal inventories in August were down 30.6 pct from a year ago, with Arkansas and Texas seeing the biggest declines. Coal inventories in the Lone Star State were down 27.6 pct at 6.317 million tons in August, while Arkansas’ inventories imploded 38.9 pct to 941,000 tons. The decline in Arkansas was the biggest percentage drop in the nation behind Kansas, which saw inventories shrink 56.8 pct from a year ago to 1.418 million tons in August. In October, 58.4 trains /day moved on the joint line, below the 58.5 seen in June and August of this year. About 26.8 million tons of PRB coal were shipped, at least 4 million tons less than projected by the utilities and mine operators. Through the end of October, coal deliveries have been only 1.2-pct above a year ago, when adjusted for 2004’s leap year, leaving generator stockpiles near record lows and forcing utilities to burn everything from higher-sulfur coal to natural gas to maintain sufficient inventories for this winter. Some generators in Texas have taken up imported coal for the first time in years to offset the reduced PRB deliveries. The lack of lower-sulfur coal has helped boost prices for SO2 allowances to record highs above $1,300/ton, kept gas and fuel oil demand strong, and boosted prices for PRB coal delivered in 2006 and 2007.
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