Uncertainty related to the Russian-Ukrainian war affects projections
Coal fleet faces fuel delivery constraints
Coal production in the United States is expected to increase 3% in 2022 even as coal generation declines as national utilities seek to replenish depleted inventories, the US Energy Information Administration said on May 10.
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“The projected increase is occurring despite our expectation of a decline in coal use in the power sector,” the EIA said in its May short-term energy outlook. “We expect increased coal production to replenish electric power sector inventories in 2023 that were depleted in 2021.”
The EIA projects coal production of 598.3 million st in 2022, revising down their estimate from the previous month by 3.7% in part due to widespread logistical problems preventing coal market movements. In 2023, production is forecast at 605.2 million st, a downward revision of 4.4% compared to the estimate of the previous month.
“While exports and inventory build-up are contributing to the projected increase in coal production, labor shortages, rail congestion and difficulties in obtaining equipment are expected to limit the gains in production,” the EIA said.
The Russian invasion of Ukraine also contributed to the EIA’s energy production forecasts, as trade flows were interrupted by the conflict.
“A wide range of potential macroeconomic outcomes could significantly affect energy markets over the forecast period,” the EIA said. “Key factors driving energy supply uncertainty include how sanctions affect Russian oil production, OPEC+ production decisions, and the rate at which U.S. oil producers and of natural gas increase drilling.”
Exports are expected to increase amid strong global coal demand and prices, partly due to the war, but logistical constraints will limit production despite higher prices, according to the EIA.
Coal exports are estimated at 85.7 million st in 2022 and 88.8 million st in 2023. Coal electricity consumption is estimated at 486.9 million st in 2022 and 466.7 million st in 2023. total coal consumption is expected to be 531.2 million st in 2022 and 510.2 million st er in 2023. Coal production is expected to reach 21.3% in 2022 and 20.3% in 2023. The EIA estimates that the Nominal delivered coal prices will average $1.98/MMBtu in 2022 and $1.95/MMBtu in 2023.
Natural gas production is expected to reach 36.8% in 2022 and 36.1% in 2023. Henry hub natural gas spot prices are estimated to average $7.70/MMBtu in 2022 and $4.93 /MMBtu in 2023. Dry gas production is estimated at 96.69 Bcf/d in 2022 and 101.71 Bcf/d in 2023. LNG exports are estimated at 11.98 Bcf/d in 2022 and 12.63 Bcf/d in 2023. Natural gas for electricity consumption is projected at 31.52 Bcf/d in 2022 and 31.29 Bcf/d in 2023.
“Despite significantly higher natural gas fuel costs this year compared to last year, we do not expect an increase in electricity generation from coal-fired power plants, which have in the past acted as main substitute for natural gas in the electricity industry,” says EIA. “Along with the continued withdrawal of coal-fired generating capacity, the remaining coal fleet has faced constraints with respect to fuel delivery and coal inventory.”