Skip to comments.2012 Brief: Coal prices and production in most basins down in 2012
Posted on 01/14/2013 6:09:31 AM PST by thackney
Wholesale (spot) coal prices across all basins fell during the first half of 2012 before stabilizing in the latter half of the year. Competition between natural gas and coal for electric power generation drove price declines in the Appalachian and Powder River Basins (PRB), two key sources for thermal coal, through the summer. Also, mild temperatures in the winter and high stockpiles at electric power plants limited demand for more purchases of coal in the second half of 2012.
While spot prices fell across the country, the Appalachian and Powder River Basins were affected the most. With new competition from Illinois Basin and ongoing natural gas displacement, annual average Central and Northern Appalachia prices reflected their most significant declines since 2009, falling 18% and 14%, respectively, from 2011. Average annual PRB spot prices for 2012 fell almost 30% compared to 2011. Illinois Basin coal prices declined just 5%, partially offset by a 9% increase in production because of robust demand for the low-cost, high-sulfur coal from the region.
U.S. coal production, down almost 7%, fell almost everywhere. Central Appalachia production decreased significantly, down 19%, followed by a 9% production decline in PRB. By contrast, coal production volumes in the Illinois Basin rose above its five-year range, up 9% from 2011.
Electric utility scrubber additions to meet proposed EPA regulations limiting sulfur dioxide (SO2) emissions underpinned much of the increasing demand for Illinois Basin's low-cost, but high-sulfur coal. With a scrubber in place, a plant using high-sulfur coal can reduce its need to buy and surrender SO2 emissions permits by 90% or more compared to a plant using the same fuel without a scrubber, making Illinois Basin coal much more competitive, especially against Central Appalachia which previously could rely on its low sulfur content as a competitive advantage. In addition to its relative low cost, Illinois Basin coal is more likely to be used in larger, more efficient plants with modern pollution control equipment, helping it compete against low natural gas prices. Record exports of both thermal and metallurgical coal partially offset declines in consumption in the power sector.
Lot easier to burn Natural Gas than Coal, of course NG can go up and make Coal more attractive if the EPA doesn’t regulate it out of business
You heard anything about this Thackey
Nov. 27, 2012, 8:40 a.m. EST
Investors Anticipate What Could Be the Largest Shale Play in American History
LUBBOCK, Texas, Nov. 27, 2012 /PRNewswire via COMTEX/ — Expectations are building for America to become the world leader in oil production by 2017 due in part from what some are supposing could be the largest oil play in American history, taking place on Texan soil.
In the heart of Texas ‘s Permian Basin , lies the Cline Shale, an oil shale field running 140 miles long and 70 miles wide. Devon Energy and Chesapeake Energy, two oil companies, are reporting impressive figures based on the short amount of time they have had to explore. Devon Energy’s test wells show the Shale contains 3.6 million barrels of recoverable oil per square mile. With an approximate 9,800 square miles of Cline Shale, this would amount to over 30 billion barrels of recoverable oil, exceeding both the Bakken fields in North Dakota , and the Eagle Ford in Texas by nearly 50 percent.
Taking into account the projected 200 to 550 depth of the Shale, this would be equivalent to having ten Eagle Ford Shales stacked on top of each other. The oil to dry gas ratio of the Shale is also garnering attention, with the Shale containing 85 percent oil and liquid rich gas. When you combine that with the low operating costs it takes to produce the oil in the Basin, about 50 percent less than the Bakken, it is shaping up to be one of the greatest oil & gas booms America has ever seen.
There are two primary deficiencies that the Cline Shale region will need to overcome to be able to make history: lack of housing due to exponential population growth to small town infrastructures, and lack of global distribution for the large amounts of liquid gas being produced. If the deficiencies are adequately addressed, the boom stands a better chance of maintaining momentum.
LubbockInvest, a real estate investing firm, is addressing the housing lack through Stone Bridge Estates, a 50 acre 265 lot manufactured home development in the heart of the Permian Basin , aimed at providing high-end, affordable housing for the employees brought to the area due to the boom. This type of housing is in high demand since many of the individuals brought to the area lack creditworthiness, preventing them from obtaining traditional housing. According to Midland City Manager, Courtney Sharp, “Oil and gas company leaders also say that cumulatively, they still could use as many as 10,000 more employees in the coming years.” As it stands, housing will continue to be a deficit that could hinder the boom, but is being addressed at a satisfactory pace.
Teekay LNG Partners, a Liquid Natural Gas Carrier, is addressing the deficiency that such large liquid gas depositories will cause. Although gas is extremely inexpensive in the United States , it remains pricey in nearly every other country in the world. Teekay has been ramping up its ability to export liquid natural gas around the world by adding six additional vessels to its inventory in October of 2011. With the presence of an international market, the profit produced from the Cline Shale will increase quite dramatically as most of the gas extracted is already liquid-rich gas.
Although it is too early to call this the largest play in American history, it is clear that intentional companies are anticipating that this is precisely what it could be.
Contact: Joy FassauerTexas District Agencymedia@texasda.org(806) 787-9229
Copyright (C) 2012 PR Newswire. All rights reserved
Source: Devon presentation Apr 2, 2012
Wesley R. Burnett, MPA, CEcD
Director of Economic Development
Shale playground in W. Texas
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Permian Basin operators enjoyed strong, stable year in 2012
December 27, 2012
Permian Basin oil and gas producers enjoyed another strong year in 2012, a year in which activity held relatively stable.
Crude prices reached triple digits in the spring before falling below $80 a barrel in the summer, recovering to around $85 by the end of the year. The Permian Basin remained a very active drilling region, with the rig count averaging about 400 rigs much of the year before moving lower as operators began emphasizing horizontal drilling and budgets emptied as the end of the year approached.
So much new production overwhelmed the region's infrastructure, sending the differential between West Texas Intermediate Midland and West Texas Intermediate Cushing to record levels. Midstream companies announced plans throughout the year to spend large amounts of money to build or expand pipelines in the Permian Basin to increase takeaway capacity. Operators say once additional capacity begins to come online, expected early in the new year, WTI Midland prices should start to close the gap with WTI Cushing.
So much activity has also sent area companies scrambling to find housing for their workers. Some operators are planning to build apartment complexes for their workers, along with portable housing and mobile home parks. A rise in traffic accidents also has companies joining together to implement safe driving programs.