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28 www.coalage.com August 2016 u.s. coal report continued tion, and the costs and technical challeng- es of environmental compliance. The EIA also tracks data on pollution control equipment at electric power plants and it can assess the investments in these technologies. For example, a significant amount of pollution control equipment was recently installed in response to the Environmental Protection Agency's Mercu- ry and Air Toxics Standards (MATS). MATS establishes emissions limits for mercury, arsenic and heavy metals. Between Jan- uary 2015 and April 2016, about 87 GW of coal-fired power plants installed pollution control equipment, nearly 20 GW of coal capacity retired, and about 5.6 GW of over- all coal capacity switched to natural gas. Of the 87 GW of coal capacity that installed pollution control equipment to comply with MATS, activated carbon in- jection (ACI) was the dominant compli- ance strategy. More than 73 GW of coal- fired capacity installed ACI systems in 2015 and 2016, effectively doubling the amount of coal capacity with ACI. According to EIA data, the average capital cost of an ACI sys- tem was $5.8 million over 2015 and 2016. The EIA also tracks modifications of existing emissions control equipment, the addition of new equipment or capabili- ties, or some combination of operational changes and new investments to improve mercury capture or to achieve other envi- ronmental control objectives, such as re- ducing emissions of particulate matter or nitrogen oxide. Overall, EIA's data indicate that operators of coal-fired power plants invested at least $6.1 billion between 2015 and April 2016 to comply with MATS or other environmental regulations. Natural Gas Supply and Price Projections According to the EIA's 2016 Short-term Energy Outlook, working inventories of natural gas were 3,179 billion cubic feet (Bcf ) on July 1. This level is 20% higher than a year earlier, and 23% higher than the previous five-year (2011-15) average for that week. The natural gas storage in- jection season typically runs from April through October. EIA projects that natu- ral gas inventories will be 4,022 Bcf at the end of October 2016, which would be the highest end-of-October level on record. Henry Hub spot prices are forecast to av- erage $2.36/million British thermal units (MMBtu) in 2016 and $2.95/MMBtu in 2017, compared with an average of $2.63/ MMBtu in 2015. Natural gas future contracts for Oc- tober 2016 delivery that were traded during the five-day period ending July 7 averaged $2.88/MMBtu, according to the EIA. Current options and futures prices imply that market participants place the lower and upper bounds for the 95% confidence interval for October 2016 contracts at $2/MMBtu and $4.14/ MMBtu, respectively. In early July 2015, the natural gas futures contract for Oc- tober 2015 delivery averaged $2.85/ MMBtu, and the corresponding lower and upper limits of the 95% confidence interval were $1.92/MMBtu and $4.24/ MMBtu. Meanwhile, spot prices for coal are at their lowest levels, and the fuel can't compete. Today, the spot price for North- ern Appalachian (NAPP) coal stands at $42.35/ton, a 42.2% decrease from five years ago ($73.30/ton). Similarly, Central Appalachian coals are selling for $41.10/ ton, an even greater 46.1% decrease from five years ago ($76.30/ton). ILB and PRB spot prices are down 36% and 30.4%, re- spectively, over the last five years. For the remaining U.S. coal opera- tors, who face declining market demand, what's left of the profit margin is being squeezed by record low prices. They will see no relief unless total power genera- tion grows, which could happen if the economy improves substantially, and/or excess capacity is removed from the mar- ket. Removing excess capacity equates to more gas being burned or a further idling of coal production capacity. This year has been and will continue to be a difficult year for U.S. coal operators. Table 8 — Top 10 Producing Underground Mines (millions of short tons) Mine Name Location Tonnage (2015) Operating Company 1 Sugar Camp Illinois 10.6 Foresight Energy 2 Marshall County West Virginia 10.3 Murray Energy Corp. 3 Bailey Pennsylvania 10.2 CONSOL Energy 4 River View Kentucky 9.1 Alliance Resource Partners 5 Enlow Fork Pennsylvania 9.0 CONSOL Energy 6 Cumberland Pennsylvania 7.5 Contura Energy 7 Harrison County West Virginia 7.1 Murray Energy Corp. 8 San Juan New Mexico 6.5 Westmoreland Coal 9 Marion County West Virginia 6.5 Murray Energy Corp. 10 Bull Mountains Montana 6.4 Signal Peak Energy Source: MSHA and the NMA Table 7 — Top 10 Producing Surface Mines (millions of short tons) Mine Name Location Tonnage (2015) Operating Company 1 North Antelope Rochelle Wyoming 109.3 Peabody Energy 2 Black Thunder Wyoming 99.5 Arch Coal 3 Antelope Wyoming 35.2 Cloud Peak Energy 4 Cordero Rojo Wyoming 22.9 Cloud Peak Energy 5 Eagle Butte Wyoming 19.6 Contura Energy 6 Belle Ayr Wyoming 18.3 Contura Energy 7 Spring Creek Montana 17.0 Cloud Peak Energy 8 Rawhide Wyoming 15.2 Peabody Energy 9 Freedom North Dakota 14.3 North American Coal 10 Buckskin Wyoming 13.6 Kiewit Mining Group Source: MSHA and the NMA