Coal Age Magazine - For more than 100 years, Coal Age has been the magazine that readers can trust for guidance and insight on this important industry.
Issue link: https://coal.epubxp.com/i/541310
m a r k e t w a t c h c o n t i n u e d July 2015 www.coalage.com 19 Efforts by Illinois legislators to incen- tivize use of in-state coal by local genera- tors could also limit the PRB's prospects. Illinois Rep. John Bradley, D-Marion, told SNL Energy that he and a group of other state lawmakers hope to advance bills to overturn a state regulation that makes it cheaper for Illinois generators to use PRB coal railed in from the West than locally produced ILB coal. Illinois last year received about 10.4 million tons of coal, 84% of it from Wyoming. All major coal-producing regions will lose demand to pending plant retire- ments, but NAPP is the least exposed of the major basins. SNL Energy estimates that less than 4% of NAPP domestic coal deliveries last year went to units that have retired or are scheduled to stop burning coal. The only other basins with lower exposure on a percent basis are Gulf Coast and northern U.S. lignite regions, which largely serve mine-mouth plants, and the small southern Wyoming market, which only shipped 11.4 million tons to domestic generators in 2014. Part of NAPP's advantage also lies in its proximity to major customers. The basin serves large scrubbed coal plants within i t s p r o d u c t i o n f o o t p r i n t o f O h i o , P e n n s y l v a n i a , a n d o t h e r p a r t s o f t h e Midwest and mid-Atlantic. "I think the demand side for ILB and NAPP has been pretty much established, and it's going to be flat for a while," Alliance Resource Partners LP President and CEO Joe Craft said on an April 29 earnings call. Alliance reported in a May 22 investor presentation that domestic utility con- sumption of eastern U.S. bituminous coals will "stabilize" at around 250 mil- lion tons through 2020. More than 100 million tons each will come from the ILB and NAPP, with the rest from CAPP. CONSOL Energy, which has narrowed its steam coal assets to large Pennsylvania longwall mines, is one of the least exposed of publicly traded coal companies to plant retirements. About 6% of CONSOL's coal sales last year were to retiring or closed units. Despite the PRB's dominant role in U.S. coal markets, its sheer size means a large chunk of PRB coal-fired capacity is set to close, which will hit some producers harder than others. A little more than 12% of Peabody's coal sales in 2014 went to units that are closing or converting, compared with around 10% each for Arch Coal and Alpha Natural Resources and 7% for Cloud Peak Energy.