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U.S. coal stockpiles at power plants above average in 2012 - EIA
January 25, 2013 / 3:11 PM / 5 years ago

U.S. coal stockpiles at power plants above average in 2012 - EIA

* Utilities switched from coal to cheap gas in 2012

* November coal stocks over year-ago and 5-year average

* As gas prices rise, coal stocks expected to decline

Jan 25 (Reuters) - Increased competition between coal and natural gas, as well as a warm 2011-12 winter, led to lower consumption of coal and higher coal stockpiles at U.S. power plants through November 2012, according to federal energy data on Friday.

Coal stockpiles in November were above the levels of 2011 and higher than the five-year average for an eleventh straight month, the Energy Information Administration (EIA) said in a report.

But with gas prices expected to rise in 2013, EIA forecast coal used to generate power will climb to about 39 percent from nearly 38 percent in 2012, and reach almost 40 percent in 2014.

That is well below where coal was a decade ago. Coal produced more than half of the nation’s power as recently as 2003.

EIA forecast the share of generation fueled by gas in 2013 will be about 28 percent, down from 2012’s average of about 30 percent, and will slip further to about 27.5 percent in 2014.

Coal stockpiles typically decline during summer and winter as power plants burn through stocks to meet peak electric demand for heating and cooling.

Historically low natural gas prices pushed generators to burn more gas and less coal during the spring and summer of 2012, while a warmer-than-normal 2011-12 winter decreased the overall heating load for that season, EIA said.

Since most coal at electric power plants is purchased through long-term contracts, utilities are rarely able to defer purchases. This leads to higher and higher coal stockpiles, until increased coal use draws down inventories.

The high stockpiles forced some generators to burn coal instead of gas even when it was not economic to do so to avoid having to pay railroads to stop delivering the coal, energy analysts have said.

EIA said days of burn, which estimates how many days a stockpile of coal will last, during 2012 were above the levels seen since 2008, reflecting lower utilization rates for coal-fired generators.

In early 2012, days of burn got close to a 90-day supply of coal before pulling back.


In November 2012, EIA said, the number of days of burn for bituminous coal eased to 80 days (or 83.2 million tons) from 85 days in October. For subbituminous coal, the days of burn slid from 73 days in October to 70 days (or 88.2 million tons) in November. That compared with 66 days for bituminous coal and 59 days for subbituminous coal in November 2011.

Bituminous coal, a harder coal with a higher heat rate and usually more sulfur content, generally is mined in eastern U.S. states like West Virginia. Subbituminous coal, a softer coal with a lower heat rate and less sulfur, is generally mined in the western states like Wyoming.

Electric utilities often try to maintain a 60-day supply of coal on hand to avoid tying up operating capital in fuel stocks, EIA said.

Because long-term contracts often have penalties associated with deferring shipments of coal, power plants are faced with few options other than continuing to accept deliveries.

As the long-term contracts for coal purchases expire, however, electric utilities may choose to lower future purchases, given the high inventory levels.

The biggest coal-fired power generators in the United States include American Electric Power Co Inc, Duke Energy Corp , Southern Co, Xcel Energy Inc, FirstEnergy Inc and Great Plains Energy Corp.

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