[Greenbuilding] Gas prices pressuring coal

Tue Mar 13 14:49:32 CDT 2012

And then, this story on nuclear not happening b/c of true cost:
http://www.economist.com/node/21549936

.... The squeeze is on!

On 3/13/12 1:59 PM, "Jason Holstine" <jason at amicusgreen.com> wrote:

> Article in the Financial Times (below) describes how crashing nat gas prices
> in the US have pushed coal to its lowest share of US electricity load since
> the 70s, even though coal prices are also down. So now more US coal is being
> exported—primarily to China so they can make stuff for us. I think this is a
> classic paradox where the market is making improvements and it could create an
> opening for further “greening” without people realizing it. Of course, the
> paradox is that (a) the gas revolution is better in terms of GHG but is from
> fracking, with other environmental costs/tragedies; (b) that coal is still
> being burned elsewhere.
> 
> The opportunity, as I see it, is to leverage the concerns on nat gas and that
> demand controls (efficiency) balanced with renewables makes for a better
> future overall...and continuing to pressure oversees manufacturing to clean up
> their acts (ie. pushing Apple to clean up Foxconn).  If coal prices continue
> to stay low, miners, processors, and traders could even reduce their
> operations or get out of coal. That will increase demand (and prices) for nat
> gas and potentially renewables...prioritizing demand-side actions.
> 
> But the market will potentially lower GHG intensity....there is hope yet.
> 
> 
> US rush to gas depresses coal prices
> By Javier Blas in London
> 
> The share of electricity generated by burning coal in the US has fallen to
> near a 35-year low as utilities shift to cheaper gas
> <http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html>  on the
> back of the shale revolution.
> 
> The shift is reverberating beyond the US as domestic coal miners are forced to
> export a growing share of their production. It is creating a global glut that
> is depressing prices in the almost $100bn-a-year thermal coal seaborne market.
> 
> The drop in coal use is particularly important because the US is the world’s
> largest electricity market, closely followed by China, and coal-fired power
> plants are one of the biggest sources of carbon dioxide
> <http://www.ft.com/cms/s/0/1f3a6cf2-dab2-11e0-a58b-00144feabdc0.html> , a gas
> that contributes to global warming.
> 
> Although coal remains the largest source of electricity production in the US,
> its share fell in December below the 40 per cent mark for the first time since
> March 1978, according to fresh estimates by the US Department of Energy.
> 
> The use of coal in US electricity generation peaked in 1985 at almost 60 per
> cent. 
> 
> “Natural gas prices have dropped significantly this winter, leading the
> generators in some states, such as Ohio and Pennsylvania, to increase
> significantly the share of natural gas-fired generation,” the US government
> said. 
> 
> “Natural gas combined-cycle units operate at higher efficiency than do older,
> coal-fired units,” it added.
> 
> US benchmark central Appalachian thermal coal prices fell last week to $58 a
> tonne, the lowest level in nearly two years.
> 
> US natural gas prices fell on Monday dropped to $2.3 per million British
> thermal units, down 85 per cent from an all-time high set in 2005.
> 
> US natural gas prices have collapsed after companies achieved a large increase
> in production by tapping so-called shale reservoirs, using a technique called
> hydraulic fracturing – known as “fracking”.
> 
> The surge in US coal exports has created a glut that has pushed the cost of
> the commodity in Rotterdam, the European benchmark, and the Australian port of
> Newcastle, the Asian benchmark, to the lowest level in 15 months.
> 
> Low freight rates are helping US thermal coal producers ship their commodity
> into the European and Asian market, depressing the global seaborne coal
> market.
> 
> “Thermal coal is under stress,” said a senior coal trader. “The problem is
> that the US miners have entered the export market. It is putting a lot of
> pressure on the price.”
> 
> Industry executives believe the benchmark annual contracts between coal miners
> and Japanese utilities
> <http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html>  would
> be settled this month at $115-$120 a tonne, down 7.5-11.5 per cent from the
> record high
> of $130 a tonne of last year.
> 
> The shift in US electricity and the expectation of lower global prices is a
> setback for the world’s big producers, including Indonesia’s Bumi
> <http://markets.ft.com/tearsheets/performance.asp?s=uk:BUMI> , Xstrata
> <http://markets.ft.com/tearsheets/performance.asp?s=uk:XTA> , Anglo American
> <http://markets.ft.com/tearsheets/performance.asp?s=uk:AAL> , Rio Tinto
> <http://markets.ft.com/tearsheets/performance.asp?s=uk:RIO>  and
> Jakarta-listed Adaro
> <http://markets.ft.com/tearsheets/performance.asp?s=id:ADRO> .
> 
> It is negative, too, for commodities trading houses including Glencore and
> Noble Group of Hong Kong.
> 
> Share prices of leading US thermal coal miners, including Consol Energy
> <http://markets.ft.com/tearsheets/performance.asp?s=us:CNX> , Alpha Natural
> Resources <http://markets.ft.com/tearsheets/performance.asp?s=us:ANR>  and
> Arch Coal <http://markets.ft.com/tearsheets/performance.asp?s=us:ACI> , have
> already fallen significantly and some companies have announced production cuts
> to mitigate the glut.
> 
> More
> On this story
> * Comment US natural gas will hit annual coal contracts
> <http://www.ft.com/cms/s/0/967beb32-6834-11e1-a6cc-00144feabdc0.html>
> *  Natural gas prices near 10-year low
> <http://www.ft.com/cms/s/0/e1972114-690a-11e1-9931-00144feabdc0.html>
> * North America US has its eye on oil independence
> <http://www.ft.com/cms/s/0/cf1f1eca-19b8-11e1-ba5d-00144feabdc0.html>
> * In depth Climate change <http://www.ft.com/indepth/climatechange>
> On this topic
> * Martin Wolf Prepare for a golden age of gas
> <http://www.ft.com/cms/s/0/7d298f50-5c85-11e1-8f1f-00144feabdc0.html>
> *  PetroChina buys Shell shale gas assets
> <http://www.ft.com/cms/s/0/7ee7db16-4d86-11e1-bb6c-00144feabdc0.html>
> IN Commodities
> *  Man launches computer-driven commodities fund
> <http://www.ft.com/cms/s/0/83655a16-6d15-11e1-ab1a-00144feab49a.html>
> *  US natural gas prices fall to 10-year low
> <http://www.ft.com/cms/s/0/92eac354-6cfc-11e1-a7c7-00144feab49a.html>
> *  India backtracks after lifting cotton ban
> <http://www.ft.com/cms/s/0/82e09b9c-6c38-11e1-8c9d-00144feab49a.html>
>  India unpicks cotton shipments ban
> <http://www.ft.com/cms/s/0/76954242-6b9e-11e1-ac25-00144feab49a.html> 

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