New mines boost Illinois Basin production

WHILE production in nearly every major US coalfield has suffered in 2012, data from the Energy Information Administration reveals coal production in Illinois – bolstered by new operations – has pushed the Illinois Basin’s output over and above a five-year range.

Donna Schmidt

The federal agency said Illinois Basin coal production during the year’s first half was 64.4 million short tons, a 13% year-on-year rise.

The growth, it said, was a response to a jump in domestic and international demand for less expensive coal from the region, which includes Illinois, Indiana, and western Kentucky, that was bituminous in nature with relatively high sulfur content.

Production within Illinois, at 23.9 million short tons, was a “key driver” in the entire basin’s production totals over the first half of the year, according to the EIA data.

International coal exports from Illinois spiked 120% in 2011 to 5.5Mt from 2.5Mt in 2010.

“In addition, domestic demand for coal from the Illinois Basin, particularly from Illinois itself, increased as a result of a shift in demand toward the Illinois Basin's low-cost, high-sulfur coal and away from central Appalachia’s high-cost, low-sulfur coal,” the agency said.

“Domestic utilities that have added scrubbers can burn high-sulfur coal while remaining in compliance with recent requirements to reduce sulfur dioxide emissions. Because of the relatively low cost of Illinois Basin coal and its use in larger, efficient plants with modern pollution control equipment, its producers were less affected by recent low natural gas prices.”

The EIA confirmed new mines in Illinois had a significant, positive impact on its first-half totals, particularly when compared to other major coal-producing states such as West Virginia, Kentucky and Wyoming.

All three have been hard hit by production and worker cutbacks, particularly during the second quarter.

Some of those mines include Prairie Eagle, which opened in 2010, and the Prairie Eagle South underground and Hawkeye mines that opened their doors the following year.

Those that have come online this year to bolster Illinois production include the Lively Grove mine, the M-C No. 1 mine, the Deer Run mine, the Black Hawk mine, and the Eagle River operation.

“In addition to new mines opening, existing mines have begun tapping into new reserves by opening new portals to the coal reserves and excavating new slopes from the surface to the coal seam,” the EIA added.

While celebrating the efforts of the Illinois Basin, the nation got another piece of encouraging news with EIA’s announcement that it was predicting flat natural gas output in 2013 – to the level where the agency took slices to its demand estimates.

Agency officials said output in 2013 should be unchanged over 2012’s record high levels, projecting 68.84 billion cubic feet per day.

The estimate parallels its slight downward revision for output for this year.

Last month, the EIA estimated next year’s marketed gas production would increase 0.5% to 69.22 bcf/d, for a third consecutive year of record output.

The agency is projecting small declines in production in coming months from rig count reductions, though the associated production will partly offset the drilling decline.

“EIA expects that prices for gas delivered to electric generators during 2013 will average 22 per cent higher than during 2012, while the average cost of coal should be just over 1 per cent higher,” the EIA said.

“The projected higher price of natural gas relative to coal should contribute to a decline in the share of total generation fueled by natural gas to 27.2 per cent next year and an increase in the coal share to 40.1 per cent.”

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