Coal's Power: Coal energy output outstrips gas, nuclear combined


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The coal called "king" in this region, an acknowledgment of its presence and power, sometimes seems in danger of facing a coup.

Just in the past week, federal agencies announced stricter regulations on pollution for coal-fired plants, with even former Pittsburgh Steeler Jerome Bettis filming commercials to strong-arm legislators into passing the restrictions.

Add into the mix a natural gas boom that's overwhelming the region and its lawmakers. Then there are the alternative options such as nuclear and wind energy that have won endorsements from the White House.

With the pressure coming from all sides, the monarchy appears threatened.

But a look at coal's ever-overpowering numbers suggests a different narrative and proves the black rock remains as much a local institution as the football team for which Mr. Bettis once lined up in the backfield. The state still contains so much coal that it produces more power than its citizens and businesses need, with the extra used to light major metropolitan zones along the heavily populated East Coast.

The Keystone state's 27 billion tons of coal have fed several major coal-burning plants that generate electricity as well as controversy, as environmentalists and officials push for cleaner-burning fuels.

Over the next week, the Post-Gazette's Business staff will examine this bedrock's fundamental contributions to the Pittsburgh region's identity, economy and future: We'll track its place in the courtroom, the laboratory, the university, the rivers and the world.

"In 2010, coal generated 45 percent of all electric power in the United States," said Jay Apt, a professor at Carnegie Mellon University who studies the economics of the electricity industry. "Natural gas was 24 percent, nuclear was 20 percent and hydroelectric was 6 percent."

In Pennsylvania, coal has always been just one item in the region's energy portfolio.

The bedrock of Western Pennsylvania could be seen as coal, a key natural resource that has long been an economic generator. The energy industry may be changing but coal still runs through many parts of life here.

• Sunday: A long history, a key industry

• Monday: The rules about your coal

• Tuesday: High-tech under the ground

• Wednesday: A concentration of expertise

• Thursday: Moving the goods

• Friday: A business in safety

When U.S. Rep. Tim Murphy, R-Upper St. Clair, touted nuclear energy at Westinghouse Electric Co. earlier this year, he said the Cranberry company's above-ground reactors fit into Pittsburgh's status as "the energy capital of the world."

And when Harper's Magazine sent a correspondent in 1881 to Pittsburgh in search of some romanticism beneath the city soot, he wrote back with this:

"Were Pittsburgh not the Iron City, she certainly should be the Coal City, and did she deserve neither appellation, assuredly she would be the Glass City."

Pennsylvania's constant resource -- the main bituminous coal field -- spreads out of the state's southwest pocket and envelops the Allegheny County region, stretching until it almost touches the New York border to the north and Harrisburg to the east.

The Keystone State is the country's fourth-highest producer of coal, with 80 percent of its output coming from just 39 underground mines. Wyoming mines the most coal, followed by West Virginia and Kentucky.

It's a drop in the bucket: the Energy Information Administration estimated recoverable reserves in the United States to be 261 billion tons, or enough coal to last about 249 years. The agency's April 2011 outlook estimated coal consumption would increase 1.1 percent per year for the period 2009 to 2035.

Pennsylvania mines so much coal that it exports more than a third of the power it generates to surrounding markets, helping supply major metro areas such as Baltimore and the nation's capital, Washington, D.C.

The state used to need more of that power, but when major industries left or closed down, they took their power demands with them.

"We have all this excess generation put here to support the steel industry, and we no longer have a steel industry," said Mr. Apt. "And so we use those power plants to supply the centers that are on the East Coast."

The region's dominant coal company, Consol Energy, mined 62 million tons of coal in 2010, accounting for about 14 percent of the total tons mined that year east of the Mississippi River.

The Canonsburg energy firm is diversifying fast into natural gas development in the Marcellus Shale formation -- another of the region's natural resources -- but it still sold those 62 million tons at an average profit of $14.80 per ton last year.

Consol Energy and other coal firms now see increased interest from the "BRIC" countries -- Brazil, Russia, India and China -- that are leading the world in rapid-pace development. Earlier this year, Consol expanded its Baltimore terminal by 2 million tons for a total capacity of 16 million tons to accommodate its growing export business.

Yet while exports introduce local companies to countries with a seemingly insatiable demand for energy, critics say the demand from abroad also encourages development in an industry that pollutes and contributes to global warming.

On Wednesday, the U.S. Environmental Protection Agency issued health-based regulations that limit the amount of mercury and other toxics allowed to emit from coal-burning power plants -- one of the agency's most substantial initiatives of the past two decades.

The announcement could lead to the retirement of eight to 10 such plants in Pennsylvania alone. Mr. Apt said increased regulations typically shut down smaller plants that can't afford costly retrofittings, but that the change shouldn't alter too much of the Western Pennsylvania dynamic.

"Western Pennsylvania has some very large coal plants," he said.

"The ones on the Allegheny Ridge, Conemaugh-Keystone, Seward, and Bruce Mansfield out by the airport -- we've got more generation in Western Pennsylvania than we have demand."

Regulatory scrutiny can make coal seem like a risky investment, but the resource's seeming immunity from most political turmoil led analysts at Energy & Capital of Baltimore earlier this year to encourage investing in coal and its cottage industries.

"Oil prices are subject to geopolitical turmoil like the nuclear standoff between Western nations and Iran that's going on right now. But not coal," wrote analyst Ian Cooper.

Perhaps the loudest recent endorsement of coal's staying power on Wall Street was actually an investment -- not in the resource itself but in the transportation system that lets it travel.

Warren Buffett, the "Oracle of Omaha" whose investment decisions can singlehandedly move the market, paid a 25 percent premium to fully acquire the Burlington Northern Santa Fe railroad company two years ago. In a typical year, Burlington Northern ships more than 300 million tons of coal.

Analysts said Mr. Buffett's investment made one thing clear: This dirty rock isn't going anywhere.

And that doesn't even account for the occasional Christmas stocking.


Erich Schwartzel: eschwartzel@post-gazette.com or 412-263-1455. First Published December 25, 2011 5:00 AM


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