We’re about to export liquefied natural gas, but the coal industry is in trouble

posted at 9:21 pm on January 13, 2016 by Jazz Shaw

Earlier today I was really scrambling to find some good news for you and not having much luck. Then, just in the nick of time, I saw this article over at the Daily Caller which reminded me that there are still a few glints of silver lining in the darkest clouds. A special tanker has arrived in Louisiana this week and it’s getting ready to get underway with some cargo which should have a very positive impact on the US economy and brighten the situation for our allies around the world. We’re getting ready to ship out our first delivery of liquefied natural gas. (LNG)

The tanker that will carry the first shipment of American liquefied natural (LNG) gas arrived in Louisiana Tuesday, symbolizing America’s status as a major new supplier to Asia and Europe.

Exporting natural gas is likely to be a growth industry, as global demand for natural gas is expected to be 50 percent higher by 2035 than it is now, according to the International Energy Agency. American LNG exports are likely to significantly reduce energy costs in Asia and Europe.

As they explain in the article, Barack Obama was opposed to to LNG exports until the past year or so, but international events may have prompted him to see the light. One of the biggest areas of impact could have been the Russian occupation of Crimea. We found very little support in Europe for opposing the move because the Russians control the flow of natural gas over there. With more energy options on the table and the chance to do business with a friend rather than a foe, we might have a bit more leverage over Russia in the future.

But just as we get the good news, some more disturbing tidings come our way as well. Our work on natural gas and crude oil is producing abundant supplies across the board, but the coal industry is in trouble thanks to the ongoing attacks of the EPA and the Obama administration. Are they having any effect? You might think so since America’s second largest coal producer has filed for bankruptcy.

Decreased demand for coal has prompted the second largest US coal producer to file for Chapter 11 bankruptcy Monday in a last ditch effort to cut $4.5 billion in debt from its doles.

Missouri-based Arch Coal is proposing a debt-for-equity swap with first-lien lenders holding more than 50 percent of the company’s first-lien $1.9 billion debt. The move would, the company says, essentially leave most of the company in the hands those lenders. Other creditors owed billions of dollars would be allowed other options.

Arch’s inability to avoid a bankruptcy through debt exchange prompted the company to issue warnings that it would be forced to file Chapter 11.

There are competing forces at play here. It’s true that burdensome regulations and bad publicity from the administration have done some damage, but coal is also in direct competition with natural gas (and to a limited extent, oil) in certain market segments. We’ve seen a series of coal fired plants making the expensive but eventually profitable switch from coal to natural gas, reducing the market for the more traditional fuel. Other power plants which are unable to manage the switch have announced that they will simply close. That’s cutting down the market for coal and making life harder for the producers. Unfortunately, that’s the free market for you, but it’s sad to see an industry which has provided so many jobs and so much energy for all these generations falling on hard times.

LNGTanker


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Comments

Jazz getting that one last story in before starting his weekend. :)

dougmva on January 13, 2016 at 9:26 PM

….how do you feel sorry for Coal Country…when you know …who they voted for?

JugEarsButtHurt on January 13, 2016 at 9:27 PM

Unfortunately, that’s the free market for you,

Say what now?

I don’t see where pouring crushing regulation on an industry until it goes out of business is “free market”.

Yes, coal finds it hard to compete- because coal fired power plants are being taxed and fined into oblivion by our government. Demand is drying up- but it’s not market forces at work.

bettercallputin on January 13, 2016 at 9:36 PM

Unfortunately, that’s the free market for you, but it’s sad to see an industry which has provided so many jobs and so much energy for all these generations falling on hard times.

Are you crazy. Coal is not being destroyed by a free market. Coal is being destroyed by a rigged market – beaten down by rules and regulations

Anyone notice that as one of the largest coal producers is beaten into bankruptcy, Soros buys a chunk of the stock which was driven down by Obama’s anti coal policy and Soros funded ‘climate’ groups

When Ryan handed Obama the store the one thing that the GOP supposedly got in return was the ability to finally sell US oil abroad.

This is just more of the rape of america. The Saudis opened their wells to drive the world price of oil down so low, the new oil frackers in the US are going bankrupt. Foreigners will be moving in to buy those companies and their leases, but now they will be able to ship the oil out of the US to their own lands

Once they have bought out our one growth industry, they will drop the spot price of oil, we will go back to 4 bucks a gallon in the US and the ones who drove our oilers into bankruptcy will now be taking our oil out in ships

This is the crime of the century, and may be a bigger theft of resources than the great rape by the Railroad barrons of an earlier era

entagor on January 13, 2016 at 9:36 PM

Jazz Shaw and the horse he rode in on are darn good blogger/writers.

SpongePuppy on January 13, 2016 at 9:37 PM

Along with the ACA, this is something that needs to be CHANGED, as soon as the next President is sworn in.

listens2glenn on January 13, 2016 at 9:41 PM

I was really scrambling to find some good news for you…But just as we get the good news, some more disturbing tidings come our way as well.

Just couldn’t force yourself to write an entirely positive post? Had to add a caveat didn’t you, Jazz?

kcewa on January 13, 2016 at 9:43 PM

….how do you feel sorry for Coal Country…when you know …who they voted for?
.
JugEarsButtHurt on January 13, 2016 at 9:27 PM

.
In PA, In don’t believe the employees of coal mining operations voted by majority for Obama.

listens2glenn on January 13, 2016 at 9:44 PM

Matewan!

Walter L. Newton on January 13, 2016 at 9:51 PM

I thought they were predicting $10 a barrel oil?

wolly4321 on January 13, 2016 at 9:52 PM

Obama has been at war with middle America for over 20 years, 7 at a level unheard of in our history. We have a president that hates America and the people that are its citizens. His policies are aimed to hurt YT but the collateral damage is to blacks and hispanics is far greater.

He doesn’t care if people of color and women are hardest hit because if it hurts white males it is worth it. I actually read his books.

jukin3 on January 13, 2016 at 9:58 PM

Unfortunately, that’s the free market for you, but it’s sad to see an industry which has provided so many jobs and so much energy for all these generations falling on hard times.

What? The free market is progress, Jazz. Stop trying to send the world back to the 20th century.

TBSchemer on January 13, 2016 at 10:06 PM

<blockquoteI actually read his books.

jukin3 on January 13, 2016 at 9:58 PM

he was pretty clear on his intentions.

wolly4321 on January 13, 2016 at 10:09 PM

Other power plants which are unable to manage the switch have announced that they will simply close. That’s cutting down the market for coal and making life harder for the producers. Unfortunately, that’s the free market for you,

Jazz, this is just flat out wrong. Those plants are shutting down and switching in direct response to Barack using the EPA to implement his promise that “anyone can build a coal plant, it’s just that it will bankrupt you.”

SDN on January 13, 2016 at 11:45 PM

We’ve seen a series of coal fired plants making the expensive but eventually profitable switch from coal to natural gas, reducing the market for the more traditional fuel. Other power plants which are unable to manage the switch have announced that they will simply close. That’s cutting down the market for coal and making life harder for the producers. Unfortunately, that’s the free market for you

“Free market” my ass. It’s the direct product of Obama’s fascist wet dream:

https://www.youtube.com/watch?v=HlTxGHn4sH4

Younggod on January 14, 2016 at 12:11 AM

No market forces involved. It’s solely the agenda of the Obama administration:

https://www.youtube.com/watch?v=iJ55UzAsp6M

Younggod on January 14, 2016 at 12:22 AM

It’s government policy, not the “free market”:

https://www.youtube.com/watch?v=V-2DAJ1w-R0

Younggod on January 14, 2016 at 12:28 AM

The EPA has destroyed the coal industry as far as electrical generation in the USA is concerned, leaving only the coal fields in the West who are a prime supplier of China. With the Chinese economy coming to a standstill, they won’t be needing as much coal as before, leading to unemployment in WY and environs, plus less tonnage hauled on the UP and BNSF to West-Coast ports, and less traffic through those ports of coal out-bound, and goods in-bound from China.
Better tighten those belts folks, it’s going to be a very tough year.

Another Drew on January 14, 2016 at 3:19 AM

Yes, and when the necessity returns of employing coal, the Stinking Monster and his plague of minions in DC who caused these bankruptcies are going to escape the clear “credit” for evil surviving monopolies that such bankruptcies will create.

2017, hopefully when the Roach crawls back under some other rock.

RL on January 14, 2016 at 3:26 AM

it’s sad to see an industry which has provided so many jobs and so much energy for all these generations falling on hard times.

It is. And it has affected my employers business a great deal (that, along with the precipitous drop in oil prices), unfortunately; we’re just scraping by these days.

However, we’ve known for a while that coal is dead. It’s dirty and produces more greenhouse gas per pound than does natural gas. There will be bumps and pits on the road to greater sustainability (and reduced greenhouse gas emissions), but there’s money to be made on that road as well. We just need to adapt.

oakland on January 14, 2016 at 6:14 AM

Unfortunately, that’s the free market for you, but it’s sad to see an industry which has provided so many jobs and so much energy for all these generations falling on hard times.

There is nothing that even vaguely resembles a free market in this country where coal is concerned. The onerous regulations imposed on the industry have purposefully ensured these bankruptcies.

As you pointed out, the plants are closing or converting to gas; what is obvious is that this is not a result of the free market but of a deliberate regulatory scheme that made burning coal too expensive with requirements that cannot be met feasibly.

Carbon is not pollution, regardless of what the EPA says. Neither is CO2. If it meant reaching a political objective, the lefties would call oxygen a toxin.

The last time I checked, the vaunted scientists call we humans, along with all other plants and animals, carbon-based life forms.

The demise of coal is deliberate, as Ojesus repeatedly made clear during his first campaign. Dear Leader is the worst sort of deceiver in his SoTU backslapping about “clean energy jobs” surpassing coal jobs, as he damn well knows that he deliberately destroyed the coal jobs in the first place.

hillbillyjim on January 14, 2016 at 7:34 AM

oakland on January 14, 2016 at 6:14 AM

Brainwashed.

hillbillyjim on January 14, 2016 at 7:35 AM

I thought the US was selling coal to China.

rhombus on January 14, 2016 at 7:37 AM

The Obama Prayer
Obama, who art in DC, hallowed be thy name
Thy will be done no matter how dumb
On the border as well as in Congress
Give us this day our daily truth
So we can record it before it changes
Forgive us our debts because, Hey, what difference does it make now?
Lead us not into temptation, we’re already there
But deliver us from evil if you can decide what it is
For thine is the press and the usual idiots
Seems like forever even if it isn’t
Verily thee unto thou.
Ahem and Ahem

thelastminstrel on January 14, 2016 at 7:51 AM

Jazz is throwing around “free market” like the government has not had a thumb on the scale opposite coal for the entire Obama Presidency.

Let’s take this “free market” question a bit further shall we?

Since Jazz says it is the “free market” that is promoting natural gas over coal, then what happens now that demand for natural gas is increasing.

Right now natural gas prices are incredibly low. With energy switching from coal to gas and people converting home heating over to gas, and exporting of gas, that is going to drive total demand for natural gas up.

The price of natural gas is going to go up.

Now what happens when most of our electricity is provided by natural gas in the future? In a sane world, a free market world, electricity generation costs will go up and coal would become more attractive again.

Do we see the problem yet?

It is called the Clean Power Plan.

I agree that most fuel switching to natural gas has been happening because of cost, but our wonderful government is taking away the ability to switch back to coal in the future. So much for free markets.

airupthere on January 14, 2016 at 8:50 AM

I read somewhere recently that George Soros is picking up coal company stocks for pennies on the dollar. How much do you want to bet that under the next administration the EPA will be muzzled and coal will be back on the rise?

Elric on January 14, 2016 at 9:03 AM

I read somewhere recently that George Soros is picking up coal company stocks for pennies on the dollar. How much do you want to bet that under the next administration the EPA will be muzzled and coal will be back on the rise?

Elric on January 14, 2016 at 9:03 AM

Soros bought tons of stock in Arch Coal and Peabody energy back in August.
Arch Coal just filed for Chapter 11 bankruptcy yesterday.

Both, at least in the short term, have been terrible investments and have slid further after a short bump in value after he purchased his shares.

airupthere on January 14, 2016 at 9:07 AM

I hope this helps Houston. They are starting to feel the effects of $30 crude now.

timoric on January 14, 2016 at 9:21 AM

The worm turns. All power to the Worm. History will repeat itself. It’ll just be much more expensive. There is a special place in Hel for Bubble Boy – coal fired, of course.

vnvet on January 14, 2016 at 10:20 AM

This all started in 2010, when Obama was unable to get his cap-and-trade on CO2 emissions through a Democrat Congress(too much opposition from coal-state Democrats), his EPA imposed an executive “rule” requiring power plants emitting over 100,000 tons per year of CO2 to get permits according to PSD rules, although nobody really knew what Best Available Control Technology was for carbon dioxide.

This brought the construction of new power plants (both coal- and gas-fired) to a screeching halt, since the emission limit corresponds to about 130 MW of heating value for natural gas (about 80 MW of power taking into account the efficiency), but most gas-fired power turbines are designed for about 250 MW of power output.

So the natural gas drillers from the Marcellus Shale were hoping to sell their gas to power plants, but since none were built, they either sold the gas for home heating, or liquefied it to sell to Europe.

For the amount of power produced, coal emits about twice as much CO2 as natural gas, and emits much more other pollutants (particulates, sulfur dioxide) than natural gas. But commercially viable control mechanisms do exist for these pollutants, but not for CO2.

So if coal companies are going bankrupt, and we’re exporting natural gas, blame it on Obama’s battle against Gore-bull warming.

But if we export enough LNG to Europe, at least the Europeans can stay warm this winter if they impose sanctions on Russia over Ukraine, and Russia closes the gas spigot.

Steve Z on January 14, 2016 at 6:13 PM