Future of anthracite coal

[Richard-deactivated]

Last January 2005 I purchased a Harman Mark II coal stove. At that time hard coal in my area [Western Pa] was $130 a ton, which I thought wasn't too bad. [I had been heating with wood, which I can get all I can burn for free, and just got tired of all the labor involved in splitting and stacking]. In February it went up to $150 a ton. It is now $170 a ton. I am hoping it doesn't go much higher. Is this a trend or are the coal suppliers jumping on the "band wagon" and just trying to make a little more profit because of the oil and gas being so much more this year. I am also concerned about the availability of hard coal in the future. I am thinking that I made a big mistake with this coal thing.

[lime4x4]

i'm in northeast Pa currently rice coal is 120 a ton Jan 1st 2006 it's going up to 125 a ton. I've heard that there is atleast 200 years supply of good anthracite coal left. So i should have enough for my lifetime...lol

[Guest]

50 Bucks says this thread gets locked.

[lime4x4]

Why??? No dealers we mentioned just locations..Oh by the way my prices i gave are if i went to pick up the coal..

[MILLERTIME]

the pick up price is 99.00 to 106.00 per ton in my area. thats chestnut

[Richard S.]

i'm in northeast Pa currently rice coal is 120 a ton Jan 1st 2006 it's going up to 125 a ton. I've heard that there is atleast 200 years supply of good anthracite coal left. So i should have enough for my lifetime...lol

Depends on where you purchase it. I'm assuming that's the price you're paying to pick it up yourself. Last I checked the breaker was charging $130 per ton for a pickup truck to come in where I purchase it. They have the best product in the Wyoming Valley though.

There is a tremendous amount of coal in the ground, unfortunately that's where most of it is going to stay. At least as far as the Wyoming Valley goes, it's inacessible because of flooding, houses built over the top of it etc. If coal prices continue to climb don't doubt they will begin mining wherever they can and if it's feasible.

[Richard S.]

or are the coal suppliers jumping on the "band wagon" and just trying to make a little more profit because of the oil and gas being so much more this year.

Keep in mind the price of coal has been suppressed for many years with very minimal increases each year. Additionally it is by far cheaper than any other fuel. If you're paying $2.50 a gallon for oil that's $400 to $500 for the price of a single ton of anthracite. Exactly how much depends on the efficiency of the units you are comparing and the quality of the coal.

Even if it increased 100% it would still be cheaper. Energy prices now and in the future are just going to climb, much faster than the cost of living. Wait until you here everyone moaning when they get there gas bills this month with new increase.

There's few reasons for this, for one the estimated oil supply wolrdwide is expected to run out in 30 -50 years. Gas production is in the same boat, there's only so much to go around. As far as fossil fuels goes coal is the only one in abundant supply, at least in the US. Anthracite though is not, it is a premium product so you can expect to pay a premium price for it now and in the future. It will remain much cheaper than gas or oil though, simply because no one is going to pay the same for coal that they can get using oil or gas which is obviously more convenient.

[lime4x4]

well i'm about 20 min from the local coal breaker in Coaldale..Hell you could pick it off the mountains if u wanted to...lol

[Ray]

I don’t think we are going to run out of oil in the next 30 to 50 yrs. We have enough oil on this planet for the next 500 yrs. What we need now is a new political party in this country. China has more coal then we do. If we decide to get greedy here with coal, I’m sure we will get it else ware. Transportation cost is the main reason coal has gone up. Not every body is going to go out and buy a coal stove. In 5 yrs when bush and his oil buddies are out of office. people wont think about buying coal. Lets get rid of the special interest in this country that’s destroying everything and put our technology to work.

[Richard S.]

I've read few articles on this, of course no one "knows" what is left in the ground. But at the current rate of comsumption and the known reserves, and the rate at which new reserves are being found.... There's quite a few people predicting that within 50 years there won't be any left. The 30 years is the worse case scenario prediction, 50 the average. The USGS prediction is a little less dire with peak production to hit in mid century with a steep decline afterwards. One prediction goes as far as peak in 2125, that's best case scenario though.

http://www.eia.doe.gov/pub/oil_gas/petr ... ply04.html

In any event, the world production peak for conventionally reservoired crude is unlikely to be "right around the corner" as so many other estimators have been predicting. Our analysis shows that it will be closer to the middle of the 21st century than to its beginning. Given the long lead times required for significant mass-market penetration of new energy technologies, this result in no way justifies complacency about both supply-side and demand-side research and development.

& slide show type presentation:

http://www.eia.doe.gov/pub/oil_gas/petr ... /index.htm

Check out slide 9, explanation 4 and slide 20.

Depends on many factors but at some point within the century there's going to be none left. If you take the mean estimation in slide 9 which is 3,000 billion barrels which is what they expect to recover and factor in a 2% growth of demand we'll be out of oil in 75 years. Trouble is demand is increasing more than that.


-------------------

China has more coal then we do.

I don't know where you got that from but the US almost has as much proven coal reserves as Russia and China combined.

Although coal deposits are widely distributed, 57 percent of the world’s recoverable reserves are located in three countries: the United States (27 percent), Russia (17 percent), and China (13 percent).

http://www.eia.doe.gov/oiaf/ieo/coal.html

[madrmc]

Aren't there 700 billion tons in the ground but only 70 billion are recoverable? Isn't is true that basically two families own the hard coal in the ground? Isn't mining the anthracite more dangerous and difficult, which may have created tougher regulations against mining, or did something else cause the drop in supply that I refer to below?

I have weekly short ton production from the DOE of hard coal in PA going back to 1992. The average over that period has been 82,500 short tons per week, yet there wasn't more than 60,000 produced since June of 2002. Am I correct in understanding that athracite's biggest use is residential heating? A recent peak in production was from June of 97 through April of 98 where it was above 140,000 tons/wk. My guess is that low oil prices (at that time), lead to lower demand for anthracite as it wasn't economical. (In contrast, now it would seem to be as economical as ever). The demand side can be inferred, however, maybe the ADMIN can give us some insight into the supply side over these periods, whether mining regulations or otherwise.

If you can handicap anthracite prices via demand for residential heating then they should go higher (I'd guess that 7/10 posts are from someone that has starting using coal this year for the first time including myself) then there's a lot of room for prices to go higher as it keeps its $/btu advantage vs. oil and natural gas and of course electricity. The question is when (yes WHEN not IF) will natural gas or oil become more economical than hard coal to heat a home (Remember in '98 oil was probably most economical/BTU).

There is more than enough natural gas and oil to go around the price just has to go higher and stay higher for capitalism to "get it out of the ground". All these estimates about when we'll run out of oil lack precision becuase higher prices will result in more oil and less demand, and the volatile prices we have seen.

As far as natural gas goes, I'd guess the biggest part of national demand growth is coming from electricity generation. Maybe the biggest reason is becuase it doesn't have the emissions issues that bituminous coal does. Either way if less natural gas is used to generate electricity (significantly less) then its price falls and more people use it to heat their homes (at least those that used to use it and switched to hard coal .... they'd switch back to natural gas). If electricity can be generated with bituminous and low co2 emissions then more of this coal is used to generate electricity and natural gas prices fall. (It alread sounds like some electricity generation is switching from natural gas to soft coal particularly for those that have the capacity). If more nuclear is used to generated electricity, Westinghouse got a big contract from Duke Energy, (and less natural gas) then natural gas prices fall. Either way if natural gas prices fall then it makes sense to think that antrhacite prices fall, as the local demand for anthracite falls becuase natural gas is more economical.

Either way I paid about $150/ton this year, that would equate with $6/MCF (assuming I get 25 million BTU/ton). The price/MCF is about $15 right now for me. So $375/ton is about breakeven, although at a price below that the hassel of dealing with coal isn't worth it.

As far as oil goes, the higher the prices go (and stay there) the more that we'll have over time. The colorado mountains have more oil than saudia arabia and the canadian tar sands have nearly as much. The problem is the price of oil needs to stay higher longer so its economical to get it out of the ground. We won't run out of oil, at some point the price might go so high, that the areas that still use it will use it much more efficiently than today or oil will be substituted for something else (obviously some combination). For now at least there's plenty of raw oil, we just lack the refinery capacity to make enough heating oil and gasoline out of it. Said another way refinery capacity has caused the price increases more than the supply of unrefined oil.

[Richard S.]

oh boy,I'll try and answer what I can...

Aren't there 700 billion tons in the ground but only 70 billion are recoverable?

I don't know what the figures are, I'm sure if you searched around you'd be able to find them.

Isn't is true that basically two families own the hard coal in the ground?

Again I don't know, it's possible that two families control the rights for a large percentage of the mines but I really have no knowledge of this. I do know there are many mines owned by many different entities.

Isn't mining the anthracite more dangerous and difficult, which may have created tougher regulations against mining, or did something else cause the drop in supply that I refer to below?

From my understanding no, it would be the opposite. Anthracite provides a more stable environment. But to add to this I know they recently closed down many smaller anthracite mines trying to enforce regulations that are used in bituminous mines. Apparently a lot of these regulations are not needed and/or irrelevant as far as anthracite mining is concerned. As far as I know that is what caused the coal shortage last year south of here. Lack of raw product. These were all mine with just a few men working them but apparently there was quite a lot of them.

As far as production goes I can only tell you what I see, I see a processing plant working as much as possible where I'm purchasing it. For the longest time they were working 10 hour days then 4 on fri. they are working a full Friday. I don't see any slow down in production. Currently they are making it as fast as they can.

The question is when (yes WHEN not IF) will natural gas or oil become more economical than hard coal to heat a home (Remember in '98 oil was probably most economical/BTU).

That's not going to happen, the price of oil and gas is going no where but up. Coal may go higher but it will still be cheaper than anything else. FYI oil was never cheaper than coal, ever. Even if it was $.75 per gallon it would still be equivalent to spending $130 to $150. Also keep in mind locally coal was below $100 per ton back in 98. If I remember correctly it was in the $90 range. Maybe less. So even at it's cheapest point it was still as much as 50% more.

There is more than enough natural gas and oil to go around the price just has to go higher and stay higher for capitalism to "get it out of the ground". All these estimates about when we'll run out of oil lack precision because higher prices will result in more oil and less demand, and the volatile prices we have seen.

Doesn't matter how much money you throw at it, you can't pump what's not there. There is a finite amount, slide 20 on the link above has a graph. There's 3 USGS listings. 1 for proven, 1 for what they expect, and one for what could possibly be in the best case scenario. there's also a few other recent estimations. None exceed what the USGS predicts. I don't see a fall in the demand for oil, do you realize how much oil is a part of our lives? Look around where your sitting, everything you see that contains plastic could not be made without oil, at least in it's present form. I saw a chemist discussing this once and I quote " If I had to make bicycle helmet without using oil I couldn't do it"

In addition you have other growing economies like China who are also creating a great demand.

So $375/ton is about breakeven, although at a price below that the hassel of dealing with coal isn't worth it.

Maybe for you but I'm sure others would disagree. If your using 5 tons of coal that's a savings of $1125, in your case. If you use a figure of $2.50 a gallon for a oil delivery the difference is quite a bit more. If you follow the guidelines the energy department provides it's as high as $1750 on staight BTU for BTU comparison. That is a unfair comparison but many customers will realize a savings of about $1500 with 5 tons. That's what my average customers uses. I have customers who burn in excess of 20 tons a year. $4500 to $6000 is not chump change.

or oil will be substituted for something else

I wouldn't doubt if in 20 30 years you don't see people burning any fossil fuels for heat at all. There's two many possibilities. We don't really need to, what we need is someone to step up to the plate and invest in alternate resources.... imagine the endless supply of energy if they simply harnessed the ocean currents. something will evolve eventually but they need to start now.

[madrmc]

I would say the price of anthracite would have a lot to do with the % of eastern PA homes that use it as the primary source of heat (presumably this will grow) and also how far its shipped to get demand from other areas, indirectly the % of non eastern PA homes that use it. I was surprised to find that they sell stokers in North Carolina, apparently there’s hard coal being shipped there as well. Not everyone will go out and buy a stove, but the more there is to be saved the more that will be sold.

I had thought in 98-99 with oil so cheap it may have become more economical than coal. I guess not, particularly in eastern PA where the smallest portion of the price relates to transportation (compared to Western PA). Thanks for setting this straight!

My hope is that hard coal’s primary use continues to be residential heating, and that nothing else sucks up supply. I’ve heard of the anthracite waste clean up project, that is turning the waste to diesel. If diesel prices go high enough, I’d be afraid they’d use coal to make it. I don’t know how high they’d have to go for that to happen. Hopefully, not anthracite in that event.

Oil demand has grown faster than supply causing prices to rise. However, I wouldn’t count on energy prices rising and rising and rising. The mere fact they increase tends to bring more supply and yes if they rise high enough cut demand (case in point demand for natural gas in my home has fallen 100% as I’ve substituted hard coal for the primary heating source), which eventually could be too much and cause prices to fall ..... eventually. It’s just the nature of commodity prices, they tend to be volatile. Everyone focused on when/if we’ll run out, what they don’t focus on is how a price spike can lead to a production/supply glut. There’s a misconception that proved recoverable reserves are a finite number, the fact is price increases have resulted in much higher estimates of recoverable reserves over time. This is because proved recoverable reserves are based on the economics of getting it out of the ground. The biggest biggest factors are the price of oil and the cost of getting it out of the ground. The higher the price goes the more that is recoverable at an economic profit, and also, the more incentive there is to find more. Oil is recovered from the ground at a lower and lower cost as the technology to get it out of the ground improves, and makes projects that previously weren’t economical at a given price level, economical. Getting oil our of the bottom of the ocean 100 years ago was probably thought to be ridiculous, today its economical. The mere fact that everyone points to China & India as using more oil means that companies will spend more and more money to get more and more oil out of the ground. Eventually there will be to much and prices will fall.

[Richard S.]

Yes the prices I quoted are from the Eastern Pennsylvania area. The savings will dwindle as you get further away obviously. I do get many people requesting coal form out of state, some from very far away. I've even suspect some are being sold a high grade bituminous simply because of the prices they give me that they paid for it.

The waste to diesel project is feasible because the source of there product isn't worth anything or very little. There's many of these banks around in the NEPA area. Some have been reclaimed for co-gen plants

There’s a misconception that proved recoverable reserves are a finite number, the fact is price increases have resulted in much higher estimates of recoverable reserves over time. This is because proved recoverable reserves are based on the economics of getting it out of the ground. The biggest biggest factors are the price of oil and the cost of getting it out of the ground. The higher the price goes the more that is recoverable at an economic profit, and also, the more incentive there is to find more.

But it is a finite amount, the entire world has been searched for oil high and low. Unless they find a huge new field those figures aren't going to change drastically. The USGS report does take into account possible future recoveries, hence the best case scenario line on the graph. These reports of the coming oil shortage are based on the work of Dr. M. King Hubbert. In 1956 he accurately predicted the US peak of oil production to be in the late 60's, early 70's which it was. There's other countries/regions aswell where the peak has been hit, Russia, Europe etc. all are in decline.

http://en.wikipedia.org/wiki/M._King_Hubbert

IMO this is all irrelevant anyway because I think at some point in time in the very near future you're going to see a new a switch to new energy source when it becomes available. Nuclear fusion reactors are probably at the top of the list if they can get them to work....

[madrmc]

A gentleman by the name of Thomas Gold died in 2004 his prediction about the formation of oil and gas is different.

"His last major prediction, though, is still unresolved. It is that oil and gas are not fossil fuels and that they did not originate from the compression of biogenic material. He held that they are created deep inside the earth, and other planetary bodies, and gradually rise toward the surface. The supply of oil and gas, he believed, is virtually inexhaustible. This is known as the abiogenic petroleum theory. This is not a view espoused by those who are bullish on oil and gas. It is not generally favored by producers, or by environmentalists, or by those who want to encourage conservation, or those worried about global warming, or those who want to increase gasoline taxes to reduce our dependence on "fossil" fuels. As Charlie Munger might say, there is little incentive caused bias in favor of the abiogenic theory.

It is, though, beginning to receive increasing attention, as the anomalies associated with the biotic view are scrutinized, and evidence for abiogenic origin begins to mount. From outright denial some years ago, western petroleum engineers are beginning to admit that some hydrocarbons are abiogenic, just not enough to make a commercial difference. "Western" is an important adjective, since the abiogenic view has long been respectable in Russia, where it has substantial support. "

In the Middle East alone, for example, reserves have doubled in the past 25 years despite significant production and few new discoveries. As one professor put it, "It would take a pretty big pile of dead dinosaurs and plants to account for the estimated 660 billion barrels of oil in the region."

You can read the article for yourself at:

http://www.leggmason.com/funds/ourfunds ... annual.asp