August 7, 2013
by Amelia Holliday — Staff Reporter
The Kentucky Coal Report for the second quarter of 2013 was released by the state department of energy on Wednesday and shows production and employment numbers that do not seem to bode well for the future of Eastern Kentucky coal.
While the second quarter coal report shows a 1.3 percent decrease statewide in coal production, Aron Patrick, assistant director with the Kentucky Department of Energy and author of the coal reports, said this fluctuation really only denotes stable production since the change is so small.
“In my opinion … I describe that as stable. I don’t describe that as any significant change,” he said. “On the employment side, though, that’s where there’s a lot of news.”
According to the report, there was a peak in coal employment in Eastern Kentucky at the end of 2011, however, employment has not stopped declining since then, with employment numbers at 12,342 statewide — the lowest since 1927, when the state began keeping mining employment statistics.
In 2012, Perry County was the second highest in the state for direct coal mining jobs, with an average of 1,775 full-time employees, according to the department of energy. The 2013 second quarter coal report lists Perry as the fourth highest in the state now, with 1,320 direct coal mining jobs, up by seven from the first quarter of the year.
Patrick said this is a common trend for Eastern Kentucky’s coal-producing counties simply because consumers of Kentucky coal are making major changes.
“It’s really these power plants that are driving the market changes for Eastern Kentucky coal,” Patrick said. “What you’re seeing is about 90 percent of Eastern Kentucky coal and then about 95 percent of all Kentucky coal … go to generate electrical power here in the United States. So, what we’ve been doing to look at the outlook for Kentucky coal production is to look at the plans of those power plants.”
Patrick said there are only about 100 power plants that Kentucky coal is sold to, mines in Perry County sell to only 20 different plants, so any change in the way those plants produce energy or purchase coal affects the industry in bigger ways than many people may realize.
One major change these plants have been making is to buy desulfurization equipment, also called scrubbers, which allows the plants to buy cheaper, higher sulfur coal from Western Kentucky mines.
“Eastern Kentucky coal is one of the best coals in the United States. It’s got low sulfur, high heat content, and it’s a great coal, but if you buy these systems that remove the sulfur from your coal you don’t have to buy low sulfur coal anymore. You can go ahead and buy the cheaper, dirtier coal because you have that system that’s going to clean it for you.”
Another change companies are making is the switch to natural gas instead of using coal at all, Patrick said.
“If they switch to natural gas neither one of our coal fields gets the business anymore,” he added.
Patrick said besides these power plant dependent factors, there is also the issue of ease in getting to coal in the Eastern Kentucky coal fields.
“It really comes down to one factor and that’s seam thickness,” he said.
Coal seams in Western Kentucky, Patrick explained, are large enough to drive trucks through, some measuring more than 12 feet in thickness. Eastern Kentucky seams that are being mined today are not nearly that thick.
“If you and I were going to open a coal mine … we would go after that thickest seam of coal … the easy coal. You grab that easy coal, and that’s what’s been happening for 200 years in Eastern Kentucky, people have been going after the best coal, the easiest coal to get,” he said.
Patrick added that because the thickest seams in Eastern Kentucky have virtually been picked clean, the coal that’s left, while a better quality coal, is too labor-intensive to reach for the small amount of payoff the company would get. This, coupled with the fact that consumers of Kentucky coal are turning to cheaper options, casts a harsh shadow on the future of Eastern Kentucky’s coal fields.
“It really looks like, to us, that it will not rebound,” Patrick said. “There are rail lines from Perry County, Kentucky, that go all the way down to Florida to generate power; they’re closing. So, these really old relationships are going away. There’s no one there to buy that coal.”