February 24, 2009

Are we running out of coal (part 2)?

Again, for better or worse, the news is that we are not.

A recent report by the US Geological Survey looks at the recoverable reserves of the Gilette field in Wyoming, currently the largest producer in the US.

It found that at current low prices, about $10/ton, that only about 6% of the coal in the field could be economically produced.

On the other hand, if the minemouth cost of coal rose to $30/ton, the retail cost of coal-fired electricity would increase only 10%*, but economically-recoverable coal reserves would increase six times. At $60/ton, 77 billion tons would become economic, enough to singlehandedly maintain US coal consumption for about 75 years. And, that's without Montana coal (Powder River), or the Illinois basin, which I discussed previously.

A spirited discusion of the report can be found here (you'll have to watch out for the tone of pessimism, which is endemic on the site).

Aren't you just taking the USGS at face value?
Not at all - I look at the detail from the USGS, the EWG, Rutledge, industry reports, etc, etc. Ultimately, I find that there really isn't disagreement on the facts, just the interpretation. Those who see coal as peaking are looking at demand for coal, in the context of cheaper and better alternatives. See more discussion of this below.

Will Peak Oil make diesel too expensive to transport coal?


A $100/bbl increase in the cost of oil would increase the cost of transporting a ton of coal by $100/bbl x 1bbl/42 gal x 2.65 gal/ton** = $6.3/ton. That's a 3% increase in the cost of electricity, which means that railroads will be easily be able to out-bid other potential users, like trucks.

Coal transportation by rail can also be converted in a relatively straightforward manner to use electricity instead of diesel, meaning that reduced oil supplies are highly unlikely to have a significant direct impact on the ability of the US to transport coal.
We're going to have to make a conscious decision to eliminate coal - it's not going to run out, and make the decision for us.

What about this report?

"Despite significant uncertainties in existing reserve estimates, it is clear that there is sufficient coal at current rates of production to meet anticipated needs through 2030. Further into the future, there is probably sufficient coal to meet the nation’s needs for more than 100 years at current rates of consumption. However, it is not possible to confirm the often-quoted assertion that there is a sufficient supply of coal for the next 250 years. A combination of increased rates of production with more detailed reserve analyses that take into account location, quality, recoverability, and transportation issues may substantially reduce the number of years of supply." From Coal: Research and Development to Support National Energy Policy

There's no real disagreement here - what disagreement there is, comes from a different frame of reference.

1st, they say "it is clear that there is sufficient coal at current rates of production to meet anticipated needs through 2030". I would argue that's probably all we need, for the transition to renewables.

2nd, they say "there is probably sufficient coal to meet the nation’s needs for more than 100 years at current rates of consumption". I would argue that's certainly all we need, for the transition to renewables (or fusion, for that matter - in 100 years things will be very different).

Finally, they say that there are risks beyond 100 years: the coal is there, but that 1) the US might dramatically increase it's rate of consumption - I think that's highly unlikely, 2) other issues may get in the way. Well, if we really were to face a situation where our economy's collapse could be prevented by digging up our national parks...the national parks wouldn't stop us.

All in all, I'd say that report supports the perspective that in the US, there's no realistic prospect of inadequate electricity caused by real, physical limitations.

*Electricity in the US is about $0.10/kWh, and US coal generates about 2,000kWh/ton. That gives a retail price of electricity of $200 per ton of coal used, so a cost of $10/ton for coal represents only 5% of the overall retail price.

**Rail transportation is about 440 ton-miles/gallon on average, and coal is at minimum 500 tm/gallon. Coal trains are probably even more fuel efficient, because the ratio of load to tare weight is greater than most other rail freight (particularly intermodal). 600 tm/g might be a good estimate. Low-sulfur coal in the US travels roughly 1,000 miles before being used (high sulfur coal travels much less).

Fuel consumption is driven by 1) acceleration and climbing; 2) drive-train friction; 3) wheel friction; 4) wind friction. 1 and 3 will rise (and fall) with weight, but not the others. If coal trains weigh much more, and will be substantially more efficient on average. Conversely, dead-head trains on the return trip from the power plant to the coal mine would consume less fuel, but the decline won't be 100%.

If the industry stat is 440m/g, we can assume that coal gets at least 600 miles/gallon one way (1.52 gallons per 1k miles). The empty train might use 50% as much the industry average for fuel on the dead-head leg (or, in effect, 880m/g, or 1.14 g/kmile). 1.52 + 1.14 = 2.65 gallons for the 2,000 mile roundtrip.

The 440m/g industry stat must include dead-heading: IIRC coal is roughly 1/3 all US train traffic, and it's not the only freight with this problem, so the above calc (which allocates this overhead cost only to coal) is conservative.

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