Gas overtakes coal at US power stations – by Ed Crooks (Financial Times – July 12, 2015)

New York – The US generated more of its electricity from gas than from coal for the first time ever in April — in a sign of how the shale boom is putting mounting pressure on the country’s mining industry.

Plunging prices for natural gas, which have fallen alongside oil since last summer, led to it being used to generate 31 per cent of America’s electricity in April, while coal contributed 30 per cent.

This was the first month in US history that gas-fired electricity generation surpassed coal-fired generation, according to SNL Energy, a research firm — although it came close in 2012 when gas prices were also very weak. In 2010, coal provided 45 per cent of US power.

Since then, competition from cheap shale gas — unlocked by the rise of horizontal drilling and hydraulic fracturing — plus a growing regulatory burden on coal-fired power plants, has squeezed out coal use. That trend has accelerated in 2015.

Brett Blankenship of Wood Mackenzie, the research company, said the combination of cheap gas and new environmental regulations such as curbs on mercury and related pollution from coal-fired plants was having a particularly deleterious effect on coal generation.

“Low gas prices mean coal plants are running less, and when they run their margins are typically compressed,” he said.

“So companies find it difficult to make the investments needed to comply with regulations and keep those plants running.”

US coal production is expected to fall by 7.5 per cent this year, according to the government’s Energy Information Administration. US coal mining companies’ shares and bonds have plunged.

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