A total of 12 mines in Northern Appalachia cranked out more than 1 million tons of coal each in the third quarter, helping boost production from the region, and more than half of those mines are held by one company that dramatically increased its footprint in the basin late in 2013.
An SNL Energy analysis of U.S. Mine Safety and Health Administration (MSHA) data showed that the top 25 producing coal mines in the Northern Appalachia basin produced a cumulative 25.5 million tons of coal in the third quarter, up from 22.4 million tons in the year-ago period. In the 12 months ending with the most recent quarter, the mines produced nearly 102 million tons of coal, up from 94 million tons.
The region has been expanding production as it continues to attract market share and employees from the Central Appalachia basin to the south. However, Northern Appalachia producers still struggle with intense competition from natural gas, as well as coal from regions where production is cheaper, such as the Illinois Basin.
Murray Energy owns seven of the 12 mines that produced more than 1 million tons of coal in the third quarter. Its top producer in the third quarter, the Marshall County mine, produced 2.85 million tons of coal during the period. Marshall is one of five mines that Murray acquired from CONSOL Energy for $3.5 billion in 2013. The Ohio County, Harrison County, Marion County and Monongalia County mines acquired in the same purchase also all reported output that placed them among the top 25 mines in the region.
Murray Energy’s seven top-producing Northern Appalachia mines generated more than 11.5 million tons of coal in the third quarter alone. The same mines produced 45 million tons in the 12 months ending in the third quarter. For the 12-month period, the Century and Powhatan No. 6 (Ohio Valley) mines were the only Murray operations in the region that reported decreased production. Murray Energy reported that the increased productivity and increased production shifts boosted production at the CONSOL Energy mines.
Despite increasingly focusing on its gas operations, CONSOL continues to hold the two top producing coal mines in the basin. The Bailey mine out-produced every mine in the region, reporting 3.1 million tons of coal in the quarter, an increase of 10.8% from the 2.8 million tons of coal production reported in the year-ago quarter.
“Our marketing effort for our Bailey coal brand is unfolding just as we had strategically envisioned,” CONSOL President and CEO Nick DeIuliis said. “We are out there tactically executing term business with must-run power plants that are in our core market regions for the next three years.”
CONSOL’s Enlow Fork mine reported production of 2.2 million tons, down from 2.4 million tons in the year-ago period. The mine has struggled recently with geological issues.
Alpha Natural Resources had three mines in the region that were among the top producers in the third quarter. Together those three mines produced nearly 3 million tons of coal. The top producer, Cumberland, reported production of 1.6 million tons of coal in the quarter. The company is expected to increase Cumberland’s coal production in the hope of offsetting the loss in production at the company’s Emerald No. 1 mine, which is nearing the end of its productive life. Emerald produced 1.1 million tons of coal in the third quarter, down from 1.3 million tons in the year-ago quarter. Alpha President Paul Vining recently said the company is looking at other options for expansion in the Northern Appalachia basin but declined to comment further on those plans. “We’re not going off the end of a cliff with Emerald shutting down, but we’re likely at some point in the future to be looking at starting to move toward perhaps some development, some incremental or longer term investment that will create additional value beyond just a lot of the measures that we’ve taken in Cumberland,” Vining said.
Alliance Resource Partners, one of the few coal companies that has managed to avoid a collapse in market value and continued to report record earnings, reported that its Tunnel Ridge mine produced 1.5 million tons of coal in the third quarter, up from 900,000 tons in the year-ago period. Alliance’s Mountain View mine produced 500,000 tons in the quarter.
Oxford Resource Partners owns three mines among the top 25 coal producers in the region. The three mines — Snyder, Dairy Jean and Tuscarawas Strip — produced a combined more than 800,000 tons in the quarter.
Arch Coal’s new Leer mine, which produces metallurgical coal, is also one of the top-producers in the region. Leer reported production of more than 650,000 tons in the quarter, up from 100,000 tons in the year-ago quarter. “The startup of Leer has been as good as we could have hoped,” Arch Executive Vice President and COO Paul Lang said. “It continues to hit our numbers.” Arch’s Sentinel mine reported production of more than 270,000 tons.