The coal supply picture for Midwest power plants darkened again this summer as deliveries of Powder River Basin (PRB) coal to the region fell for a second consecutive quarter due to unreliable rail service, according to a report by SNL Energy.
Midwest generators have been plagued by coal supply issues this year because of ongoing disruptions in rail service. Stockpiles have dropped as low as four days at some plants, with others warning they are at risk of running out of fuel this winter.
According to SNL Energy data, deliveries of PRB coal to the Midwest fell 2% in the second quarter of 2014, compared to last year. This comes after a similar 2% drop in the first quarter. Total deliveries in the first half of 2014 fell 640,227 tons.
The fuel crunch has led some generators to implement coal conservation measures to protect reliability. Net coal-fired generation in the Midwest in the second quarter of 2014 was down 6%— 2,515 GWh—from Q2 2013 figures.
The biggest drops were in Iowa and Michigan, where generation fell 13.86% and 10.94%, respectively. Not surprisingly, Iowa has been the hardest hit by problems in coal delivery, seeing total (PRB and other) deliveries fall 14.51% in the second quarter and 9.09% on the year, compared to 2013, according to SNL Energy.
The ongoing crisis is largely the result of increased congestion on rail lines, with shipments of crude by rail from the Bakken field in North Dakota—where oil production is about twice the region’s pipeline takeoff capacity, according to the Energy Information Administration—responsible for much of the added demand. BNSF Railways, the largest coal shipper in the region and the second largest in the nation, has also blamed weather issues and competition for shipping capacity from agriculture—a large grain harvest is expected this fall.
The surge in demand is causing cascading problems in a variety of sectors in addition to coal. BNSF is working to add capacity, but the fixes take time.
Coal generators have complained to regulators and Congressional leaders about the problem, asking for changes in regulations that would increase competition in the rail business, but BNSF says the proposed changes could make the problem even worse by increasing congestion at key interchanges.
—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).