Coal Industry Remains Strong in Ohio Due to Surface Mining, Reserves and Customers
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Ohio is coal country, and that won’t change any time soon according to those involved with the coal industry. Chuck Ungurean, the president, chief executive officer and director of Oxford Resource Partners, which started in Coshocton, said its business has remained strong because of surface mining, the reserves at its mines and its customers.
This has helped other local companies survive, such as Coshocton Trucking, which ships some of Oxford’s coal from local mines.
However, Ungurean said, it has become difficult to obtain mining permits since the EPA began to impose stricter regulations in 2009. The result is limited supplies and steeper coal costs.
Those costs are felt by energy companies such as American Electric Power, which has generating stations in Conesville and Beverly.
Mike Debord, vice president of fuel procurement for AEP, said it’s his job to get the specific coal needed for plants and to do so in the most cost-effective manner.
Because of anticipated spikes in the market and layering contracts with coal vendors so they don’t all expire at one time, Debord said AEP has managed to keep energy costs low for local customers.
Debord and Ungurean think there are plenty of coal reserves across the U.S. They said exporting to nations such as China and India, which do more industrial work, could become a big market.
Economic Effect on the Energy Provider
Debord said about 45 percent of the coal used at the Conesville Generating Station comes from Oxford. The Conesville plant has 296 employees.
The Columbus Southern Power region of AEP, of which Conesville is a part, used a little more than 5 million tons of coal in 2010. Debord said AEP averages 60 million to 65 million tons of coal per year company-wide, which is a decrease of about 10 million tons in 2008.
“The economic slowdown certainly impacted a number of our industrial customers and caused a reduction in power demand and so a reduction in fuel demand for us,” Debord said.
Although rising coal prices can be passed on to consumers in what they pay for power, Debord said it’s part of his job to be financially responsible in buying to help keep an individual’s electric bill from going up.
Debord said AEP tries to layer contracts between short-term and long-term agreements for the different types of coal needed, which buffers any huge upswing in coal prices during a certain time period.
“If we’re doing our job of getting fuel required for a particular unit at the best price, then that is generally accepted as being prudent. We certainly don’t want to overpay, but we have to make sure the coal we’re buying works for the particular unit we’re buying for. We can’t use just any coal in a unit,” Debord said.
EPA mandates regarding emission controls of coal-burning plants also play a role in rising energy bills. Many changes proposed by the EPA in 2009 have started to be enforced or will be this year. Plants have to spend money getting up to EPA guidelines with new systems and equipment.
Jason Rusk, director of fuel procurement, said AEP’s Conesville plant has scrubber systems to limit harmful emissions. Because the plant already has these systems, the EPA’s new regulations have not had a major effect on customers’ energy bills.
The Conesville plant’s scrubber systems also ensure Oxford’s business stays viable, Ungurean said.
Oxford has added 63 employees in the past year, primarily because it has a solid client base to keep production up, Ungurean said.
Local Coal Hauling
Oxford operates two river terminals in eastern Ohio and western Kentucky for shipping. Ungurean said Oxford ships about 300,000 tons of coal per month in Ohio.
Oxford also uses the railroad; the Conesville plant receives about five shipments via rail per week.
Ungurean said about 140 trucks are used each day for coal shipping, including some operated by Coshocton Trucking.
Coshocton Trucking does coal hauling under its dump division, Cherokee Excavating Inc. Roxann Hadrosky, of dump dispatch, said the company has between 24 to 26 dump trucks and employees hauling coal daily.
That’s an increase from about 20 in past years, she said, because of Oxford’s need for more coal. Cherokee trucks coal from six Oxford-owned mines.
Hadrosky said the company averages about 2,000 tons of coal per day and hauls about 500,000 tons per year. Coal hauling makes up about a third of Coshocton Trucking’s annual income, she said.
Hadrosky said the coal industry appears to be doing well locally because of increased demand. However, she is concerned about government regulations affecting the industry.
“I hope all our representatives and people in power realize that (Ohio) is coal country and they don’t do anything to basically disrupt that,” she said.
EPA Effect
Debord said the information required to get mining permits from the EPA have increased, which raises expenses for mining companies. He said the time it takes to get mining permits has increased since 2008 from 18 months to about three years.
Ungurean said Oxford tries to offset the extended wait by always looking forward. The company starts the permit process years before the company moves into new mining areas.
He said fewer permits are being issued, which has lowered the available coal supply — another reason for rising coal costs.
“It’s a natural process. When one mine completes, we open another one up. That’s why the permitting is so crucial,” Ungurean said.
Along with opening new mines, Oxford also will go into previously mined areas that still have coal reserves. New technology since the 1950s and 1960s has allowed them to use those mines, Ungurean said.
Reusing mines, he said, can help the environment, because companies now can fix previous water and soil issues at old mines.
The basic process of mine reclamation involves replacing topsoil and purifying water before releasing it into streams and rivers.
Ungurean said such work has been standard since the 1970s. He also said technology developed in the 1970s has kept harmful emissions low even as coal usage has increased.
Ungurean said Oxford doesn’t have as much trouble with the permit process as some companies because it does not use mountaintop mining, a technique that has fallen under intense EPA review.
The EPA has become more involved with the U.S. Army Corps of Engineers in granting 404 permits relating to the release of dredged and fill materials into waterways and wetlands.
A federal court judge recently ruled the EPA overstepped its authority with its intense reviews of individual Clean Water Act permits normally handled by the corps of engineers.
The EPA will hear arguments about its new water quality guidelines for coal mining operations in Appalachia in June.
Future of the Industry
Debord said the East has had the steepest decline in coal sales and production, but that the industry hasn’t been hit as hard in other areas.
For example, he said, coal from Wyoming is low in sulfur and low in ash, and sells well. Metallurgical coal, used in part for steel production, is in high demand outside the U.S., he said.
“Some people think coal is a homogenous type of substance, but there are many different types of coal used for different purposes. For use in different types of equipment, you need different types of coal,” Debord said.
Ungurean thinks the industry has good potential in overseas sales. However, he said Oxford Mining doesn’t do any overseas exporting at this time. Debord said AEP doesn’t buy any coal from overseas and the Conesville plant only uses coal produced in Ohio.
According to the World Coal Association, the five biggest coal-consuming countries are China, the U.S., India, Russia and Japan. These five countries represent 77 percent of global coal consumption.
China has consumed about 3.7 billion tons of coal so far this year, up from about 1 billion tons in 2001.
The U.S. exports about 100 million tons of coal each year.
“(The U.S. is) bringing oil in, but we’re exporting coal out. It’s good for the balance of trade,” Ungurean said. “We can’t compete with China on labor, but we can compete with them on energy if (the government) lets us. The world is turning to coal.”
— By Leonard Hayhurst, Coshocton Tribune
