Natural gas challenges coal as king of the energy hill in Ohio
BELLAIRE, Ohio — The four miners who gathered one blustery morning at the United Mine Workers of America hall know that, so far, they are lucky.
Their coal mines along the West Virginia state line are still working, having survived a painful 30-year decline in the industry. But a new threat has pushed into Ohio, imperiling the primacy of coal here and all over the country.
“I feel worried about the future, that natural gas is a threat to us,” said Tim Merryman, 54. “Some of those coal plants will convert [to natural gas], and that’s a threat to coal guys.”
For more than 200 years, coal has been king in Ohio, occupying a privileged position in state politics and as the fuel of choice for local power plants. Now its supremacy is being challenged. A natural gas rush that has hurtled through the country over the last five years has pushed its way into the coal fields of Pennsylvania, West Virginia and Ohio. Entire villages in eastern Ohio are leasing their land for gas drilling, and huge energy companies that relied on coal to generate electricity are turning to natural gas.
Stoked by technological advances, the gas boom is transforming the United States and creating winners and losers on a national level and in far-flung small towns. From Texas to North Dakota to Pennsylvania, natural gas production has brought jobs and revenue. It has also driven up rents in small towns, torn up roads and led to lawsuits about control over energy development. And it has raised environmental and public health concerns.
The energy boom is also transforming the American economic landscape. The United States now imports less crude oil than it has since 1987, thanks in large part to an oil rush in North Dakota and a rise in vehicle fuel economy. More electricity now comes from renewable sources as the prices of wind and solar fall and states put in place clean energy mandates. Among the biggest shifts, however, has been the rise of natural gas, and with it the increasingly fragile position of coal.
As gas has risen, coal has dived. Long the primary fuel for the country’s power plants, coal has been squeezed by cheap natural gas and tightening environmental regulations. With the arrival of gas companies in Ohio, the coal industry and the towns and people tied to it find themselves grappling with the complex risks and rewards unlocked by the national energy shift.
“Is the coal industry suffering? You bet,” said Thomas Stewart, executive vice president of the Ohio Oil and Gas Assn. “Not too long ago, coal was king and natural gas was the ugly stepchild. You see companies switching the fuel they use. Coal is a very efficient fuel, but they’re the ugly stepchild now.”
Coal still is the most widely used fuel in power generation, but with each year, its share of the domestic market has shrunk. Industry lobbies and their political allies assert that the Environmental Protection Agency has declared “a war on coal” in the form of tighter pollution rules. But independent analysts say cheap gas has played as crucial a role as regulation in eroding coal’s supremacy.
In 1993, coal generated 53% of the nation’s electricity. By the end of 2012, it was just 37%. Natural gas, meanwhile, has risen from 13% of the fuel mix 20 years ago to 31%. Advances in horizontal drilling and high-volume hydraulic fracturing, a controversial production method also known as fracking, have allowed companies to produce gas in geological formations that were too technologically and financially daunting a generation ago.
Ohio has a long history of oil and gas production, but this latest wave of natural gas development is still in its early stages, unlike in Pennsylvania, where thousands of wells are already producing. Only 249 wells have been drilled in Ohio, in great part because the pipeline network has yet to catch up with the drilling interest. The gas here is so-called wet gas, more valuable than the “dry gas” prevalent in Pennsylvania because it is extracted with certain liquids like ethane and butane that can also be sold on commodity markets.
The advance team for the gas boom has begun to course through eastern Ohio. Hotels are being built along the interstates to house experienced oil and gas hands from Louisiana, Oklahoma, Texas and elsewhere. In St. Clairsville recently, the county deed recorder’s office was choked with about 45 mostly young men and a few women checking on who owns the mineral rights to parcels of land. Two years ago, five visitors to the office would have made for a busy day.
Coal production in Ohio has held steady in recent years, but only because more of it is exported. In Ohio, 82% of electricity still comes from coal, but the number is dropping. The country’s second-largest power company and a huge coal consumer, AEP, based in Columbus, has been burning more natural gas than in previous years because increased availability has driven the price down.
Still, coal will continue to be a substantial part of the country’s fuel mix, says Mark McCullough, AEP’s vice president of generation. As part of a legal settlement announced Monday with the EPA and other parties, AEP agreed to stop burning coal at power plants in Kentucky, Indiana and Ohio by 2015.
But as gas elbows its way into coal country, disputes have started to emerge. Here in some parts of Belmont County, drillers have to bore through shallower coal seams first to get to the gas thousands of feet below ground. Coal companies can derail the drilling if they assert that it impinges on a mine, even one that hasn’t been established yet. The Smith-Goshen Landowners Group has leased 35,000 acres for gas drilling, and nearly all of it sits above seams belonging to Murray Energy, the country’s largest privately owned coal company.
Gas and coal advocates use the arguments of environmentalists, whose assessments they normally dismiss, to raise questions about the other side. Landowners leasing land to gas companies point to the damage done by coal mining to Ohio.
A member of the Smith-Goshen group, dairy farmer Larry Cain, drives past the entrance to one of Murray’s coal mines to give a visitor a view of an impoundment pond, a man-made lake of mining sludge as far as the eye can see. The miners meeting in Bellaire, for their part, echo environmentalists’ worries that hydraulic fracturing might contaminate water sources.
Many Ohioans, include some in coal mining, have had a hard time resisting the pocketbook allure of gas. People are being offered $5,000 to $7,000 an acre to sign leases, and royalty payments of 20% of revenues once gas is produced.
For years, Richard Clay worked as a coal miner in eastern Ohio. Now retired, Clay, 66, and his wife, Kaye, 54, have leased their 140-acre cattle and sheep farm in Piedmont to Gulfport Energy. Just signing the deal gave them enough money to pay off their mortgage. The company drilled a well and set up storage tanks under a stand of trees where the Clays’ son got married. After seeing what coal mining can do to the land, the Clays said, they were pleased by how little disruption the gas drilling created.
“It felt wonderful to be able to pay off the mortgage,” Kaye Clay said. “At the same time, we want this farm to be a heritage to our children, so we didn’t want it torn up.”
For many miners, the only solace during the gas rush may be that there is so much coal in the country, it will have to be used somehow. To men like those at the United Mine Workers hall in Bellaire, natural gas may be needed, but it is a flash in the pan, while the deposits here are good for perhaps 30 years, they contend. Coal, they say, can be used for maybe hundreds of years.
Says miner Rick Altman, “When they turn off the tap, the pocketbooks will dry up too.”
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