Studies showing that natural gas burns cleaner than coal have caused at least some shift in the energy market; however, a West Virginia coal industry representative says there will continue to be room for coal.

A few weeks ago, Dominion Virginia Power announced it would close a small West Virginia coal-fired power station and open a larger natural-gas -fired power station in northwestern Virginia. The company cited cleaner air from fewer emissions as one of the reasons it would be willing to close the North Branch station in Bayard.

The company closed the plant as part of an agreement with the National Park Service and Virginia Department of Environmental Equality.

“Our proposed Warren County (Virginia) station will provide nearly 20 times more electricity than North Branch with cleaner-burning natural gas,” David A. Christian, CEO of Dominion Generation, said in a news release. “Our decision to close North Branch makes good sense for our customers and the environment.”

New Environmental Protection Agency regulations aimed at new sources of CO2 emissions will make expansion of existing coal-fired facilities and the addition of new facilities difficult. The organization is expected to enact new rules for existing plants in coming years.

Other states such as Kansas have already begun a switch to natural gas. Prior to 2002, there were only 63 registered natural gas wells in the Cherokee Basin. In 2009, more than 5,200 were registered.

Southern West Virginia, known for its vast coal reserves, would likely be hurt the most from a blow to the coal industry. Northern West Virginia, which is over the Marcellus Shale, a large natural gas deposit, may benefit from gains in the natural gas market. Though much of the state sits over the gas deposit, efforts to extract natural gas have largely occurred in the northern part of the state.

Chris Hamilton, senior vice president of the West Virginia Coal Association, said the economy is more of a threat to the industry than natural gas. He said the coal industry is not threatened by the competition.

“You always see variations in market demands — sometimes this, sometimes that resource will be more economical to use. We believe coal remains the primary energy resource today and in the foreseeable future.

“... We believe the marketplace determines which is used at any given time and in what quantities. Right now, the world’s demand for energy is down, but we believe the overall economy will improve and with it the demand for steam coal and every other form of energy.”

Hamilton said coal companies have largely stabilized themselves through the recession because China, India and other countries have a high demand for metallurgical grade coal, which is widely available and of a high quality in West Virginia.

“The net effect is that met coal, due to strong pricing, is filling in the void in our state’s budget that would have otherwise been created due to decreased volume,” Hamilton said. “It will not be a wash in terms of volume, just tax collections.”

Hamilton said the work of the current presidential administration and the EPA have vastly slowed the progress of the coal mining industry.

“You have to get the coal out of the ground and unfortunately, (President Barack) Obama and the EPA are making it difficult to get permits to even mine the coal in the first place,” he said.

Coal has largely remained in demand because it is abundant and inexpensive. Various environmental groups believe a push toward tighter regulation may be enough to snatch King Coal’s historic price advantage. Already, natural gas prices have slipped from a high of $14 in mid-2008 to about $4 per thousand cubic feet.

Despite rising costs of coal production, falling natural gas prices and the push for renewable forms of energy, Hamilton said he is confident in the future of coal.

“Look, just a couple of years ago our economy was in full go-mode. We had lines at gas pumps with gas selling at $4 and $5 a gallon. We were selling every ton of coal we could mine, pumping all the oil we could pump and drilling for every cubic foot of natural gas and we still couldn’t keep up with worldwide demand,” Hamilton said.

 “We are in an economic downturn right now, yet the price of coal has held up well and is even increasing. When the economy does turn around, we will be right back where we were and we will need every bit of energy we can muster from every source we can find … whether coal, oil, natural gas, wind, solar, hydro or nuclear.”

Though coal still provides about half of the nation’s energy, others are skeptical about coal’s ability to hang on to its market share for long. Black & Veatch, an energy consulting company, estimate coal’s market share will fall from 48 percent to 21 percent by 2035. The same group expects natural gas to grow from 21 percent of the electricity market to about 40 percent by 2035.

Other analysts warn that natural gas is not able to produce gas cheaply enough to sustain that large of a market share.

Environmentalists’ disdain for coal may be strong, but natural gas has run into its own enemies. The process of mining for natural gas sometimes utilizes a controversial practice known as “fracking” or hydraulic fracturing to get to the natural gas deposits.

The process involves blasting water, sand and chemicals at a high pressure into rock formations to fracture them. According to the Interstate Oil and Gas Compact Commission, about 90 percent of oil and gas wells are fracked to boost production.

The process has been known to pollute wells and groundwater in the surrounding communities. In Pennsylvania, which like West Virginia is located over the Marcellus Shale, about 20 wells were found to be contaminated as a result of fracking.

The Natural Resources Defense Council warns that fracking can cause earthquakes and poison livestock. The EPA is conducting a study on the environmental impacts of hydraulic fracturing.

Some lawmakers are boosting natural gas’ edge in the market as well. Virginia state Delegate Will Morefield of Tazewell recently announced that he has pre-filed legislation that would add an alternative fuel category to a program that provides utilities with incentives to invest in renewable energy. The legislation would provide tax incentives to natural gas companies.

Hamilton said federal and state policy has little effect in the short term. Energy industries, he said, are much more affected by pricing levels and the market. He points to the hotly contested Spruce Mine permit issue as an example of over-regulation of the industry.

The EPA proposed a veto of Arch Coal’s mining permit for the Spruce No. 1 mine in Logan County. The organization cited the burial of headwater streams and waterway pollution in the area as reasons for revoking the permit.

Hamilton called the actions of the EPA on the Spruce Mine permit a “radical policy move.”

“The Spruce mine permit issue could be a major problem because it is the first time the EPA has moved to rescind an existing permit — one in which investment had been made and people hired.

“... What does this do for investment? If I am an officer of an investment house or energy company, how can I feel confident in going to my stockholders to suggest investing in this type of regulatory climate? And it is important to note that this is not just an issue for coal. It is an issue for any business that requires a permit from federal regulatory authorities to operate.”

Another argument for the coal industry is jobs. Hamilton said that coal provides more jobs than the natural gas industry.

“(Coal) mining sustains many more good paying jobs with higher payroll dollars and greater local and state taxes than natural gas,” Hamilton said. “Gas operations support a few jobs during the initial drilling phase but for a short duration of time.”

According to the West Virginia Office of Miners’ Health, Safety and Training, the coal industry directly provides about 30,000 jobs in West Virginia. Taxes from the coal industry and by utility companies account for more than 60 percent of business taxes in the state.

In the end, Hamilton says, though natural gas is a competitor, he also sees the industry as “an ally in contending with all the permitting and regulatory issues confronted by our state’s energy industries.”

— E-mail: tkuykendall@register-herald.com