NEW YORK (AP) – Alpha Natural Resources Inc., one of the country’s biggest coal producers, became the latest in a string of coal companies to seek bankruptcy protection amid an historic shift in the electric power sector brought on by cheap natural gas prices and pollution regulations.
Alpha operates about 60 coal mines, many in parts of Appalachia that have seen the sharpest declines in coal demand and coal prices as electric power customers have switched to natural gas. It is the fourth U.S. coal company to seek bankruptcy protection in the last 15 months.
The bond rating agency Fitch expects coal companies to struggle in the future. “The sector default rate is likely to increase further in the near term,” its analysts wrote in a note to investors Monday.
The boom in natural gas production in the U.S. brought on by improved drilling techniques and hydraulic fracturing has ushered in a period of sharply lower natural gas prices. At the same time, clean air regulations are dimming the future for coal-fired power because coal emits about twice as much carbon dioxide as natural gas, and far more pollutants such as soot and mercury.
The average price of coal used for electricity from Central Appalachia is 20 percent lower than last year, according to Platts. In June, the price hit an eight-year low.