Everette Wheeler for SNL:

As producers contend with mounting stockpiles and falling consumption this year, the U.S. Energy Information Administration projects the largest annual production decline on both a percentage and tonnage basis since the beginning of record keeping in 1949.

In its latest “Short-Term Energy Outlook,” the government agency projects that 2016 coal production will fall 16.7% to 746 million tons, a 0.9% decline versus the prior outlook. If 2016 production meets the EIA’s projection, it would mark a greater than 25% decrease from the 2014 total of 1 billion tons.

The government agency expects the largest production cuts to come from the Appalachian and Western regions. At 15% and 20%, respectively, those cuts compare to a drop in Interior region production of 9%.

The falling production comes as producers struggle to rationalize production in the face of falling demand. According to the government agency, domestic coal-fired generators burned an average of 948 million tons annually from 1997 through 2015. According to the “Short-Term Energy Outlook” released May 10, the government agency lowered its latest forecast for 2016 by 1.1% versus the prior outlook to 682 million tons, a 7.8% drop year on year.

Last month, the government had projected that coal would account for roughly 31% of the nation’s electricity needs to natural gas’ 33.9% in 2016, but the latest projections have coal providing roughly 30.5% of generation to natural gas’ 34%.

The shift in coal consumption patterns has the nation’s coal stockpiles rising. According to the government agency, power-sector coal stockpiles ended February at 189 million tons. “This pattern deviates from the normal seasonal pattern where stockpiles decrease during the winter months,” the report said. “U.S. end-of-February coal stockpiles were still at high levels, despite the coal plant retirements that have occurred in recent months.”

Full article ($): 2016 could bring about largest US coal production decline on record