Overview

Resources and Consumption

Alabama is rich in energy resources. The State has considerable conventional and unconventional natural gas reserves, substantial deposits of coal, and numerous rivers capable of hydroelectric generation. Several regions of Alabama are well suited for growing switchgrass, making the State a potential site for the installation of bioenergy plants. With a strong manufacturing base in paper products, chemicals, and textiles, Alabama’s industrial sector leads State energy consumption, accounting for nearly one-half of total energy use.

Petroleum

Alabama produces a small amount of crude oil from reserves located in the Black Warrior Basin in the north and the Gulf Coast in the south. Although production has been in decline since the early 1990s, new onshore drilling activity has occurred in recent years. To increase production from aging fields, producers have repaired old wells and applied new technology. One petroleum refinery is located near the Port of Mobile, a second is located in Tuscaloosa on the Black Warrior River, and a third is located in Atmore in the southern part of the State. Petroleum products made at Alabama’s refineries are delivered to local and regional markets and shipped via pipeline to States in the Northeast. Alabama markets receive additional finished petroleum products from Texas and Louisiana through the Colonial and Plantation pipelines. Per capita petroleum consumption in Alabama is about average compared to other States.

Natural Gas

Alabama’s annual natural gas production accounts for more than 1 percent of total U.S. output. More than one-half of this production typically comes from onshore wells, and about two-fifths come from coalbed methane deposits (unconventional natural gas found trapped within coal seams) in the Black Warrior Basin and the Cahaba Coal Field. As with oil production, Alabama’s natural gas production is in decline and does not satisfy State demand, about four-fifths of which is from industrial users and electric power generators. Consequently, Alabama purchases additional supplies of natural gas transported by pipeline mainly from the Gulf of Mexico, Louisiana, and Texas. The Southeast Supply Header pipeline, transporting natural gas from the Perryville Hub in Texas to southern Alabama, came on-line in September 2008. This pipeline has a capacity of 1 billion cubic feet per day and is intended to give Alabama consumers an alternative to offshore supply, which may be vulnerable to weather-related disruptions.

Coal, Electricity, and Renewables

Alabama ranks among the top 10 States in electricity generation. Coal is the dominant fuel for electric power generation, typically accounting for more than one-half of the electricity produced within the State. Alabama produces large amounts of coal in the northern part of the State. Industrial plants and coke plants consume a larger share of the State’s output than in most other States. Additional coal, largely used for electricity generation, is shipped in from other States, primarily Wyoming, Kentucky, and West Virginia. Alabama is a major nuclear power generator; its two nuclear power plants produce about one-fourth of the electricity generated in the State. The State’s nuclear power capacity expanded in mid-2007 when the Tennessee Valley Authority (TVA) restarted a nuclear reactor at its Browns Ferry plant that had been idle since 1985. With more than two dozen hydroelectric dams, located mainly along the Alabama and Coosa Rivers, Alabama is one of the top producers of hydroelectric power east of the Rocky Mountains. Hydroelectric power typically supplies at least 5 percent of State electricity generation. Alabama ranks among the top States in net summer capacity for generation from wood and wood waste. The State also contains one of the world’s largest solid biofuel plants, designed to produce 520,000 metric tons of wood pellets each year, the majority of which is shipped to Europe.

Due to high demand from the industrial and residential sectors, Alabama’s total electricity consumption is high when compared to other States. Alabama’s per capita consumption of residential electricity is one of the highest in the country due to high air-conditioning demand during the hot summer months and the widespread use of electricity for home heating during the generally mild winter months. However, despite high total and per capita electricity demand, Alabama electricity production exceeds consumption and the State exports large amounts of electricity to neighboring States via several high-voltage interstate transmission lines.