Alpha is latest coal producer to go bankrupt

NEW YORK -- 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 and stricter 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 switch to natural gas. It is the fourth U.S. coal company to seek bankruptcy protection in the last 15 months.

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.

President Barack Obama on Monday announced rules limiting greenhouse gas emissions from existing power plants, a move that likely will reduce demand for coal further.

Alpha, like many of its peers, is struggling with a large debt load. Many coal producers borrowed money to fuel growth on the expectation that demand would soar around the world, especially in China, as hundreds of millions of people gained access to electricity.

Alpha took on debt, for example, to fund its $7.1 billion acquisition of Massey Energy in 2011.

But clean-air concerns are pushing countries around the globe to look for alternatives to coal, and coal production in developing countries has increased, reducing the need for U.S. coal.

Also, a slowdown in construction in China has depressed prices for coal used to make steel.