GLG News by Mr. Thomas Shewski, Owner
GLG News is now G+ Insights
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G+ is a community for professionals, academics and entrepreneurs to connect through online discussions and in-person meetings. You will continue to see G+ Insights (formerly GLG News) here as well as on the G+ website, where you can share and discuss the G+ Insights you read.
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Not All Powder River Basin Coals Have Participated in Run-Up in Coal Prices
February 19, 2008
Foundation Coal Swings to 4Q Profit | money.cnn.com
The global coal availability and price has provided the opportunity for U.S. Eastern coals to be placed in export to Europe. This has dramatically increased Eastern coal prices. This provides an opportunity for Western Powder River Basin (PRB) coals.
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Regulated Utilities May Not Necessarily Receive Cost Recovery for Increased Coal Prices
February 19, 2008
Coal, Once Stable, Zooms in Price | www.news.com
The increase in coal prices will obviously increase the electricity generating costs at a coal plant exposed to these price increases. The impact to Independent Power Producers (IPPs) and their potential margins is understood. Regulated utilities, on the other hand, are not necessarily exempt from the coal price increases affecting corporate earnings as discussed below.
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Western U.S. Coal Potential Export
February 19, 2008
Talk of Exporting U.S. Coal to Pacific on the Rise | uk.reuters.com
The global coal availability and subsequent coal price explosion has provided a great benefit to Eastern U.S. coal producers. The Western U.S. coals may not be able to appreciably directly-participate in the export surge.
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January 25, 2008
South’s Drought a Threat to Nuclear Power Plants | www.freep.com
If low water levels used for cooling caused nuclear plants to operate less or back-off entirely at certain locations, this would be bullish for coal-fired (and natural gas-fired generation) and mitigate or cancel the concerns of an economic slowdown on coal-fired electricity generation.
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Coal Consumption at Electric Power Sector Unlikely to Decline if U.S. Enters Recession
January 21, 2008
Citigroup forecasts 'dim' 4Q mining/metals earnings outlook | www.stockhouse.ca
Discussion has been made that a U.S. recession will cause a decline in coal consumption by the electric power sector. This is unlikely based on coal’s relative cost to generate electricity and the historical coal consumption by the electric power sector in previous economic downturns.
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Treatment of SO2 Allowance Sales Proceeds by Regulated Utilities
January 21, 2008
Idaho Power wants to invest in wind power: Your rates could go up initially, the company says about a plan that would invest money from selling sulfur dioxide emission allowances. | www.tradingmarkets.com
Coal generators have been taking efforts to reduce sulfur dioxide (SO2) emissions from coal-fired power plants. Regulated utilities are required to treat the reduced SO2 emissions differently than unregulated utilities, merchant generators, and independent power producers (IPP). The discussion below discusses this difference.
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January 21, 2008
Snowpack Brightens Power Outlook | www.missoulian.com
The Pacific Northwest has a tremendous amount of installed hydroelectric capacity. The first and second quarter earnings of the investor owned utilities in the Pacific Northwest very greatly with hydroelectric conditions. Preliminary reports are robust for the snowpack in the Pacific Northwest that could result in advantageous hydroelectric conditions and earnings.
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Comments on Van Eck’s Market Vectors Coal ETF That Tracks Stowe Coal Index
January 17, 2008
New Coal ETF Offers Alternative to Oil | seekingalpha.com
Van Eck’s Market Vectors Coal ETF (KOL) is designed to track the coal markets through the recently released Stowe Coal Index. The index is comprised of 60 companies around the world in the coal industry. Comments that follow discuss the index and components shown at the website: www.stowecoalindex.com.
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Coal Prices – Also Consider the Sulfur Premium in the Coal Price
December 21, 2007
U.S. Coal Industry Benefiting From Better Domestic Consumption, Exports | www.forbes.com
Coal prices are on the rise in many regions. The sales price per ton only tells a portion of the story; the sulfur content of the coal also determines its final sales price to the customer. Sulfur emissions credit prices affect the final sales price as discussed in the analysis section.
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Bullish Signs for U.S. Thermal Coal—Exports, Imports, and Production
December 20, 2007
Surging Asian Coal Consumption Lifts U.S. Prices | money.cnn.com
There are many production-related issues that point to a bullish coal market in 2008 and 2009. The commentary section below discusses these bullish signals.
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December 19, 2007
Coal Dust Problems Could Raise CU Bills | www.news-leader.com
The Wyoming Powder River Basin (PRB) Joint Line in May 2005 experienced two major derailments believed by the BNSF and the Union Pacific to be attributable to coal falling off the coal railcars on this rail line and fouling the ballast and preventing proper drainage. Coal deliveries were severely impacted for months as the railroads cleaned the paralleled rail line. The BNSF has studied this issue and is widely believed to begin shortly to require that coal railcars significantly reduce coal losses from the PRB. The commentary section discusses the consequences and economics to the two western railroads, coal-receiving utilities, and the coal producers.
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U.S. Central Appalachian Coal’s Potential Price at the Mine Based on Its Export Potential to Europe
December 17, 2007
Newcastle Coal Exports Dip, Waiting Time Eases | economictimes.indiatimes.com
Thermal coal into Europe continues to be above $100/tonne (metric ton) for 2008 as measured by the API 2 Index into Northern Europe. It is up ~67% from prices for this same period quoted at the beginning of 2007. The commentary calculates the price potential at the mine for a Central Appalachian coal to participate in the European thermal coal market.
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Coal Scrubber Retrofits Will Greatly Increase Demand for High-Calcium Limestone
November 16, 2007
Critical to Economy, Limestone Has Low Visibility | www.statejournal.com
Coal plants utilize high-calcium limestone as a reagent in flue gas desulphurization (FGD or “scrubbers”) to remove the sulfur from the coal rather than it going up the stack as air emissions. The usage of this limestone will increase as scrubbers are included on new coal plants and existing coal plants to comply with the upcoming emissions regulations.
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By the Numbers: Lost Coal and Railcar Sales as a Result of Cancelled and Delayed Coal Plants
November 14, 2007
Plans for Coal Power Plants Scrapped | ap.google.com
Many previously announced coal plants have been formally cancelled or delayed this year. This is the result of either regulatory rejections or uncertainty, cost increases because of materials and labor, or environmental (CO2 emissions) issues. U.S. Department of Energy (DOE) and media reports discuss the cancelled and delayed coal plants in terms of lost capacity (MW nameplate). The analysis section places numbers in terms of lost tons of coal and coal railcars as a result of the cancelled coal-fired generation.
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Cancellation of Coal Plants is Not Necessarily a Short Term Boom to Wind Power Projects
November 14, 2007
Rejection of Coal Plants Could Hurt Wind Farms | www.nebraska.tv
There have been several published reports of coal plant cancellations due to lack of the perceived need by regulators, differences in cost recovery in rates to consumers, the belief surrounding CO2 emissions or other reasons, Cancellation of the coal plant projects does not necessarily mean a boom to environmentally-preferred power (i.e. wind power) to fill some of the cancelled coal plants’ intended generation.
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STB Could Make Some Rail Movements More Competitive By Addressing ‘Paper Barriers’
November 1, 2007
Board Proposes Regulations Governing “Paper Barriers” in Rail Line Transactions | www.progressiverailroading.com
As a quick background, a “paper barrier” is a provision contained in an agreement when a Class I Railroad sells a line segment to a Class III Railroad preventing or limiting the acquiring Class III Railroad from interchanging traffic with a connecting railroad other than the original Class I Railroad that sold the line segment. This practice has been a long-standing issue with shippers because it limits competition, efficiency, and causes higher rates.
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Illinois Basin Coal’s Potential Export Into High-Priced European Market
October 15, 2007
Hot Coal | www.ft.com
Coal prices delivered into Europe are currently above $100/tonne (metric ton) as measured by the API 2 Index. This is up approximately 50% from prices being quoted for this same period at the beginning of 2007. The commentary that follows evaluates the potential for the Illinois Basin coal (Illinois, Indiana, and Northwestern Kentucky) to be economically sold into this European Market.
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U.S. Central Appalachian Coal’s Potential Participation in Hot European Thermal Coal Market
October 12, 2007
Record Coal Prices Hammer Power Generators | africa.reuters.com
Current delivered coal prices into Europe have crossed over the $100/tonne (metric ton) threshold as measured by the API 2 Index into Northern Europe. That is up ~50% from prices for this period quoted at the beginning of 2007. The commentary discusses the potential for Central Appalachian Coal producers to participate in this red-hot European coal market.
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October 10, 2007
Out of the Gate: Massey Rises | www.forbes.com
The upgrade by Stifel Nicolaus & Co. of Massey Energy is representative of the bullishness in the U.S. coal sector. The commentary section discusses the positives in the coal sector.
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Consol Energy’s Shrewd Purchase of River Transportation Assets
October 9, 2007
Consol Energy Purchases Tri-River Transport Group | www.bymnews.com
Consol Energy’s acquisition of Tri-River Fleeting Harbor Services and Ti-River Marine towboat fleet continues its shrewd investment of Ohio River and Monongahela River assets. This follows Consol Energy’s 2006 acquisition of the Guttman Group Mon River and J.A.R. towboat and barge assets.
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