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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Coal Plant Inventory Levels: Amount, Reasons, and Response Going Forward
July 23, 2007
International Coal Group Reports Second Quarter 2007 Results | www.finanznachrichten.de
Coal companies’ second quarter earnings will almost all state the high inventory levels at coal plants across the United State as one of the reasons for the lackluster coal demand and price. The commentary section discusses the current coal inventory, the reasons for this coal inventory, and the response going forward in coal purchases.
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Railroad Coal Transportation Service Issues, New Contracts, and Utility Response
July 23, 2007
As I See It: Poor Oversight of Monopolies Costs Consumers | www.kansascity.com
The Surface Transportation Board (STB) has been holding regional meetings to hear from coal shippers, other shippers, and the railroads regarding rates and service on America’s Class I Railroads such as BNSF, Union Pacific, CSX, and Norfolk Southern. These hearings are designed to allow shippers to tell of their experiences (read: horrific experiences) with the railroads and for the railroads to defend their practices and performance and promise future improvements. The commentary discusses the STB’s role and the current service issue for coal transportation.
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Railroad Coal Transportation – Current Contracting and Rates
July 23, 2007
In Kansas City, Regulator Hears Utilities Vent About Railroad Service | www.kansascity.com
The Surface Transportation Board (STB) recently held hearings with railroads and coal shippers regarding the current level of service and rates from the Powder River Basin (PRB) coal mines in Wyoming and Montana. The STB hearing was a forum for coal shippers to vent their frustrations and the railroads to defend their current practices and performance. It is not likely that the STB—at least in the immediate period—will provide much needed relief to coal shippers. The commentary section below discusses the STB’s limited authority and the state of current coal transportation rates.
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June 19, 2007
STB to hold July hearing on rail transportation of energy resources | www.logisticsmgmt.com
The Surface Transportation Board (STB) is asking for comments on its new definition of a “contract”. This could trigger a benefit to the railroads, such as Union Pacific, BNSF, Norfolk Southern, and CSX).
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June 18, 2007
DM&E Head Focuses on Rail Expansion | www.casperstartribune.net
The Dakota Minnesota & Eastern (DM&E) was turned down for its application with the Federal Railroad Administration (FRA) for approximately $2.3 billion in Government-backed loan guarantees through the Railroad Rehabilitation & Improvement Financing (RRIF) out of the total $6.0 billion project. This project was to upgrade an existing 600 miles of track and provide for 260 miles of new track expansion into the coal fields of the Powder River Basin (PRB).
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Coal Production Cuts Have Been Overstated by the Energy Information Agency
June 18, 2007
Energy Information Agency Weekly U.S. Coal Production Overview | www.eia.doe.gov
The Energy Information Agency (EIA) has been overstating the coal production cuts in the Central Appalachian region.. Those that have been utilizing the EIA numbers for modeling coal producer sales from the Central Appalachian region or for estimating coal inventories at utilities have been utilizing incorrect data.
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June 15, 2007
Loeb Bails from Massey Energy | www.underthecounter.net
Massey had a one-two punch of news. The first, which is the linked resignation letter, was the abrupt departure of two Board Members from Third Point Capital. The second was the Federal District Court of Southern West Virginia’s ruling on June 13, 2007 rejecting the practice of placing sediment ponds downstream of fills. This is the second Court ruling against Massey related to fills in the last few weeks. The commentary section discusses the current issues facing Massey and the Central Appalachian Basin. There are a lot of distractions with news related to Massey, but coal prices have been steadily increasing in the Central Appalachian Basin which is the real story to watch.
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Central Appalachian Coal Producing Region’s Problems Affect on Coal Prices
May 15, 2007
Dark Days for Coal Miner Massey | www.forbes.com
As the article points out, Massey Energy was hit with an EPA lawsuit for approximately $1.7 billion alleging violation of the Clean Water Act. The EPA issued the suit based on Massey exceeding the average monthly or daily permit limit between January 2000 and March 2006. The Analysis Section discusses this event and other event’s affect on coal prices.
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May 10, 2007
Market Report | news.moneycentral.msn.com
Coal from the coal fields in the Powder River Basin of Wyoming have to compete on a delivered-, emissions-adjusted basis to coal’s in the other producing regions, such as the Central Appalachian Basin.
The recent increase in Eastern coal prices and SO2 emissions allowances now allow the Powder River Basin coal to increase in price to be at parity.
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Forecast for FreightCar America Coal Railcars: Soft
May 10, 2007
FreightCar America VP Sells Shares | www.forbes.com
FreightCar America Senior Vice President of Sales and Marketing exercised 32,980 shares of company stock at $19 each on May 3 and sold the shares for $46.88 each on May 4. According to SEC Form 4, he beneficially owns 7,000 shares after this transaction.
It may be that FreightCar America Management realizes that coal railcar orders will be soft for the next several quarters. The Analysis Section discusses new coal railcar demand.
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Coal Usage and Coal Plant Build Discussion if U.S. Congress Enacts Lighting-Efficiency Rule
May 10, 2007
Households Would Need New Bulbs to Meet Lighting-Efficiency Rule | online.wsj.com
The article in The Wall Street Journal describes potential Legislation to require the use of compact fluorescent bulbs (CFL) and other energy-saving lights to decrease the emissions of carbon dioxide (CO2) from coal-fired power plants.
The Analysis Section below has some additional math and discussion around energy-saving lights, CO2 emissions, electricity requirements, coal plants, and coal consumption.
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April 27, 2007
Evergreen Energy Inc. Announces First Quarter 2007 Financial Results | home.businesswire.com
Evergreen Energy (formerly KFx) continues to disappoint investors with the lack of significant progress on placing its beneficiated coal to customers.
The commentary section below provides a quick primer on Evergreen Energy’s beneficiated coal and the potential sales price that may be charged F.O.B. at the Fort Union Mine in the Powder River Basin of Wyoming.
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April 27, 2007
Consol Energy Forms Joint Venture for Wyoming Coal | www.observer-reporter.com
Consol Energy and Pittsburgh & Midway, a Chevron Company, announced a joint venture to develop a new mine in the Powder River Basin (PRB) of Wyoming called the Youngs Creek Mine. The coal property is north of Sheridan, Wyoming.
The potential development and mining of this property appears to make economic and strategic sense in the future and are discussed in the commentary section below.
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April 11, 2007
Judge: Corps Coal Permits Illegal | www.federalnewsradio.com
Background:
United States District Court for the Southern District of West Virginia Judge Chambers issued a ruling that valley fill permits granted by the U.S. Army Corps of Engineers must be rescinded and remanded back to the Corps for further reconsideration. The permits were for Massey Energy Company operations. The issue at hand was “mountaintop removal coal mining” and the placement of the material in the mining process and the potential affect on streams and rivers.
Environmentalists filed a lawsuit claiming that the Army Corps of Engineers violated the Clean Water Act and National Environmental Protection Act (NEPA) by issuing a permit without requiring an Environmental Impact Study.
The Army Corps of Engineers issued Nationwide permits that are for the general environmental impacts. The plaintiffs (environmentalists) argue that each permit for valley fill should have an Environmental Impact Study performed to see how the specific mining activity in question will affect stream and river flows.
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Potential Federal CO2 Limits and the Economics if Enacted
April 3, 2007
Supreme Court Rules EPA Can Regulate Greenhouse Gases | news.com.com
As the article points out, the U.S. Supreme Court ruled in a 5-4 decision that the Environmental Protection Agency (EPA) may regulate carbon dioxide (CO2) emissions. The analysis section below discusses how the EPA or a law enacted by Congress and signed by the President could limit CO2 emissions and the consequent cost.
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March 26, 2007
Sector Snap: Railroads Mixed | www.chron.com
The Surface Transportation Board (STB) decided on January 25, 2007 that fuel surcharges in rail transportation agreements must more accurately reflect the actual cost of the movement and not be a “double dip” by including fuel-related costs also in indices utilized to adjust rates. The STB decision was made because the fuel surcharge program became an additional profit center for the railroads.
The Union Pacific is implementing the new fuel surcharge on coal transportation tariffs effective April 26, 2007.
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Economics of CO2 Capture and Sequestration from a Coal Plant
March 26, 2007
Domenici Lauds MIT Coal Report | www.earthtimes.org
The article references the March 2007 release of the report, “The Future of Coal in a Carbon Constrained World”, by a team of professors at Massachusetts Institute of Technology. The report, among other things, computes the utilization of coal in a carbon constrained world. The analysis section discusses CO2 limits utilized, CO2 capture and sequestration costs, and the belief regarding future coal use.
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An Update on Costs for New Coal Power Plants
March 26, 2007
Duke Puts $2B Price Tag on Cliffside Power Plant | www.bizjournals.com
The article reports on the cost of Duke Power’s proposed Cliffside Coal Plant in North Carolina. The increasing costs, and the reasons, for coal power plants are discussed in the analysis section.
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Review of Dodds-Roundhill Coal Gasification Project Public Disclosure Document
March 12, 2007
Dodds-Roundhill Coal Gasification Project (Public Disclosure Agreement) | www.sherritt.com
The analysis section reviews in general coal gasification and the Dodds-Roundhill Coal Gasification Project Public Disclosure
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CSX Increasing Tariff Rate for Coal Transportation Effective June 1, 2007
March 7, 2007
Sector Snaps: Railroads Pick Up Steam | news.moneycentral.msn.com
The article discusses the move in the railroad equities, Prudential’s initiation of coverage of the sector, and the lucrative nature of transporting coal
Another point for consideration is the CSX announced on March 1 that the tariff rate for coal shipments (Tariff 8200) will increase effective June 1, 2007 for those customers under the tariff. The Analysis Section below discussed the old and new per ton rates under this tariff.
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