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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February 26, 2007
TXU Deal Scraps Plans for 8 Plants | www.dfw.com
News announcements are that Kohlberg Kravis Roberts (KKR) and Texas Pacific Group (TPG) will concede to scale back TXU’s ambitious new coal plant building from the planned 11 coal units to 3 coal units in order to placate environmental and legislative groups. (One coal plant location has two units.)
This new coal plant build scale-back will affect several companies. The analysis section discusses the affected companies and numbers.
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Scrubber Delays: Reasons, Numbers, and Potential Consequences
February 26, 2007
TVA Delays Pollution Control at Plant | www.chron.com
There have been many anecdotal stories of delays in scrubber retrofits. TVA at its Colbert Unit in Tuscumbia, Alabama is a recent addition to this list. The analysis section attempts to quantify the reasons for these delays, provide numbers, and the potential consequences of the delay.
Note: Installation of scrubber retrofits on existing coal plants to reduce sulfur dioxide pollution is being undertaken to comply with the Clean Air Interstate Rule (CAIR) affecting the Eastern United States in two phases beginning in 2010 and 2015. Also, they are being undertaken to comply with State, Court, or other decree decisions. Once installed, the scrubber reduces sulfur dioxide (SO2) emissions from the burning of the coal by up to approximately 95%. SO2 emissions from coal plants can cause visibility and acid rain issues. -
February 23, 2007
UMWA, Peabody Energy Reach Agreement | www.timeswv.com
Coal companies such as Peabody, Consol, and Jim Walters have recently agreed to a new five-year contract with the United Mine Workers Association (UMWA). The economics are provided below in order to help in modeling costs and revenues at UMWA-represented coal mines.
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The Range of Economics for Producing Coal-to-Liquids for Syntroleum Corp and Others
February 20, 2007
Air Force Tests Synthetic Fuel as It Seeks to Lessen Dependence on Foreign Oil | www.signonsandiego.com
The Air Force’s actual tests of jet fuel from coal-to-liquids and gas-to-liquids in B-52 Bomber appears to be successful. The barrier to large scale commercial application of converting the United States’ vast coal reserves to liquid fuels continues to be the high cost of the conversion and the risk that the costs will become uneconomic if oil prices plunge; stranding the immense capital investment.
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United Mine Workers Association (UMWA) Labor Agreement Terms
February 20, 2007
Coal Loses Steam | www.stltoday.com
The article points out some of the pressures on coal producers. Not mentioned in the article is the new UMWA Contract that was recently approved by Consol, Peabody, and other mining companies that will place additional pressures. The Analysis Section lists the salient points from this new UMWA Contract.
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January 29, 2007
U.S. Bans Excessive Rail Fuel Surcharges | www.chicagotribune.com
The Surface Transportation Board (STB) decision on January 25 that fuel surcharges in transportation agreements must more accurately reflect the actual cost of the movement and not be a “double-dip” is potentially good news for the beleaguered Powder River Basin (PRB) coal producers.
The analysis section discusses how this STB fuel decision potentially advantages the PRB coal producers
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January 29, 2007
Feds Ban Excessive Railroad Fuel Fees | www.chron.com
The Surface Transportation Board (STB) ruled on January 25, 2007 that fuel surcharges in transportation agreements must more nearly reflect the actual cost of the movement and not be a “double-dip”. This decision will impact the Class I Railroads’ coal transportation revenues for those coal transportation contracts with a fuel surcharge mechanism. The UP will be especially affected by such a decision.
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Powder River Basin Coal Continues to Help BNSF Earnings
January 29, 2007
BNSF Reports Increased Earnings | www.dfw.com
The article correctly points out that the BNSF has had record earnings for the fourth quarter 2006, and full-year 2006.
The BNSF’s coal transportation business out of the Powder River Basin (PRB) of Wyoming and Montana was a major contributor in this solid fourth quarter 2006 and full-year results. The analysis section below discusses volume and rates related to the BNSF’s transportation from the PRB.
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The Proposed “Coal-to-Liquid Fuel Promotion Act of 2007” to Jumpstart Coal-to-Liquids in the U.S.
January 29, 2007
Sasol to Build U.S. Plant Once Legislation in Place - Report | www.miningweekly.co.za
The United States has more Btu-equivalent coal in the Illinois Basin alone than the combined oil of Saudi Arabia and Kuwait combined. The U.S. coal reserves are very attractive for coal-to-liquid (CTL) conversion. Yet, because of the high initial capital investment and potential risk of “out-of-the-money” oil produced from the CTL process in the event of declining oil prices, construction of massive projects have not taken place.
The referenced article notes that Sasol, the South African pioneer in CTL, will build a CTL once beneficial legislation is in place. The analysis section describes the key points from the proposed “Coal-to-Liquid Fuel Promotion Act of 2007”.
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United Mine Worker of America (UMWA) Reach Tentative Agreement with Consol’s UMWA Coal Mines
December 18, 2006
UMWA Reaches New Contract Deal | www.wboy.com
The UMWA on Friday, December 15 tentatively agreed to a new agreement with Consol’s UMWA mines. This was a much-watched negotiation because of its impact on coal supply and cost. The analysis section below describes what is known of the agreement
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December 18, 2006
Record Trainloads of Coal Moving to Nation’s Utilities | biz.yahoo.com
The Powder River Basin Joint Rail Line is owned equally by the Union Pacific and BNSF Railway. The Powder River Basin Joint Rail Line experienced a meltdown because of dual derailments in May 2005 that resulted in deliveries only meeting approximately 85% of scheduled demand for the balance of 2005. During most of the balance of 2005, the Joint Line ballast was cleaned to remove this coal dust accumulation. In 2006, an additional 18 miles of track and associated crossover switches were added to the Joint Line to improve fluidity of the trains, along with adding five landing spots at coal mines to facilitate moving empty trains off the main line and out of the way onto the coal mines to await loading.
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December 18, 2006
Jeff Moreland Named Executive Vice President, Public Affairs; Roger Nober Joins BNSF as Executive Vice President, Law & Secretary | www.marketwire.com
In early December, the BNSF Railway announced that Roger Nober will join the BNSF effective January 1, 2007 as Executive Vice President, Law & Secretary reporting to the company’s Chairman, President, and Chief Executive Officer Matt Rose.
Roger Nober was a partner in the Washington, D.C. law firm of Steptoe & Johnson, LLP working on transportation and legislative issues. Before this, Roger Nober was Chairman of the Surface Transportation Board (STB) between November 2002 and December 2005. The STB is responsible, among other things, for ruling on the rate reasonableness of coal transportation rates. Roger Nober’s employment at the BNSF Railway—one of the railroads he was charged with regulating—raises items for consideration.
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December 18, 2006
BNSF Provides Comments to STB on DM&E/IMRL’s Supplemental Environmental Appendix | www.marketwire.com
In early-December 2006, the BNSF filed with the Surface Transportation Board (STB) that if the Dakota, Minnesota & Eastern Railroad (DM&E) was successful in adding the proposed additional 260 rail miles to create a third rail line into the Powder River Basin coal fields, it would have commercial and environmental consequences.
This is just another hurdle thrown up against the DM&E on its proposed track rehabilitation of its existing network and proposed new track addition into the Powder River Basin. The DM&E is still waiting approval of the crucial $2.3 billion Federal Railroad Administration (FRA) Railroad Rehabilitation & Improvement Financing (RRIF) of Government-backed loans required to build-out the railroad. The other major hurdle is the opposition to the project by the Rochester Coalition representing the City of Rochester, Minnesota and the Mayo Clinic through which the DM&E’s line runs.
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November 16, 2006
AMP-Ohio Declares Intent to Pursue Powerspan Air Emissions Control Technology for American Municipal Power Generating Station Project | biz.yahoo.com
Powerspan was awarded a deal to provide emissions control technology to American Municipal Power (AMP) at its proposed 1,000 MW coal-fired plant. Utilizing this technology will make the facility’s emissions one of the cleanest in the nation. The emissions to be reduced include SO2, NOx, mercury, and particulates.
Also, AMP agreed to participate in the studies with FirstEnergy and Powerspan for CO2 capture at one of First Energy’s Burger Plants.
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Results and Implications of the Surface Transportation Board’s Revenue Adequacy Decision
November 13, 2006
Board Judges Norfolk Southern “Revenue Adequate” | content.hamptonroads.com
Only the Norfolk Southern (NS) was recently determined by the Surface Transportation Board (STB) to be revenue adequate in 2005. The other six Class I Railroads were determined to not be revenue adequate in 2005. The NS was also determined to be revenue adequate in 2004.
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November 10, 2006
USDA: DM&E Upgrade Could Save $240 Million | biz.yahoo.com
The Dakota Minnesota & Eastern (DM&E) have applied to 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, if approved, will 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).
The latest round of analysis and comments from those for and against the project were due in early-October to the FRA on the proposed Government-back loan guarantees. The FRA opened an electronic data room with all of the comments received. The most interesting comments were those related to the potential affects on the DM&E, Union Pacific (UP), and BNSF.
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November 7, 2006
ADA-ES and NexGen Form Joint Venture to Produce Refined Coal | home.businesswire.com
ADA-ES and NexGen announced this joint venture to produce refined coal to the market. This is another player in the beneficiated coal space such as Fuels Management, Incorporated’s Cowboy Coal, Evergreen’s (formally KFx) K-Fuel, and CoalTek.
The news release states repeatedly how the deal between ADA-ES and NexGen and the success of the joint venture is predicated upon the product meeting the rules for a Section 45 Tax Credit. The commentary below outlines the requirements to qualify for this Section 45 Tax Credit. Also, the commentary section discusses how this product appears to be a “me-too” product to Fuel Management, Incorporated’s Cowboy Coal, Evergreen’s (formally KFx) K-Fuel, and, to a lesser degree CoalTek.
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TXU’s Issues With Its New Coal Plants—Delays, CO2 Emissions, and BNSF and UP Rail Transportation
November 7, 2006
TXU Behind Schedule in Texas Coal Plant Projects | today.reuters.com
TXU announced issues and initiatives related to its ambitious Texas coal plant projects. The commentary section below discusses some of these items announced and includes one item not announced by TXU.
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Economics of the Potential Change in Coal Transportation Fuel Surcharges to Shippers and Carriers
October 9, 2006
Railroads Urge Restraint On Board’s Surcharge Proposals | www.easybourse.com
The STB held hearings in May to hear from both Shippers and Carriers about the level of fuel surcharges the railroads are charging on shipments, including coal shipments.
Ever since the fuel charges started approximately three years ago in contracts, coal shippers have believed that the level of the charges is excessive; even an over-collect. It is estimated that approximately 50% of the coal transportation agreements currently have such a mechanism. The number of contracts with fuel surcharges will increase as the old contracts expire and include such a mechanism.
The STB proposed a change in how the fuel charges are applied to better track the actual fuel-related costs of the transportation movement. Comments from the Shippers and Carriers were due back in early October. The shipping community is awaiting the STB’s final decision.
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Additional Things to Consider With KFx (Evergreen Energy)
October 9, 2006
Another One Bites the Coal Dust | www.smartmoney.com
The first unit train of KFx K-Fuel loaded on August 4 for First Energy in Ohio. The coal was test burned in First Energy’s Burger Plant. The initial results were released in mid-September with great controversy. The controversy is discussed in detail in the referenced Smart Money article.
The Analysis Section below discusses additional questions about this First Energy shipment and potential other shipments.
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