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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Potential New CO2 Reduction Technology from Alstom: Economics to Reduce CO2 from Coal-Fired Plants
October 9, 2006
We Energies Site to Test Emissions Technology | www.jsonline.com
CO2 emissions (Greenhouse Gas emissions) and its belief that it causes global warming are being discussed in greater intensity. California’s recent CO2 reduction bill and the debate in the U.S. Congress have moved the issue to the forefront. Many believe the U.S. will have some type of CO2 limiting Legislation beginning in the next few years.
The technology being explored by Alstom at We Energies Pleasant Prairie Power Plant provides a potential to capture CO2 from existing coal-fired plants.
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Reopening Mohave Coal Plant Cheaper than Building New Generation
October 9, 2006
Arizona Utility Seeks Investors to Reopen Mohave Coal Plant | www.easybourse.com
At the end of 2005, the 1,580 MW Mohave Generating Station was closed because of the need to install extensive environmental retrofit technology, coal supply issues, and water issues.
The plant’s proximity to the energy demand intensive areas of the Southwest such as Phoenix and Las Vegas makes it a valuable asset. The economics of the plant—even with the required costs to reopen—make it economic compared to a new plant.
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September 28, 2006
U.S. Ethanol Demand Would Increase Without Tax Credits: Study | www.agriculture.com
Ethanol in the U.S. has a tax credit of 51 cents per gallon produced. This tax credit is through 2010. Imports of ethanol have an ad valorem tariff of 2.5% and an import duty of 54 cents per gallon. The intent of the import tariff and duty is to prevent foreign countries from gaining economically for our imposed policy requiring the additional use of ethanol in the U.S.
The analysis section discusses the economics of imports versus domestically produced ethanol -
The Value and Cost of California’s CO2 Reduction Plan
September 25, 2006
Global Warming Plan Could Be Costly | www.latimes.com
California recently passed a CO2 reduction plan that requires a cut in CO2 emissions. The program will be a cap and trade program with emissions credits as a right to emit CO2 gases. There is also the emissions-friendly designed law that limits coal-fired generation entering the state from long-term power sales agreements.
The analysis section discusses the potential value and costs of California’s CO2 reduction plan -
What a Supreme Court Ruling on Global Warming Could Mean to the Power Production Industry
September 25, 2006
The Jury on Global Warming | www.seedmagazine.com
As the article points out, the U.S. Supreme Court is scheduled to hear arguments in its next term on whether the Environmental Protection Agency (EPA) must regulate carbon dioxide (CO2) emissions. A positive ruling could cause a few different outcomes for the EPA and industry. The analysis section below discusses these.
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Coal-Based Liquid Fuel Gaining Interest
September 25, 2006
Coal-Based Liquid Fuel Gaining Interest | www.nps.edu
At current oil prices, conversion projects of coal-to-liquids (C-T-L) are gaining a great deal of interest by producers and end-users.
Below are a few examples of developments in the U.S. that have recently occurred to help bring C-T-L in the news:
- The National Coal Council’s recently published report states a goal of 2.6 million barrels per day of liquid fuels from coal that, if fully achieved, would require 475 million tons of coal per year.
- Rentech announced earlier this year of a small scale C-T-L plant in East Dubuque, Illinois that will also produce other by-products.
- DKRW Advanced Fuels has proposed a C-T-L facility in Medicine Bow, Wyoming with coal from Arch Coal and using Rentech’s Fischer-Tropsch technology.
- Rentech and Peabody entered into a Memorandum of Understanding involving potential joint C-T-L activities.
- The Department of Defense’s test of Syntroleum’s synthetic jet fuel from a 50%-50% blend from natural gas and normal jet fuel in Air Force B-52s.
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IGCC for Power Generation has Both Advantages and Issues to Consider
September 21, 2006
Coal Gasification: Players, Projects, Prospects | pepei.pennnet.com
As the article points out, an Integrated Gasification Combined Cycle (IGCC) plant takes coal and converts it to synthetic gas (“syngas”) that is used like a conventional gas-fired turbine to produce electricity. The process is very environmentally-friendly, reducing sulfur dioxide (SO2), nitrous oxide (NOx) and mercury to levels even lower than what can be achieved by a conventional coal-fired plant with all the latest emissions control technology.
The IGCC plant also has the ability—with additional capital spending upfront—to remove nearly all of the CO2 emissions through CO2 capture and injection. Traditional coal plants can be built to also remove nearly all of the CO2 emissions, but at a significantly higher price.
The Power Engineering article is very bullish on IGCC. Several U.S.-based utilities have announced and are moving forward in building IGCC generation, with operations anticipated early the next decade.
The commentary section below tries to be balanced by identifying both the advantages and issues of IGCC technology -
Small Quantities of KFx Coal to be Transported on DM&E Railroad is Not Appreciable to Either Company
September 11, 2006
Deal Sends Wyoming Coal to DM&E | www.rapidcityjournal.com
BACKGROUND
- KFx (K-Fuel) is a process where raw Powder River Basin (PRB) is beneficiated to remove moisture to improve the heat content of the coal and also has lower emissions of sulfur dioxide, nitrous oxide, and mercury. According to KFx, the target market for this K-Fuel is small industrial customers that could utilize this coal to meet tighter emissions standards, rather than making capital expenditures for pollution-controls.
- Dakota, Minnesota & Eastern (DM&E) wants to expand its current railroad by approximately 260 miles into the coal fields of the PRB and also upgrade its existing rail network. The total cost of the overall project is approximately $6 billion, including a $2.3 billion in Federal Railroad Administration (FRA) loan. The FRA’s decision on the loan is expected in late-2006 or early-2007. If approved, the expansion and upgrade would begin over three seasons (2007-2009), with the ability to move coal from the PRB in the fourth quarter 2009.
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STB Decision Will Especially Hurt Union Pacific Revenues
September 1, 2006
Group Commends STB Decision on Rail Fuel Surcharges | www.agweb.com
The recent STB Decision affecting the Class I railroads will require that fuel surcharge mechanisms in transportation agreements better reflect the actual cost of the movement. This will require the railroads to discontinue the fuel surcharge implemented on top of base rates. This fuel surcharge mechanism has been quite lucrative for the railroads, which resulted in the uproar from the Shipper Community and the eventual decision from the STB to move to a fairer, more appropriate mechanism.
The commentary section discusses how and to what magnitude this will impact Union Pacific.
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Phase-Out of Synthetic Fuels Credit to Hit Producers and Drop Coal Production
September 1, 2006
Tax Credit for Coal-Based Synthetic Fuels Losing Its Steam | baltimore.bizjournals.com
The Section 29 Tax Credit on synthetic coal is anticipated to be nonexistent or severely phased out for 2006 based on its linkage to oil prices. As oil prices increase, the tax credit phases out and then eventually goes to zero. The Section 29 Tax Credit is scheduled to expire in 2007.
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Tighter Mercury Rules Could Benefit Several Named Companies
August 31, 2006
Power Plants Seek Solutions to Mercury | news.yahoo.com
The EPA issued its Clean Air Mercury Rule (CAMR) in March 2005 that requires a nationwide reduction in mercury. The Rule requires coal-fired power plants to decrease their mercury emissions by 21% starting in 2010 and 70% starting in 2018 from current mercury emissions levels. Under the CAMR, a cap and trade program with mercury emissions credits will be instituted nationwide.
This EPA Rule does not go far enough in reducing mercury in the view of the environmental community and several states, causing several states to not adopt the EPA CAMR and instead seek more aggressive and timely mercury reductions. This upcoming EPA Rule, several states acting on their own, and the need to control mercury emissions on all the new coal-fired plants that will be built in the next several years provides an opportunity for those companies in the mercury-control technology space.
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Potential Increased Value for CONSOL’s High Heat Coal Once Scrubber Retrofits Occur
August 30, 2006
CONSOL Energy Expects to Clean Up with Scrubber Regulations | pittsburgh.bizjournals.com
As the article points out, under the Clean Air Act Amendment of 1990, plants were required to reduce their sulfur dioxide (SO2) emissions. This was accomplished, for the most part, by switching to lower-sulfur content coals. This disadvantaged the high-sulfur coals from the Illinois Basin and Northern Appalachian Basin by reducing demand and pricing. CONSOL Energy is primarily a Northern Appalachian Basin producer.
The new Clean Air Interstate Rule (CAIR) announced in March 2005 will require further SO2 reductions in 28 Eastern states and the District of Columbia. As a result of these rules, an extensive amount of coal plants will be required to retrofit plants with scrubbers to come under the reduced SO2 requirements.
These scrubber retrofits will bring opportunity for increased demand and pricing for CONSOL Energy’s Northern Appalachian Basin coal.
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What Rail Rate for KFx Deliveries? How Much Will KFx Be Able to Charge?
August 8, 2006
KFx Announces First Unit Train is Loading | biz.yahoo.com
The first unit train of KFx K-Fuel was loaded on August 4 and is headed towards First Energy in Ohio. The coal will be test burned in a First Energy Plant over several weekends.
The results of the test burn will be released in several weeks. The mystery remains on the rail rate being charged on this and—more importantly—future unit trains of KFx K-Fuel.
The Analysis Section below discusses the rail rate issue and how it impacts what KFx is able to charge for its product.
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The Market Economics of Massey’s Coal
August 7, 2006
The Trouble With Massey Energy | www.businessweek.com
As the article points out, Massey Energy has been hit with earnings disappointments in the recent quarter. This is a function of mining costs and realized sales prices for the coal in the marketplace.
The article does not describe the economics of how the Massey coal is coming under competitive pressures from Western low-sulfur Powder River Basin (PRB) coal. The Analysis section describes the economic pressures for Massey’s coal.
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Proposed Changes to Fuel Surcharges Will Impact Railroads’ Coal Transportation Revenues
August 7, 2006
Transport Board Proposes Changes to Fuel Fees | home.hamptonroads.com
Coal Shippers have been complaining about the unfair fuel surcharges on unit train shipments since the inception of the practice in new contracts a few years ago. With the increase in oil prices and consequent fuel surcharges, along with the belief that this was a profit mechanism for the Railroads, these complaints have grown steadily louder with the Surface Transportation Board (STB) holding hearings on the subject in May of this year.
The recent STB Proposal will impact the Railroads’ coal transportation revenues for those coal transportation contracts with a fuel surcharge mechanism because it would 1) prevent “double-dipping” by collecting for fuel in both a cost index and fuel surcharge mechanism and 2) better track the actual fuel-related costs of the transportation movement.
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July 28, 2006
Foundation Coal 2Q Profit Rises | www.chron.com
Contained in this Foundation Coal quarterly earnings recap article and in other coal company quarterly earnings announcements and presentations are references to lower sulfur dioxide allowance prices negatively affecting quarterly earnings and forecasted earnings.
The Analysis section below details how the lower price of sulfur dioxide allowances lower the coal companies’ realized price per ton.
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Mercury Emissions Controls Companies to Benefit by Tougher State-Level Mercury Limits
July 28, 2006
DEQ Targets Oregon Coal Plant Mercury Emissions | www.katu.com
Oregon and several other states have come to the realization that the Federal Rules released in March 2005 under the Clean Air Mercury Rule (CAMR) do not go far enough and soon enough to reduce mercury emissions from coal-fired generating plants. The states are requiring larger mercury reductions—and sooner—than the Federal Rules.
These aggressive mercury emissions reductions being announced by the states are an opportunity for those in the mercury emissions controls technology space.
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July 28, 2006
Railroad Labor Deal on Slippery Track | jacksonville.bizjournals.com
The Railroads desire to reduce the size of train crews to as low as one crew member in the upcoming negotiations. As can be expected, the United Transportation Union believes the two-person crew is significantly safer than the proposed one-person crew. The National Carriers’ Conference Committee representing the Railroads believes the two-person crew is redundant and adds greatly to the cost of operations.
At this point, no one is discussing a potential strike.
The key implications are 1) Labor jobs, 2) potential business for companies that provide technology to go to one person crews, 3) railroad operational cost savings, and, 4) not much savings for the shippers.
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July 27, 2006
Plenty of Coal; Not Enough Miners | www.wtov9.com
Finding labor to work in coal mines has been difficult for the last few years. The perception--and to a lesser extent, the reality--of the industry is one of hard, dirty work. Add to that the recent miner tragedies and you have a working environment that is tough to attract new employees. The average age of the existing mine labor workforce is higher than most industrial areas.
Where there is a problem, there is an opportunity.
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July 27, 2006
Plans for $1.3 billion Illinois Coal-to-Gas Plant Advance | www.belleville.com
At current fossil fuel prices, conversion projects of coal-to-gas are gaining a great deal of interest by producers and end-users. Coal-to-liquids (diesel or jet fuel) have been making bigger headlines because of the north of $70 per barrel oil prices. Coal-to-gas is not receiving the headlines because of the relatively low natural gas prices of late.
With states allowing long-term purchases of natural gas, coal-to-gas projects will be more favorable to developers and financers since there is less risk.
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