GLG News by Coal Mine Experts (Appalachia Region)

Thomas ShewskiOwnerHigh Energy Services

Natural Gas-Fired Generation is Not Currently Impacting Coal-Fired Generation as Reported by Joy Global Inc

August 31, 2007

Analysis of:Joy Global Inc. Announces Fiscal 2007 Third Quarter Operating Results | money.cnn.com

    Joy Global in its earnings announcement claims the following: “Although the long-term outlook remains positive, U.S. coal continues to exhibit short-term softness. This is primarily the result of weakening demand for electricity, and compounded by the generator's increased burn of natural gas to enable them to build coal stockpiles.”     This is not correct. Natural gas-fired generation is not utilized in increased quantity to enable generators to build coal stockpiles. This is uneconomic and unnecessary. Also, coal consumption is up year-to-date compared to 2006.

Thomas ShewskiOwnerHigh Energy Services

Rail Rates Unlikely to Fall Any Time Soon Even if STB Changes Revenue Adequacy Methodology

August 28, 2007

Analysis of:STB Proposes New Rule for Determining Railroads Cost of Capital | www.logisticsmgmt.com

    The Surface Transportation Board (STB) recently issued proposed rulemaking to move from a Discounted Cash Flow (DCF) methodology to a Capital Asset Pricing Model (CAPM) for determining revenue adequacy. Revenue adequacy is the determinant in rate cases brought by shippers--especially coal rate cases—where a Stand Alone Cost (SAC) railroad must be built to compute the prescribed rail rate.

Thomas ShewskiOwnerHigh Energy Services

Coal Plants Produce Useful Byproducts—Fly Ash and Gypsum

August 28, 2007

Analysis of:Plants’ Cleanup May Create Side-Effect | www.baltimoresun.com

    Coal plants produce byproducts that have a beneficial use to society. The installation of air pollution controls (APC) may affect this mix of coal combustion byproducts.

Thomas ShewskiOwnerHigh Energy Services

Massey Energy – Current Coal Market Situation Mixed

August 24, 2007

Analysis of:Massey Energy Shares Rise on Upgrade | www.forbes.com

    According to the Forbes article, UBS upgraded shares of Massey Energy to “Buy” from “Neutral”.  The commentary section describes the current market condition that may affect Massey.  At the moment, it is still a mixed picture.

Thomas ShewskiOwnerHigh Energy Services

Implications of Valley Fill Decision on Surface Coal Mines in Appalachian Region

August 23, 2007

Analysis of:Bush Administration Would Ease Legal Limits on Mountaintop Removal Coal Mining | www.ens-newswire.com

    The Mountaintop Removal issue has been an ongoing issue for years for Appalachian surface mines.  It has been used successfully by interveners to delay, suspend, or block surface mining activities at Appalachian Mines.       The issue, to cut it down, revolves around the placement of the overburden (also called spoils, waste, or material) that is removed to uncover the coal.  The overburden has to be placed somewhere and it is likely that it will be placed in an area that is a stream or near a stream, even if it only serves as a stream a few times a year (if even that frequently) after a major rainstorm. By extension, one could make the argument—and did make the argument—that the placement of the overburden directly or by proximity affects streams.  This was a vehicle by which the interveners would use to delay, suspend, or block the mining activities.

Thomas ShewskiOwnerHigh Energy Services

Thermal Coal Production, Thermal Coal Inventory, Section 29 Coal, and Coking Coal Issues

August 23, 2007

Analysis of:Energy Roundup: B of A Cuts Coal Producers | www.forbes.com

The attached discussion states Bank of America cut its target prices for U.S. coal equities on August 22, 2007. (Yes, not until August 22!!!!).  B of A cites coal production and inventory levels for its view. The commentary section discusses current coal production and inventory numbers compared to last year's numbers.  It also discusses how Section 29 coal and coking coal could be a potential bright spot.

Thomas ShewskiOwnerHigh Energy Services

Railroads Overcoming STB Fuel Surcharge Decision With Higher Base Rates on New and Renegotiated Coal Transportation Agreements

August 20, 2007

Analysis of:STB Issues Final Ruling About Fuel Surcharge | www.greatfallstribune.com

The Surface Transportation Board (STB) in January 2007 ruled 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’s decision was made because the fuel surcharge program became an additional profit center for the railroads. The BNSF implemented a mileage-based fuel surcharge in 2005; replacing the percent of base rate fuel surcharge methodology.  The Union Pacific implemented its mileage-based fuel surcharge methodology at the end of April 2007; also replacing the percent of base rate fuel surcharge methodology in a vast majority of coal transportation arrangements.

Thomas ShewskiOwnerHigh Energy Services

Coal Exports One Bright Spot in an Otherwise Lackluster Coal Industry

August 20, 2007

Analysis of:U.S. Coal a Better Value to Offshore Buyers Due to Dollar Fall | www.mineweb.net

U.S. coal sales and pricing have been hit the last several months as a result of much higher-than-normal coal inventories at coal-fired power plants.  One bright spot has been the increase in U.S coal exports.

Thomas ShewskiOwnerHigh Energy Services

Profit Potential from 2010 Sulfur Dioxide Emissions Allowances

August 20, 2007

Analysis of:Texas Leads List of Dirtiest Power Plants | www.sciam.com

    The article discusses the emissions from the top coal plants.  Sulfur dioxide is one of the emissions discussed in the article.  The article does not focus on how sulfur dioxide emissions from coal plants is approximately half of what they were in 1990 after the Clean Air Act Amendment required the reduction from the nation’s coal plants starting in 1995 for the dirtiest coal plants and in 2000 for the rest of the coal plants.       The Analysis Section discusses the current Law, upcoming Rule, and the potential windfall for owners of 2010 SO2 emissions allowances

Thomas ShewskiOwnerHigh Energy Services

Hit to Railroads and Advantage to Shippers if The Railroad Competition and Service Improvement Act of 2007 Were to Become Law

August 20, 2007

Analysis of:The Railroad Competition and Service Improvement Act of 2007 | www.washingtonwatch.com

Senate Bill 953 and House of Representatives Bill 2125 are crafted to help address the monopolistic powers of the nation’s Class I Railroads.  The Analysis section discusses the major points of the proposed legislation.  

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