Articals of interest to the coal industry.

Saturday, April 14, 2007

Non fuel use of coal

April, 2007
Project to tap coal potential

Dhanbad, April 12: Central Fuel Research Institute (CFRI) here and the BHU have jointly taken up a research project to explore the possibility of producing “fullerenes” from coal.
Fullerenes are chemical compounds, which were discovered in 1985 and only the USA has been able to produce Carbon Nano Tubes from graphite and that too in laboratory conditions. It is expensive and priced at Rs 1.28 lakhs for 10 grams, said CFRI director S.K. Srivastava.
The unique structure of fullerenes give them high tensile strength, high electrical conductivity, high resistance to heat and relatively lower susceptibility to chemical activities.
Scientists, excited over the development of fullerenes with their unique electronic, chemical and mechanical properties, believe this is going to be path-breaking and cylindrical fullerenes or nanotubes could be put to various uses including defence and medicinal purpose. The common gas cylinders in use today, they believe, will weigh far less if fullerenes can be used in their manufacture.
The three-year research project has received a grant of Rs 2 crore from the government, which is equally keen to explore the possibility of producing fullerenes from coal, found in abundance in this part of the country.
The CFRI director said the project is the brainchild of one of their brilliant scientists, Ashis Ghosh, and he exuded confidence that the scientists will have the desired breakthrough within the period prescribed. BHU scientist O.N. Srivastava will be collaborating with Ghosh on the project, he added.
CFRI, he said, has already drawn global attention by its pioneering research on the non-fuel usages of coal and the production of engineering plastic out of coal.
With the research on fullerenes, he said, CFRI has joined a select band of research institutions in the world engaged in the high-technology area of fullerenes and nanotubes.
“We are sure to succeed and prove that we are inferior to none as promising scientists are putting their best in this work,” said Srivastav.

There's Green in that Coal

Peabody Energy: There's Green in Coal

Posted on Apr 12th, 2007 with stocks: BTU

Todd Sullivan submits: America has a growing demand for electricity and is currently the largest consumer of electricity in the world. In our homes, our businesses and industries, Americans spend more than $210 billion on electricity each year. In fact, electricity and food are the two largest commodities bought and sold in America.
Electricity demand has continued to increase since the 1970s. While we are more efficient in our use of energy, demand has grown largely due to the introduction of new technologies — such as the Internet — which consumes about 8 percent of U.S. energy. Between 1970 and 1999, electricity use grew by more than 130 percent, and will continue to climb: According to the U.S. Energy Information Administration [EIA], America's energy demand is anticipated to grow over 45 percent in the next 20 years.
What is the main fuel for all this electricity? Coal. It fuels about 40% of the world's electricity and over half of America's electricity (this amount continues to climb annually), which is more than all other sources combined.
Other than electricity, what are some additional uses of coal?
• Coal liquefaction offers promise for nations that are rich in coal, yet scarce in oil. There are four plants in the United States and South Africa currently using coal as feedstock to create liquid fuels. A plant using more than 6 million tons of coal annually could produce more than 3.6 million barrels of diesel and Naptha annually, making diesel liquefaction competitive at $35 to $40 per barrel oil prices. China has earmarked $15 billion for coal-to-diesel-fuel conversion plants and has targeted replacing 10 percent of its oil imports with coal-liquified oil by 2013.
• Partial oxidation - gasification - combines feedstock, oxygen and steam to produce a synthesis gas that is cleaned of impurities. Syngas can be used as a fuel to generate electricity and steam or as a chemical building block for the petrochemical and refining industries. The gasification process converts feedstock such as coal, crude oil, petroleum-based materials or gases into marketable fuels and products.
• Syngas from gasification historically has been used as a feedstock for the production of chemicals, accounting for nearly one-half of syngas use worldwide in the late 1980s. World gasification capacity grew by 50 percent during the 1990s, with more than 40 plants coming on line.
• Today, there are approximately 155 commercial gasification plants in development, construction or operation around the world in 28 countries in North and South America, Europe, Asia, Africa and Australia. When operational, these facilities will provide the energy equivalent of more than 770,000 barrels of oil per day.
How to invest and make money on coal?
Just as investing in alternative fuels begins and end with Archer -Daniels Midland (ADM), commercial roofing and insulation with Owens Corning (OC) and paint and coatings with Sherwin Williams (SHW), investing in coal begins and ends with Peabody Energy (BTU) . Since their initial public offering on May 22, 2001, at $28 per share, or $7 per share on a split-adjusted basis following the March 2005 and February 2006 two-for-one stock split, shares hit a high of $75 in May of 2006. Since then, shares have fallen steadily (40%) to their current level of $45 despite growing earnings last year 60% . The world's largest public coal company, their products fuel approximately 10 percent of America's and 3 percent of the world's electricity.
So, how much coal does Peabody have? If you converted their coal into each one of the following energy sources, Peabody's reserves would provide :
• Enough electricity to provide all the U.S. electricity demands for five years• More that 10 times the total U.S. natural gas uses• Diesel fuel: enough to fuel the U.S. truck fleet for 42 years• Hydrogen: enough to replace all oil in U.S. transportation for 6+ years
BTU has not traded in a PE range this low since early 2003, when its stock traded for a split adjusted $9 a share. Since that period, it has grown earnings from 25 cents a share to $1.92 last year (680%) and dividends have grown from 11 to 24 cents a share (118%). Since 2001, shipments of coal have grown from 194 million tons to 240 million tons in 2006 and in 2006, its worldwide coal sales were 38% greater than their closest competitor. In the U.S., Peabody's shipments were 22% of all U.S. coal shipments and 80% greater than the closest competitor. They clearly dominate the coal market both nationally and internationally.
The Future
So, now that we know where we are, we need to figure out where coal and BTU are going. Let's take a look at both worldwide demand and demand here at home in the U.S. The EIA estimates that 115 gigawatts of coal fueled electricity will come on line worldwide in the next three years and by 2030, an additional 156 gigawatts will come online in the U.S. These uses by themselves will require an additional 500 million tons of coal annually. This does not include additional coal demand for the other uses previously mentioned.
Currently BTU has a 1 billion ton backlog of orders with contract ranging from 1 to 19 years, with an average of five years. All long term contract have "price re-opener" provisions in them which protects BTU from a profit squeeze should input costs rise unexpectedly.
BTU is currently is in the process of building 3,100 megawatts of electrical generation capabilities in two locations at BTU owned mining sites. This will enable BTU to become a "minimal cost" electrical producer at these locations as they would be using their own coal to produce the electricity they would then resell.
Debt grew by $1.7 billion in 2006 as this money was used to purchase Excel Coal in Australia and repay its debt. The acquisition makes BTU that largest coal producer in that country also and provides BTU a lower cost basis to export coal to Asia and China, whose demand for it is surging. The Australian mines primarily produce "metallurgical coal." This high BTU coal is primarily used for the production of steel and is highly sought after by China. Selling for about $100 a ton (vs. approx. $26 a ton for all other coal), BTU estimates it will sell an additional 3 to 6 million tons of this in 2007 vs. 2006 providing about $500 million in additional revenue with no added cost.
For 2007 BTU is predicting 265 to 285 million tons of coal shipments for a 10.4% to 18.7% increase over 2006.
From 1990 to 1999, the price of coal declined from $1.38 per million BTU's to $ .91 per million BTU's. Since 1999, that trend has reversed and prices have risen to $1.15 in 2005 and the EIA estimates this price will continue to rise to $1.84 by 2030.
Geopolitical Considerations
The news this week made reference to, but did a lousy job of covering the "summit" of natural gas producers. These nations are attempting to band together and create an OPEC like cartel for the sale of natural gas. The U.S. is not one of these nations, and the formation of an organization like this would only be done for one reason: to raise the price of natural gas.
This event, should it come to fruition, would be monumental to the coal industry. It would create a huge demand for reliable, low cost fuel for the production of electricity and more plants and other industries would move from natural gas to coal as their main fuel source. I anticipate that these nations will form this alliance and Peabody and its shareholders will be the main unintended beneficiary of it.
So, all this now has us considering buying shares of a company that is the world leader in its industry, with increasing demand and pricing power for its products selling at historically low levels... valueplay, anyone?

Progress Energy seeks new approach

Progress seeks new strategy

ASHEVILLE — Progress Energy said Wednesday that officials realize the proposed power plant in Woodfin was perceived in the public as a done deal, and they may take a different approach with similar deals.
Progress Energy spokesman Ken Maxwell said while the company publicly announced a $1-per-year lease on public land to build the oil-burning power plant and there were numerous occasions for public input, the building of the $72 million “peak” power plant was seen as certain by many people in the community.
“We may look at this differently in the future,” Maxwell said.

The utility’s response came after a Woodfin board voted last week to deny Progress Energy a conditional-use permit for the 130-megawatt plant that would serve about 150,000 power customers during peak demand periods.
Many residents spoke in opposition to the plant at the board meeting, saying it was harmful to people’s health and the environment, and would cause property values to drop.
Progress Energy said the plant is needed to replace power that the company now buys from another utility provider and that it has to build the plant in order to provide reliable power to the region.
Progress Energy representatives said they have not yet decided if they will appeal the ruling in court, go back to the board with new information or look at building the plant elsewhere.
The company has 30 days from the April 2 ruling to appeal the board’s decision. Even with a successful appeal, Progress still must win an air quality permit and prove need for the plant before the Utilities Commission in the fall.

Cleanest power plant in the U.S.A.

Polk power plant one of the cleanest in the country

Last Edited: Thursday, 12 Apr 2007, 8:51 PM EDT
Created: Thursday, 12 Apr 2007, 8:51 PM EDT

This power plant in Polk County is getting world-wide attention for its clean-burning technology.

MULBERRY - A power plant in Polk County may become a power player in the struggle to combat global warming. Tampa Electric Polk Power Station is in an isolated area south of Mulberry, and a lot of people are making the trek there looking for answers.
"We have had a number of visitors, literally around the world, to learn about this technology," said Rick Morera, a spokesman for Tampa Electric.
The power station is known as one of the cleanest plants in North America. It emits very little air pollution, and is ready to raise the bar even higher. It is set to cut carbon dioxide emissions, which are suspected of causing global warming, to lower levels than ever before.
"It's not a trivial thing to consider carbon dioxide removal," said Mark Hornick, general manager at the Polk Station.
Carbon dioxide is produced as a by-product of burning the coal.
Experts expect the federal government to tighten up regulations on coal burning plants like the one in Polk, within the next few years.
"We'll be ready," Hornick said.
If the plant's state of the art technology was retrofitted, its carbon dioxide emissions could be cut by almost ninety percent. It also has plans to build a new unit within the next few years that would produce very little Co2.

Coal vs. Environmental Concerns

Coal fueling environmental collision course
Apr 13, 2007
Honolulu Advertiser, Opinion
By Ronald Brownstein
Utilities deciding on new plants that could undermine U.S. policy
An ominous collision is approaching between Washington's legislative and regulatory agenda and the investment plans of the nation's largest utilities. Unless these blueprints are aligned, meaningful progress against global warming could be foreclosed for years, or even decades.
Mandatory limits on carbon dioxide and other gases that contribute to global warming appear inevitable after a U.S. Supreme Court decision last week. By ruling that greenhouse gases qualified as air pollutants under the Clean Air Act, the court virtually required the Environmental Protection Agency to regulate them — and increased the likelihood that Congress will impose limits as well. But with President Bush opposed to compulsory reductions, none is likely until he leaves office.
Many utilities accept the inevitability of restraints on greenhouse-gas emissions, but most won't act unless they are required to act. And while Washington delays in establishing such requirements, utilities are making investment decisions that could undermine whatever strategy the nation finally adopts.
With demand for electricity expected to rise by about one-sixth through 2015, utilities are betting heavily on coal, even though it generates more carbon dioxide per unit of heat than oil or natural gas. Coal is attractive to utilities because it is plentiful and cheap. But coal is inexpensive largely because power plants are not required to capture the carbon they produce. Coal-fired plants contribute half the electricity produced in the United States but four-fifths of the carbon emissions associated with electrical generation. Coal-fired plants, in fact, contribute almost one-third of all the carbon emissions the United States generates — roughly as much produced by every car and truck on the road. No future federal effort against global warming could succeed without slashing those coal-related emissions.
Yet the Department of Energy recently reported that U.S. utilities are planning to build 150 more coal-fired power plants through 2030, with nearly half slated for operation by 2011. Utilities say they have no alternative to meet the growing demand, but power plants operate for 50 years. By relying too heavily on coal to meet their near-term supply challenge, utilities could threaten progress against global warming for decades.
"The biggest threat to a rational global warming policy is we delay acting two to four years and utilities build a lot of new sources that make it impossible to take action," said Bruce Nilles, a Sierra Club attorney.
Technological advances may someday reduce that danger. Researchers are exploring systems that capture carbon dioxide emissions from coal-fired power plants and sequester the gas underground. But these efforts are nascent: The largest project, in Norway, is storing only about one-third as much carbon as an average coal plant produces.
Some public figures, such as former Vice President Al Gore, 2008 Democratic presidential candidate John Edwards and outspoken NASA climate scientist James Hansen, want to ban new coal-fired plants until this clean coal technology is proved. That's probably more than the economy could bear. But until research demonstrates the technological and economic feasibility of "capture and sequester" systems, officials should seek to limit new coal plant construction to the bare minimum.
One precedent that states could apply is the new California law prohibiting purchase of electricity from plants that generate substantial greenhouse-gas emissions. Democratic Sens. Barbara Boxer of California and Jeff Bingaman of New Mexico recently sent a useful signal by warning that any federal global-warming legislation was unlikely to "grandfather" heavily emitting coal plants completed before its passage.
Even the utility industry should think twice; conventional coal plants built today inevitably will face expensive retrofitting to meet future emission standards. American Electric Power Co., a large Midwest utility, last month announced plans for the first capture-and-sequester retrofits on existing coal plants. But Michael G. Morris, company chairman and chief executive, says the better approach is to build all-new plants "from this point forward addressing the global warming issue."
As Morris notes, that would require fresh thinking from state regulators, who currently don't allow utilities to pass on the cost of limiting carbon emissions, because federal law doesn't require it. It would also require sacrifice from consumers. Wind and solar could fill some of the gap if utilities slow their planned additions in coal-fired power while cleaner technologies are tested. But any turn from coal would also demand conservation, likely enforced through higher prices for electricity.
Moving away from conventional coal too abruptly might disrupt the economy. But sticking with it too long would surely doom our efforts to stabilize the environment. The best formula would be to accelerate research on technologies that promise cleaner coal — and to slow the deployment of conventional coal plants until that research catches fire.
Ronald Brownstein is the Los Angeles Times' national affairs columnist.