beegdawg007

Life After Coal: Coming Sooner than You Think

John,

The cost per ton is not of PRB coal is not really important. The issue is the cost per mm BTU. Right now PRB coal is selling for about $0.74 per mmBTUs, while eastern coal on average is selling for about $2.50 per mmBTUs. The moisture content is somewhat higher for PRB than it is for most appalachian coal but that's really not much of an issue when coal is used to generate power. PRB coal is an ultra low sulphur coal which is a real advantage. The key disadvantage is of PRB coal rail freight because PRB customers are located far from the mines in northeastern WY and Mnt. Right now it costs about $4.00/ton/100miles for coal rail freight. So a thousand mile rail trip adds $40 or more dollars to the cost of the coal. However, eastern coal also travels by rail so the disadvantage to PRB coal is not the entire $40.

PRB miners are steadily selling more coal further east. In 1994, Wy coal sales were 237 mm Tons. In 2008 WY coal sales are in excess of 450mm tons. Also the DOE projects that Western Coal sales, 90% of which are PRB, will continue to grow annually through the foreseeable future while Eastern Coal sales are in the process of topping out. The Eastern coal sales are topping out because of supply limitations in the east which are resulting from ever more difficult/expensive geological conditions combined with the inability to get new mining permits. The most encouraging segment of Eastern coal development is the Ill basin which contains over 100 B tons of recoverable coal that lies relatively close to some important customers. The value of Appalachian coal is really in the quality and the amount that can be used as either hard coking coal or PCI coal for making steel. Appalachian coal is also a good coal export product because of the proximity to shipping ports on the east coast and in the Gulf.

PRB coal exists in 100 to 150 ft thick coal seems which lie only slightly below the surface. These seems are mined using enormous drag lines which scoop the coal out two train car loads per scoop. According to the EIA, the average WY coal miner produces 38 tons of coal per hour, while a miner working in a typical underground App mine may produce only 3 to 6 tons per hour. That is why WY and MT mines produce the cheapest coal in the world. But PRB coal is not a crappy dirty lignite coal like that which remains in Europe. PRB coal is typically 8500 to 8800 BTU/lb coal which is ultra low in sulphur, which is important because it is the sulphur which unites with H2O to form sulphurus acid rain. PRB coal is fine for generating electricity, and that is why BTU, ACI, and FCL combined will sell nearly 300 mm Tons of PRB coal in 2009, and more in 2010 and more in 2011..etc...

Check this out...

www.eia.doe.gov/oiaf/a...

Regards,

b d;?D


On Feb 17 03:51 PM john s. gordon wrote:

> beegdawg - PRB coal is worth less per ton than higher-rank coal because
> it has higher moisture content and lower calorific value. costs more
> to ship to chicago because of that. there have been processes to
> upgrade the material before shipment but they have not gained traction.