beegdawg007

Though Newer Sources of Power Are Being Built, Coal Remains a Cheap BTU

Coal's surprising new value proposition. Using coal can "reduce" CO2!!! Hadn't heard that one before myself, but here it is toward the end of this article..
money.cnn.com/2009/04/.../
""Sokol says, energy companies will need to produce more energy while emitting less carbon dioxide.

Electric cars will be one answer. They generate fewer greenhouse gas emissions than cars that burn gasoline, and they have lower fuel costs, even when oil is cheap. That's because electric engines are more efficient than internal-combustion engines, and because generating energy on a large scale (in coal or nuclear plants) is less wasteful than doing it on a small scale (by burning gasoline in an internal-combustion engine).

The numbers look something like this: Assume you drive 12,000 miles a year, gas costs $2 a gallon, and electricity is priced at 12¢ per kilowatt, about what most Americans pay. A gasoline-powered car that gets 20 miles to the gallon - say, a Chevy Impala or a BMW X3 - will have annual fuel costs of $1,200 and generate about 6.6 tons of carbon dioxide. Equip those cars with electric motors, and fuel costs drop to $400 a year and emissions are reduced to about 1.5 tons. """

I'm not sure if the actual numbers prove this to be true. However, even if overall CO2 in China does not decline from the development of electric cars, something of equal importance will happen. With a plug-in electric car, compared to an internal combustion engine, most of the pollution will be created out of the cities and much further into the country. For hundreds of millions of Chinese, air polution in the city is a real health issue. Also, an electric plug-in car that could go 60 miles without burning any petroleum would allow China to substitute energy from its vast reserves of coal for that of imported oil. The potential for plug-in electrics to move pollution out of the cities is a story worth watching.

What the US can do that China can not is use NG as a transportation fuel. China does not have vast enough NG supplies to do that. What America should be investigating in is plug in PLUS NG powered cars and light trucks. Couple that with NG powered commercial vehicles and America could lower greenhouse gas emissions while reducing the price of driving and reducing our dependence on foreign oil. Right now, 1M BTU s of NG cost less than $5. It takes seven gallons of gasoline to provide a million BTU s.

Is There Enough Natural Gas?

Fitz, there is little question that the US has enough NG to swap out a lot of vehicles to NG from gasoline. Remember however, in regards to CO2, which seems to be one of your concernes, NG is not a free ride. The CO2 in a million BTUs of NG is 35% less than petroleum and 45% less than coal, but it is not free of CO2.

As for EIA estimates of NG, I am certain that the estimate is way below the actual amount simply because we have had no reason to really look for more Ng. Also, Canada has a lot of NG and very few people.

Price wise, compared to gasoline, NG is a heck of a deal. Considiring that 1 m BTUs of energy from NG typically costs (delivered) $7 to $15, and that It takes 7 gallons of gasoline to produce 1M BTUS.

However, as for replacing coal in power plants, that would be enormously expensive. 1 m BTUs from coal cost less than $2.00, while that same energy from NG would cost $7 to $15. If the goal is to reduce overall CO2, the smartest thing to do IMHO would be to focus on replacing as much petroleum with NG as possible first because that would both reduce CO2 and move us toward energy independance. I personally do not think that man made CO2, now at only 1 part per 10,000 parts of atmosphere, is or can ever be a problem. But, if you are concerned primarily about CO2, I say convert transportation first and second, use NG in power plants to supplement coal burning. Many power plants already have the abiltity to switch between the two. If we strive for an electric infrastructure system which uses both fuels in every power plant, the competition between those fuels would serve to hold a lid on the price of both.

Also realize that niether China nor India have significant supplies of NG to rely on NG to provide electricity and heat. Niether of those countries are going to stop using coal. Since 90% of all ""future CO2 from coal"" over the next 20 years (EIA numbers) will come from developing countries, eliminating America's use of coal will accomplish little in the way of world wide CO2 reduction. Do some more research into CO2, and I think you'll find that the issue is but a red herring. Water vapor is the greenhouse gas which is responsible for 95% of the greenhouse effect. The steam being emitted from power plants will do more damage than will the CO2. Total atmosperic CO2 is now only 4 parts in 10,000 and three of those were put there by mother nature. www.petitionproject.org/

Though Newer Sources of Power Are Being Built, Coal Remains a Cheap BTU

Coal and your utility bill. The average American consumes about 950 KWH/month worth of electricity. The bill for the cost of energy being produced by coal powered electric plants is about 10-12 cents/KWh. What is surprising is that of this 10-12 cents, very little is actually as a result of the cost of the coal. A typical ton of coal contains 20M BTUs of energy which is equal to 5900 KWH. When this coal is burned to produce electricity the efficiency rate is about 40%. So, to produce 950 KwH of energy for the typical home requires 950KWH / (.40 x 5900) = .403/shrt tons of coal. According to the EIA, the average coal in the US now costs about $38/t. Eastern coal is much more expensive than Western coal but about half the coal burned in the US is very cheap PRB coal which now sells for about $12/t. Therefore, on average, a US home which uses electricity delivered from a coal powered electric plant spends only $15/month - 50 cents a day - 1.6 cents per KWH - for the coal that creates its electricity. All the rest of the bill is what the cost of the infrastructure (support and construction) and profit. That is why building windmills makes virtually no economic sense. A power system for a city must assume that it can deliver on peak power requirements on days when the wind is not blowing. Therefore, any windmill constructed is "incremental" infrastructure cost which does not result in any "incremental" income. And, as I just demonstrated, the cost of the infrastructure is typically about 85% of our utility bill. No wonder power companies have thus far resisted doing something as stupid as building wind turbines. It makes sense for T-Boone to build wind power because he is selling that wind to cities in Texas for a profit as a result of the CO2 hysteria. But, realize that these wind turbines provide incremental supply even though there is no incremental demand for power in Texas. T-Boone's wind turbines are simply adding incremental cost for a demand curve which has not expanded. I wonder if any of the Texas politicians have taken the time to explain that to the average Joe and Mary who must pay for this nonsense?

Though Newer Sources of Power Are Being Built, Coal Remains a Cheap BTU

o your insightful blog, I would add, these comments.

First, most do not realize that as of 2007, China and India combined already consume 50% more coal than Europe and North America combined. During the next decade, China and India will increase their coal consumption by an amount equal to all the coal currently consumed in North America. The future of coal is in the hands of Asia.

Next.. By law, thanks to the Greens, by 2020 Germany must close all 17 of its nuclear power plants. Germany is reluctant to switch to imported natural gas from Russia for obvious political reasons. Germany is turning to …. clean coal. In addition, the UK will shut down 2 nuclear reactors do to age. Only two new nuclear power plants are currently planned between now and 2020, one in France and one in Denmark. It is unlikely that Europe's dependence on coal - Europe burns almost as much coal as the USA – will diminish at all during the next 10 years. Google – Germany and “clean coal”.

Finally, Energy Sec Chu is very aware that coal must remain the backbone of the US energy policy. I listened to his testimony in the House of Representatives yesterday during the Energy Bill hearings. Steven Chu is very aware that China and India plan to continue to use more coal. He is supportive of clean coal technology development. Last night he stated that it would take at least 8 years for clean coal technology to become mainstream. Based on what I heard during the testimony yesterday, I believe that the liberal press has truly misrepresented Chu's view of coal. This guy has his eyes open.

Finally, based on what I heard during the testimony and grilling yesterday during the House review of Waxman's energy bill, Cap and Trade has zero chance of passing. I posted a detail post about that on the KOL message site earlier today. I doubt that this bill will ever even be brought to the floor for a vote. It simply lacks support from many key democrats.

Expert: Coal Reserve Estimates Way Too High

David Rutlidge.. knock!! - knock!! . - world coal problem solved... I just discovered an additional 1.7 trillion tonnes of coal. Hooray ... the world can now burn coal for 500 years or so. No foolin... The state of Alaska also believes that it has at least 200 Billion tonnes of recoverable reserves. The real question though, is why would anyone even waste money exploring for coal when we already know where the next hundred year supply is coming from.

www.steelguru.com/news...

Mr John Heugh MD of Central Petroleum said that “The findings are a solid outcome and whilst there has not yet been sufficient drilling to arrive at a JORC resource estimate, the report has defined a coal Exploration Target potential of between 0.6 trillion tonnes to 1.3 trillion tonnes above 1,000 meters with a total tonnage inclusive of deeper coal sections of between 1.5 trillion tonnes to 2.1 trillion tonnes in CTP's combination of Mining and Petroleum Act permits and applications that covers most of the same ground.”

steelguru.com/news/ind...

Inner Mongolian proved coal reserve reach 701.6 billion tonnes
According to the information released by the Department of Land and Resources of Inner Mongolia so far the amount of coal reserve in Inner Mongolia has reached 701.6 billion tonnes ranking first in the country.

Berkshire Hathaway Presents a Rare Opportunity

Not to be morbid, but what happens when WEB dies? Look at what happened to AIG after Hank Greenberg left! My concern with BRK is that it is all about Buffet! If he passes away, BRK sells off big time... All insurance companies - Berkshire is an insurance company - make money by investing the float until that day when a claim needs to be paid. If the float can not be invested in a way that returns more than it costs, there are no profits. Buffet has been brilliant about managing the float so that returns hold up during all markets. But who will replace him and how many years will pass before we know if that person is anywhere as good as WEB?

Time to Buy and Hold for Reflation: Four Promising Sectors

The impact of Co2 on global warming is an issue very relevant to the future of coal. China and India both understand that our view of Co2's potential impact on the environment is, at best, silly!

Many "real" scientists are now speaking out on this. Most are amazed that the junk science promoted by Al Gore has gone this far, when there is really ZERO evidence that our climate is behaving now, any differently than it has for the past 12,000 years.

www.petitionproject.or.../

People who understand nothing at all about CO2, are now radically opposed to burning fossil fuels which release CO2. Most non-analytical people (probably 4 out of 5 people) view CO2 as a toxic gas which, if left unchecked, will eventually kill all life on earth. Given that CO2 is necessary for life to exist, this is really some marketing job which has been done by the Gorite camp.

If you ever find yourself discussing the "horrors of global" emissions with a "radical believer" in the 'CO2 will kill the earth theory', here are two questions to ask.

1. How much Co2 is now in the atmosphere, compared to 150 years ago? Most will not know... the answer is 285 ppm vs. 385 ppm. To put that into a visual format, picture a 5 ft by 20 ft cylinder filled with 10,000 tennis balls, where each tennis ball represents some form of atmospheric gas, i.e. Nitrogen, Oxygen, Argon, Helium, Water Vapor etc.. , Going back 150 years ago, 3 of those balls would have represented Co2. Today, at 385 ppm, Co2 would be represented by 4 balls. So "at least" 3 out of 4 of those tennis balls were put in the atmosphere by mother nature. Many scientists also believe that a significant percentage of that 4th tennis ball is also natural. This they believe to be true because as the temperature of the ocean increases (the ocean contains 93% of all of the Co2 on earth) and as plant life flourishes (plants contain 2 times as much CO2 as the atmosphere), CO2 is released into the atmosphere. And the earth has definitely warmed during the past 150 years because we are exiting the latest phase of the little ice age. But, lets stay focused on the forest vs the leaves for now. All of this hysteria about fossil fuels and CO2 is in regard to the fact that man may have added the equivalent of 1 tennis ball out of 10,000 to the atmosphere in the past 150 years. This is extremely minimal, ant that is why CO2 is referred to as a trace gas in the atmosphere.
2. Next ask your opponent, "how much CO2 is good?" 99 out of 100 people will have no idea how to even answer that question! The answer is not a precise number, but we know that plants (both land and marine) become more abundant and grow larger and faster as the amount of CO2 is increased. Based on sampling the ratio of certain microscopic marine critters buried in layers of deep ocean sediment, scientists have been able to estimate that CO2 on the planet earth was 4 -5 times higher than now during the Triassic and Jurassic periods. This 100+ million year period of time is the period of time when life was "most abundant" on earth. During this period, based on fossil evident, we know that flora and fauna were most abundant.

To summarize my points, most people who are radically opposed to man's use of fossil fuels because of their fear of CO2 emissions, have no understanding at all of the role that CO2 plays on earth. Their fears of CO2 are but a boogie man that has been placed under their bed by politicians who clearly have an agenda that does not involve good science. There is ZERO real scientific data to lead any thinking scientist to believe that CO2 being added to our atmosphere at the current rate, will have any "negative" impact. We do however know that CO2 stimulates plant growth which has historically always been beneficial to earth's animals.

www.petitionproject.or...

31,000 American Scientists agree with what I have just posted...

www.petitionproject.or.../

Time to Buy and Hold for Reflation: Four Promising Sectors

I agree with coal and steel. Coal is so misunderstood by the average American investor. It is impossible to mention "coal" without someone responding with "obama's administration will kill coal" or something to that effect. People, the growth for coal is coming from China and India. Between the two countries there are 550 power plants under construction and they are going on line at the rate of 2 a week. Obama may be able to curtail the construction of future U.S. coal powered electric plants, but he can do little about those that are already operating because most cities have but one source of power. China already uses nearly 3 times as much coal as the U.S. and that will grow to 4 times in the next decade. China and India realize that this hysteria over CO2 will pass. If CO2 was the cause of global warming, why have the oceans been rising for 18,000 years. CO2 is good because it stimulates the growth of both plant and animal life on earth. Most non math type people do not realize that the CO2 in the atmosphere now at 385ppm, is to having 4 yellow tennis balls in a building which contains 10,000 tennis balls in total. And, 3 of those four tennis balls were put there by mother nature. And there is no evidence that yellow tennis balls have any more negative impact on the atmosphere than do white tennis balls. I am not the only nut who thinks like this. As for the ocean rising, it is. And, during the past 180 centuries (18,000 years) the ocean has risen 395 feet which, at over 2 ft a centure, is faster than it has been rising since the start of the industrial revolution. Go to the link at the end and you will see that 31,000 American scientists (9,000 PHDs) have signed a petition requesting that our government not sign Kioto or anything remotely resembling it because there is ZERO scientific evidence available which would lead any real objective scientist to conclude that CO2 is now or will in the future have an adverse effect on our economy. Pah.... leese do not take my word for this.. just go to....

www.petitionproject.or.../

This is important to understand because it explains why both China and India will continue to pursue those 550 coal powered electric plants over the next five years.

Life After Coal: Coming Sooner than You Think

Tom... a newsflash you might find of interest!

Dang.... it looks like someone just stumbled upon another 400 year's worth of new coal in Central Australia! Not kidding... this really just happened!

www.mineweb.com/minewe...

Massive Australian coal deposit has great CTL and gasification potential
A huge coal formation has been defined in central Australia which could contain 1 trillion tonnes of coal or more suitable for underground gasification or CTL development.

Author: John Chadwick
Posted: Thursday , 19 Feb 2009

LONDON -

A new report has identified an area of the Simpson Desert straddling the South Australian-Northern Territory border as sufficiently promising to be a serious contender in Australia's rapidly emerging underground coal gasification, coal bed methane and gas-to-liquids (GTL) industries. The report, the full text of which will be released shortly, found potential for well in excess of 1 trillion t of coal in the Purni Formation of the Pedirka Basin with estimates suggesting the coal seam potential is very well identified between 200 and 1,000 m depth. "cont'd"

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.

Life After Coal: Coming Sooner than You Think

Tom, I came across an article that you really should read.

"Rethinking U.S. Coal Reserves and Resources". by James Mayer...

Very informative!

Read it and let me know if you still think that the U.S. will run out of usable/recoverable coal anytime in the foreseeable future.

74.125.95.132/search?q...

The author of this article explains how the US EIA (Energy Information Agency) estimates the various categories of reserves, i.e. recoverable, demonstrated, hypothetical, identified etc. To start off, he makes note of this most often referenced coal reserve statistic, which is that the US has recoverable coal reserves that are estimated to be 270 billion tons, which is 200 years worth of coal! Now even that is a lot of coal. However, the author than goes on to explain why the actual reserve tonnage is "at least" 2 times that, and probably more than four times that 270 billion ton EIA estimate.

This is a lengthy and detailed article, which I know most who visit here would not be interested in reading from beginning to end. So, allow me to just use one quote from this 13,000 word article to demonstrate why this authors view is probably on target;

The author states...
" Alaska provides a dramatic example of coal potential ****unrecognized**** by the EIA, (US Energy Information Agency). Total hypothetical coal resources in Alaska exceed 5.5 trillion short tons, [note that is TRILLION, not Billion] according to the most recent comprehensive "state" coal resource assessment.i By comparison, the EIA/USGS estimate of total U.S. resources, including hypothetical measures, is 3.9 trillion tons. Alaska accounts for a meager 6.1 billion tons in the 2004 DRB estimate, even though state experts state that coal reserves in Alaska very likely surpass all coal resources in the lower 48 states. This report asserts that the EIA’s 500 billion ton DRB (Demonstrated Reserve Base) estimate reasonably reflects the ultimately recoverable U.S. coal reserves. To put this in perspective, it is believed possible that 500 billion tons of coal may ultimately be recoverable from Alaska alone."""

Coal in a resource which the U.S. has mismanaged for the past 30 years. Had we learned how to liquif and/or gasify coal to run our cars, we would be not be importing oil from anyone. We would have saved $trillions$ on pointless wars, and tens of thousands of U.S. soldiers would still be alive. Tom, do you realize that 1 shrt ton of PRB coal, which sells now for just $13/ton, contains 17.6 Million BTUs of energy? Let me better highlight the potential of that. The 17.6 Million BTU's of energy contained in $13 worth of Wyoming PRB coal is equivalent to the total BTU energy equivalent contained in 140 gallons of gasoline!

Odds on a Two-Year Recession and a Three-Year Bear

If you can see when this will end, why could you not see when it would begin! I think you're just another guy with another opinion which amounts to nothing more than a huge WAG!

Life After Coal: Coming Sooner than You Think

Tom exports of US App coal increased to over 80 M tons last year. That was a 40% increase. Europe has no choice but to purchase coal since that which remains in Europe is ultra dirty lignite. Europe now gets most of its coal either from Africa, Columbia or America. As a source of exported coal, the Appalachian mines have an obvious advantage over western mines because or their proximity to rivers and shipping ports. The price of App coal did go up in 2008 because demand did outstrip supply partially as a result of the large surge in export coal to Europe. That was surge in demand, coincided with restricted supply expansion because of the difficulty in obtaining new mining permits as a result of recently heightened environmental activism in Appalachia. However, that does not really support the argument that the US is going to run out of coal. Their are very large new and accessable coal reserves in the Ill basin, Colorado, Utah, New Mexico, Wyoming, Montana and Arizona. Just go to the DOE web site and look up the data on known "minable" reserves. In addition, this data actually discounts reserves which exist in wilderness areas that are currently designated as off limits for mining. It is believed that Utah may contain a trillion tons of coal which is in federal parks. Also, as you must know, the US possesses the equivalent of a trillion barrels of oil which is locked up in US oil shale deposits in the Northwest corner of Colorado. That would certainly provide a backup plan should we actually run low on coal. According to the DOE database, the US has 270 Billion tons of "minable - recoverable" coal reserves. Since we are currently mining a little over 1.1 Billion tons per year, that will last the US at least 200 years. Those who know anything at all about coal would not take serious any argument which postulates the likelihood that the U.S. coal supply could run out in 25 years. All of the DOE and USGS data available indicates that US coal reserves are enormous. Because it would be best for humanity to simply leave most of that coal in the ground, I genuinely hope that we will ultimately find a viable clean alternative to coal. But there is no current technology on the horizon which looks as though it could displace coal to any serious degree within the next 20 years.

Regards,

bd

On Feb 17 01:53 AM Tom Konrad wrote:

> Your argument does not seem to account for the increasing prices
> of all grades of coal. If the rise of PRB coal were solely due to
> its economic and environmental advantages, would not the prices of
> Appalachian and Central coal be falling?

Intrinsic Value Investing: Recognizing Potentially Mispriced Stocks

WOW pardner... intrinsic value sounds conservative, but they way you come up with it requires a forecast for tomorrows cash flow.
Here is what the author says... "The forecast data then becomes available for years 2009 - 2013 using our default algorithms built around analyst EPS forecasts.""

Fifty percent of the time, analyst forecasts for the next year out are in error by 100% and more. I've been at this for 30 years. There is no mathematical short cut which gives anything close to a fool proof way to invest. The safest investments are those that have a huge economic mote and which are trading below tangible book value. And even that is risky if the value of the assets decline as they did with banking. The best formula for safety right now is 1. Minimal debt. 2. Priced below "tangible" book value. 3. Highly visible earnings such as sales that are currently under contract.

Life After Coal: Coming Sooner than You Think

"""Yes, even coal is subsidized from the Reagan Admin deciding to offer the Powder River Basin leases cheap back in the 80's. They could have gotten more for them. """

The reason that PRB coal is so cheap is do to the geological nature of the coal. The PRB coal lies near the surface and the coal seam is 100 ft thick. What's that mean? The average PRB miner produces 38 tons of coal per hour, while the average Appalachian miner worling in a productive mine, can only 6 tons of coal per hour. That's why it costs $50 to $75/ton to produce Appalachian coal while it costs less than $10/ton to produce PRB coal.