US CoalVision 2009TM

A Comprehensive Analysis of US Coal Markets through 2025

John T. Boyd Company (BOYD) is pleased to present US CoalVision™ 2009, the fifth edition of our yearly review of the US coal and electricity markets. This year’s edition reports on the volatile 2008 coal market. Particular attention is paid to a number of subjects, including greenhouse gas reduction legislation and its impact on coal-fired power generation, the effect of increased mining regulations and inspections, international coal exports, economic downturn in the face of recessionary forces, falling coal prices, and the overall dramatic shift in market fundamentals between the first and second halves of the year.

Table of Contents

Executive Summary

• Recessionary Pressures                 
• Political Change
• Challenges Ahead
• Coal Demand
• Coal Supply
• Coal Pricing

Introduction

An Overview of Coalbed/Coal Mine Methane

• On-Site Power Generation
• Ventilation Air Methane Treatment

U.S. Electricity Markets                

• Introduction
• US Electricity Demand and Generating Capacity                
• North American Electric Reliability Corporation Reliability Assessment
• Outlook for US Electricity Demand
• Future Electricity Supply
• Future Generating Capacity
• Coal-Fired Power Generation
• Natural Gas Generation                 
• Renewable Energy
• Wind Energy
• Solar is Getting Hotter
• Smart Meters
• The Smart Grid

Regulatory Review

• Coal-Fired Power Plant Regulations
• Clean Air Interstate Rule (CAIR)
• Sulfur Dioxide Scrubbing
• Limestone Supply and Demand                
• Limestone Supply
• Limestone Demand
• New Source Review (NSR)
• Global Climate Change
• International Treaties
• Legislation
• Court Cases
• State Initiatives                
• Regional Initiatives
• Western Climate Initiative
• Regional Greenhouse Gas Initiative
• Greenhouse Gas Emissions from Coal versus Other Fossil Fuels
• Coal Technology Solutions
• Carbon Capture
• Carbon Sequestration
• Unmineable Coal Seams
• Deep-Sea Injection
• Sequestration Reservoir Capacity
• The Carbon Principles
• Mining Regulations
• Surface Mine Permitting
• Underground Safety Regulations

U.S. Coal Demand

• Domestic Steam Coal Demand
• Domestic Metallurgical Coal Demand
• Industrial Applications/Coal-to-Liquids/Synthetic Natural Gas
• Steam Coal Exports
• Metallurgical Coal Exports
• Allowance Pricing

U.S. Coal Supply

• Outlook for US Supply
• Transportation
• Rail Transportation
• Barge Transportation
• Ocean Freight

               
U.S. Coal Supply Regions

Northern Appalachia

• Market Outlook for NAPP
• NAPP Production Trends
• The Pittsburgh Seam
• Central Pennsylvania
• Northern West Virginia                

Central Appalachia

• CAPP Market Outlook
• CAPP Production Trends

Southern Appalachia

• Market Outlook for SAPP
• SAPP Production Trends

Illinois Basin

• Market Outlook for Illinois Basin Coal
• Illinois Basin Production Trends                

Powder River Basin

• Market Outlook for the Powder River Basin
• Powder River Basin Production Trends

Rocky Mountains

• Market Outlook for Rocky Mountains
• Western Colorado
• Utah
• Southern Wyoming
• Four Corners

Imports

U.S. Coal Prices                

• Coal Price Volatility
• A Note on Coal Prices
• Closing

               
Appendix A – BOYD Coal Market Models
Appendix B – Coal In The News
Appendix C – Profile of Publicly Traded Coal Companies
Appendix D – Announced New FGD Retrofits By Year, 2008 to 2015

Sample Insights

• A new President and Congress will emphasize environmental issues and provide incentives for renewable energy. Nonetheless, coal will provide at least 45% of the electric power generated in the United States through the next decade.

• Regional coal demand will change as scrubbers are installed to control sulfur dioxide emissions. The price differential between low and high sulfur coals will diminish as coal heat content becomes the overriding factor in coal quality decisions.

• The price volatility experienced in 2008 will subside as the world economy rebounds in 2010 and supply and demand come back into balance. The dramatic drop in pricing in the 4th quarter of 2008 will signal the end for many high cost marginal mines that were installed under the high price environment. Ultimately, BOYD is forecasting a return to a long-term equilibrium pricing environment in which coal prices for most products will reflect the full costs of production.

• The industry’s response to future supply challenges will be complicated by operational and practical issues more severe than those experienced during the tumultuous 1970’s, a period of declining productivity, labor strife, and increasing costs. This will be compounded by increasing regulatory overview and legal challenges by environmental activists.

• Continued US and worldwide growth in coal-fired electricity generation will be tempered by global climate change legislation and renewable portfolio standards (RPS) mandating a growing percentage of electric power generation from renewable sources.

• Higher than normal coal stockpiles and competition from gas-fired generation will temper coal-fired generation in 2009. This situation will be particularly acute for Powder River Basin coals.

• Long-term costs of coal supplies from most regions of the US will be much higher going forward.

• Uncertainty in coal emission legislation, especially those related to sulfur dioxide and carbon dioxide emissions, has stalled many new coal-fired power generation projects.

• The international market for US metallurgical coal will wane as infrastructure issues in traditional metallurgical coal supply countries are resolved, shipping rates from the US become less favorable, and a strong dollar favor other international sources.

• Expectations that natural gas-fired electricity generation can meet projected increases in electricity demand over the next 15 year are unrealistic. As demand for gas increases, gas prices will rise, reducing its economic advantages even in a carbon-constrained environment.

The BOYD coal demand simulation process is a combination of quantitative modeling and qualitative analysis.  BOYD’s analysis of US steam coal is based on a sophisticated and detailed model of coal-fired generating units and regional coal products.  Coal supply choices are handled principally on the basis of estimated busbar costs for each economically and technically feasible coal product on a unit specific basis while meeting air emission restrictions and strategic coal sourcing and transportation objectives. Projected regional coal supply costs are based on our full understanding of mining economics considering existing and anticipated geologic conditions, capital investment requirements, lead times, and liabilities.

Please contact John T Boyd Company for further information:
United States Headquarter Office, 724-873-4400 (ask for George Stepanovich)


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