Go Consol!

International Longwall News April 24, 2009

Consol flies high

Angie Bahr

Friday, 24 April 2009

CONSOL Energy has produced one of the best quarters in its history despite the economic times, with CEO Brett Harvey confident of a bounce-back in coal pricing as early as 2010.

“Despite the weakened economy, Consol was able to achieve outstanding net income and earnings per share. Both our coal and gas segments performed extremely well in these difficult times," Harvey said.

The Appalachian producer posted a net income of $US195.8 million, 260% above the 2008 March quarter, as it continued in the slipstream of higher pricing. It also posted record operating cash flows of $249.8 million.

For 2009, the company has planned coal production at an average realised price of $59.83 per ton, 23% higher than 2008.

Despite the record financial results, cracks did begin to show in the quarter with total coal sales down, as the weak economy reduced coal burn at utilities and the coal needs of steel companies.

"Because of the economy, Consol Energy is working with some of its customers to postpone shipments where needed. We have long-term relationships with our customers that we value highly, but we expect to capture the value for our shareholders in the contracts we have signed," Harvey said.

"One option we're pursuing is spreading the value over future tonnage."

Coal production was 16 million tons for the quarter, down only slightly on the 16.2Mt in the same period last year.

"Consol Energy will match its production with actual customer shipments. We are in the business of creating value for our shareholders, so we will not produce coal just to build inventory. When shipments rebound, so will our production."

Consol has already closed its Buchanan and Mine 84 complexes.

Operating costs for the quarter were $32.30/t – 14.1% higher, with supply and maintenance costs increased and installation of higher-grade seals as well as a higher number of seals built contributing.

Commenting on the costs, Harvey said idling of some of Consol's higher-cost mines in the middle of the first quarter could help mitigate unit cost pressures during the rest of 2009.

Looking ahead, Harvey was relatively positive.

"Clearly, coal stockpile levels at power generators and the domestic gas storage level is impacting near-term pricing," he said.

"However, we believe that the rapid response by coal and natural gas producers will bring the current oversupplied situation back to equilibrium more rapidly than in previous downturns.

“We believe that stockpile levels for utilities burning Northern Appalachian coals are still at significantly lower levels than those burning PRB coals. In addition, energy companies with less than stellar financial positions could find it very difficult to obtain reasonable financing terms to maintain their operations.

“We believe that this will impact supply and could set the stage for higher coal and natural gas prices as early as 2010."

Harvey said Consol was aggressively managing coal production at its mines, carefully managing relatively low inventory levels and monitoring liquidity during this period of tight credit markets and a cloudy economic outlook.

Byrd Stimulus For Coal

United States Senate
Washington DC 20510

February 19, 2009

Dear Friends:

Over the years, there have been many myths written about coal.

It was once said that coal grew from seeds in underground caves, guarded by demons and dragons. Coal was once praised for its medicinal powers to protect against plague, while others cursed it for causing baldness. In 14th Century England, King Edward I – you will remember him as Longshanks from the movie “Braveheart” – launched the medieval environmental movement when he tried to ban the burning of coal, proclaiming that anyone caught using it would suffer the loss of his head. In 19th Century America, coal was considered a “green” alternative energy, advocated by those who opposed the hunting of whales for oil, and the destruction of forests for wood.

The myths and varied perceptions about coal continue to proliferate to this day, often shaped more by environmental and safety concerns than by recent advances in the use of coal For instance, a lot of progress has been made because of the Clean Air Act, which addressed what was believed to be the major challenge in the 1970s and 1980s – acid rain. But, as we have seen, coal’s public persona continues to evolve. Now, carbon emissions are deemed to be the major challenge, and those of us who understand coal’s great potential in our quest for energy independence must continue to work diligently toward that new solution.

I recently met in my U.S. Capitol office with the new U.S. Secretary of Energy Steven Chu. I wanted the new Secretary to recognize the critical importance of coal to America’s energy future. I endeavored to enlighten him as we discussed a previous comment that he made about coal’s being our “worst nightmare.” At my request, Secretary Chu agreed to visit the National Energy Technology Laboratory in Morgantown, to see West Virginians at work making coal cleaner and more energy efficient through technology.

In addition, I have helped to secure $3.4 billion for clean coal technologies in the stimulus bill recently passed by the Congress and signed by President Obama. This is an enormous sum of money, in terms of what is usually possible in the annual appropriation process. These are dollars which will both create jobs and move us toward a cleaner environment and energy independence.

I remain bullish about the future of coal in our national energy policy, and so very proud of the miners who labor and toil in the coalfields of West Virginia. In Washington and in West Virginia, this time holds great promise of a new era, putting an abundant supply of clean coal to work for an energy independent America.

With Kind regards, I am

Sincerely yours,

Robert C. Byrd

The Sky ISN'T Falling

Here is a little more proof that the media spin is negative.

Before you read this:

• This is a Pittsburgh paper
• The vast majority of coal produced locally is used for electricity production-off less than 3% as quoted in the article
• Our local mines have been working OVER capacity to provide coal to the steam market in 2007 and 2008. Dropping production by 3% at a mine that produces 3 shifts per day, 6 days per week amounts to 0.54 shifts of reduced work per week. My guess is that most miners would be thrilled to work a few less hours after working pretty much every weekend for years.
• The 84 Mine closure announcement was first made way back in 2006. The “loss” of these jobs is old news.
• Speaking of old at 84… We have worked a lot at that mine (it is 15 minutes from here). Many of those jobs were retirement age people anyway. The UMWA retirement package is defined benefit-so it is not impacted short term by the economy.
• There is a shortage of people in coal right now. So, throwing anyone into the market for our other mines will actually help alleviate a real problem.
• The mine in Northern WV that they reference is actually in Western Virginia. Almost all of its coal is for the steel market. That mine is 4 hours from here. I know it belongs to Consol, but why is it news here?
• The picture stinks
• The price of coal on the spot market in June of “06 was about $36/Ton. We were mining like crazy at that price. Do you think we’ll be OK at today’s spot market price of $66/Ton?
• Consol’s average price per ton already sold in 2009 is $61.56. They have sold 95% of their capacity in 2009. Their average price per ton in 2008 was $48.77. Their direct cost to mine a ton in 2008 was under $32/Ton.

Don’t let the newspaper get you down. Maybe the headline could have been: “Coal still burns brightly in down economy”

Ugh.

http://www.post-gazette.com/pg/09049/949786-28.stm

GO COAL IN THE OHIO VALLEY

Still Working in the Coal Mine

By JENNIFER COMPSTON-STROUGH

MOUNDSVILLE - Many local companies - from retailers to steel giants, the chemical industry and hospitals - have announced job cuts and layoffs in recent weeks, but Consol Energy Inc. has no plans to reduce its work force in the Upper Ohio Valley.

Read More

Newsweek Weighs In On the Heavyweight Bout

On the campaign trail, President Obama embraced the coal industry's vision of "clean coal" technology. But even before he took office, a coalition of environmental groups (including Al Gore's) launched ads ridiculing the idea as a myth: "In reality, there's no such thing as clean coal."

We're sure to hear more of this debate in coming months. Burning coal creates large quantities of carbon dioxide, the most prevalent of the "greenhouse gases" that scientists say is heating up the planet and Obama has said he wants to reduce.

Is "clean coal" possible? Our answer: Probably, though it would come with a big price tag.

Link to Article

New Energy Secretary Likes Clean Coal

President-elect Barack Obama's choice to head the Energy Department told senators that developing "clean coal" technology must be a national priority, as a slew of Cabinet appointments sat for confirmation hearings Tuesday...

...Mr. Chu clarified previous remarks he had made that coal was his "worst nightmare," saying that the nation will have to rely on coal power while it develops alternative energy sources and improves energy efficiency.

"It doesn't mean that you stop everything today," said Mr. Chu, drawing an analogy between the need for coal and nuclear energy, while the nation improves technology for cleaning and disposing of both sources. "It's very much like coal," he said. "We will be building some coal plants, and one doesn't have a hard moratorium on something like that while we search for a way to capture carbon safely. It's very analogous in my mind." (More)

Not Zero, But...

Donna Caudill
Monday, 12 January 2009

United States mining industry marked its lowest number of deaths ever in 2008 at 51, but powered haulage continued to be the leading cause of death, according to data released last week by the US Mine Safety and Health Administration.

Mine Safety and Health Administration head Richard Stickler In total, coal mining accidents took 29 lives, 22 died in metal/nonmetal mines and 28 worker fatalities were marked at surface operations.

The total number was four less than the previous record set in 2004, and was a 31% drop over 2007. The fatality rate for coal mining alone was the lowest since 2005.

MSHA officials noted that powered haulage was by far the leading cause of deaths in mining across the board last year, with 15 fatalities. Coal mining made up 10 of the fatalities while five were at metal/nonmetal mines.

Taking the top spots for deaths in the US were Kentucky and West Virginia, which each had eight. Utah did not have any in the first full year following the Crandall Canyon collapse that killed nine in August 2007.

Overall, according to MSHA data extending back eight years, mining fatalities have dropped 46% and the rate of injuries in that same period has also dropped steadily by 36% from an all-injury rate of 5.07 in 2000 to 3.24 last year.

MSHA acting assistant secretary of labor for mine safety and health Richard Stickler said the year was a milestone in terms of safety and enforcements in many areas, as 2008 was the first time MSHA ever completed all of its mandated safety and health inspections.

Just between 2007 and 2008 in coal, regular inspections increased 12% while there was a 46% rise in inspection hours, a 33% increase in orders and citations and a notable 209% rise in assessed penalties.

Part of that progress is due to the large-scale hiring of federal mine inspectors across the entire nation. Since 2006, 260 new inspectors have come online with a net gain of 169 full-time workers. At current, there are 754 inspectors in the US in coal alone.

Also, the agency marked its first-ever issuance of a pattern of violation notice, implemented a total of eight final rulings for safety and health issues, and collected a significant amount of monetary penalties from delinquent operators.

MSHA recorded a significant jump in civil penalties as well in 2008, with 198,700 for violations versus 130,100 in 2007. During that timeframe, assessed penalties increased more than twofold from $US74.5 million in 2007 to a single-year record of $194 million last year.

In fact, according to federal data, enforcement actions over all types of mining were marked in the eight-year period logged.

There was an 80% increase between 2000 and 2008 from 3122 in the first year to 5628 last year. Accordingly, the total dollar amount assessed inflated 622% from an average $23 million per fiscal year to an average $166 million during the same period.

After defining a “flagrant violation” as part of the MINER Act of 2006, the agency placed a significant focus on them in the two years to follow.

In 2008, 74 flagrant violations were issued to mines, a staggering increase over the 15 assessed in 2007, and the violations totalled $11,474,400 and $2,588,200, respectively.

“Although these numbers demonstrate continuing improvements at our nation's mines, they also represent significant loss to the families and friends of 51 miners," said Stickler.

“We must continue to be vigilant in our efforts to bring all miners home safe and healthy at the end of every shift."

Our Kind Of Opinion

Saving Lives with Coal

Paul Driessen

Saturday, January 03, 2009

There is no such thing as "clean coal," environmentalists insist. Burning coal to generate electricity emits soot particles that cause respiratory problems, lung cancer and heart disease, killing 24,000 Americans annually.

It's the kind of claim that eco-activist Bruce Hamilton says "builds the Sierra Club," by generating cash and lobbying clout for his and similar groups.

It's also disingenuous, unethical and harmful.

Since 1970, unhealthy power plant pollutants have been reduced by almost 95% per unit of energy produced. Particulate emissions (soot) decreased 90% below 1970 levels, even as coal use tripled, and new technologies and regulations will nearly eliminate most coal-related pollution by 2020, notes air quality expert Joel Schwartz.

Moreover, the vast bulk of modern power plant particulates are ammonium sulfate and ammonium nitrate. "Neither substance is harmful, even at levels tens of times greater than are ever found in the air Americans breathe," Schwartz says.

The alleged death toll is based on speculative links between pollution and disease, and unwarranted extrapolations from responsible estimates to levels that grab headlines and prompt contributions.

Coal helps keep American homes, businesses, factories, airports, schools and hospitals humming, and provides myriad benefits that never get mentioned by anti-coal factions. Even if we accept these groups' assertions as fact, the benefits of coal should be considered in any policy debate just as we acknowledge (and strive to reduce) motor vehicle deaths, but recognize the value of transporting people, products and produce.

Coal generates half of all US electricity, and 60-98% in twenty-two states, according to the Energy Information Administration. Modern, state-of-the-art, low-pollution coal-fired generators have replaced both antiquated power plants and monstrous industrial furnaces that were the backbone of our nation's steel-making and industrial might just two generations ago. They improve and save millions of lives.

Imposing excessive new regulations, or closing coal-fired power plants, would produce few health or environmental benefits. But it would exact huge costs on society and bring factories, offices and economies to a screeching halt in states that are 80-98% dependent on coal: Indiana, Kentucky, Missouri, North Dakota, Ohio, Utah, West Virginia and Wyoming.

Coal's reliable, affordable electricity creates millions of high-paying jobs, and thus provides health insurance, rent and mortgage money, nutrition, clothing and retirement benefits for countless families. It keeps people warm (and alive) on freezing nights, and comfortable during summer heat waves like the 2003 scorcher that killed 15,000 elderly French citizens who didn't have air-conditioning.

Thanks to coal-based electricity, CT scans, x-rays, colonoscopies and other examinations detect cancer, heart disease and other health threats, saving numerous lives every year. Life-saving and enhancing surgeries are performed because doctors have lights, lasers, computers, and sterile operating rooms and equipment. Premie wards and life-support systems carry people through critical illnesses.

Children and adults get vaccinations that remain viable because of dependable refrigeration. Millions avoid deadly intestinal bacteria, due to refrigerators and freezers, and water that is sterilized and piped in large measure because of electricity.

American families live in houses that are built from stronger materials and to higher standards, because of electricity. Tens of millions have been warned of natural disasters, and given time to flee, thanks to radios and televisions.

Environmentalists talk glibly about replacing America's 600-plus coal-fired power plants, and the 2 billion megawatt-hours of electricity they generate annually. But with what?

Most greens detest nuclear power as much as they hate coal. They want to dismantle dams, not build new ones. They oppose drilling for natural gas that could partially substitute for coal, and fuel essential backup generators for wind farms. They support geothermal energy in theory, but rarely in practice.

They oppose construction of new state-of-the-art coal-fired plants that America needs to supply more baseload power, to serve a growing population and electricity-hungry products and equipment of every description. Most do support wind energy, and it must also play a role.

But right now, wind turbines provide a mere 1% of all US electricity. Wind power leader Texas gets just 2% of its electricity from breezes, versus 36% from coal. On blistering summer afternoons, when the Lone Star State most needs reliable air-conditioners, Texans can count on wind turbines to generate at only 9% of their installed capacity, because that's when the wind blows least.

How exactly will Texas replace 36% of its electricity with renewable energy? How exactly will Indiana and North Dakota replace the 94% that they get from coal?

What happens to all those benefits when coal power is legislated, regulated, litigated, priced or cap-and-traded to the sidelines? To lives that are improved and saved with that electricity?

A little specificity, moral clarity and social responsibility would help here. We generally can't expect it from environmental activists, who excel at denigrating and opposing energy, but do little to generate anything but hot air and political power.

However, we should expect, and demand, clear answers from judges, elected representatives and unelected government regulators. That's the essence of ethics and social responsibility.

If we are going to end this recession, retain American jobs and living standards, and rejuvenate our economy, we will need vast quantities of electricity, from coal and every other source now and for decades to come.

The rest of the world also needs coal, to lift people out of poverty and save lives.

In impoverished countries, two billion people rarely or never have electricity. Four million infants, children and parents die every year from lung infections caused by smoke, soot and other pollutants from open fires that heat their homes and cook their meager food, because they don't have electricity. Two million more perish from intestinal diseases, caused by unsafe water and spoiled food, because they lack refrigeration, sanitation and water treatment.

Radical environmentalists bemoan the exaggerated death count from producing electricity here in the United States. But they callously battle every proposal to build coal, gas or hydroelectric projects in these destitute countries.

24,000 speculative deaths versus six million very real deaths is hardly a fair tradeoff.

As we usher in 2009, may America and all nations resolve to implement policies that honestly reflect the costs, benefits and power-generating capabilities of traditional and alternative energy options that exist in the real world.

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