The Story of Coal ....... as told by the end user ---->

[88gta350]

The power plant I work for is owned by a large utility that owns several coal power plants. The utility publshes a monthly magazine for its employees to keep them up to date on general company news and other business sectors they may not be afiliated with. This month's magazine had it's feature story on coal. It resembed Mark Hemphill's article on commodities of the Rio Grande (although solely on coal in this case), but from the viewpoint of the end user - the power utility. I thought some of you might find it interesting, so I retyped it here. I apologize for the length, but I wanted to include it all. It includes mention of the rail transport in the second half of the article.

This article was written in Exelon's monthly company magazine (December '04). Keep in mind it was written by employees of a power company, for employees of a power company, but I thought it had some neat information in it from the other end of the tracks.



BLACK GOLD

In today's highly competitive business of electric generation, companies
such as Exelon Generation only make money if their generation assets are online and producing electricity at a price the market finds acceptable.
With both oil and natural gas reserves needing to be increasingly imported
from other countries at escalating prices, a number of electric generation
companies have again looked to the United States' enormous domestic coal supply as a way to lower their overall fossil fuel costs.
Considering that point, it is no wonder why 51 percent, or nearly 2 million
gigawatthours, of the nation's electricity was generated by the use of coal as a
fuel source in 2003. Exelon Generation, which alone used more than 7.75 million tons of coal last year, is no exception.

Why Coal?

"Just like you would want to diversify your stock portfolio, we want to
diversify our fuel portfolio," said Joe Simmons, fuels trader for Exelon Power
Team. "By diversifying the fuel Exelon's unit's use, it helps make sure the
company can still operate if one fuel becomes more expensive or if fuel
regulations in a certain area change."
Power Team's fuels group, headed by David C Ellsworth, vice president of
fuels, manages the company's fossil fuel portfolio and negotiates contracts,
making sure the company gets the best prices.
"We examine the market and make educated decisions on when and how much to buy based on many factors," said Martin Sonesson, fuels trader.
There are several major factors that cause the price of coal to fluctuate
including time of year, changes in the market prices of oil and gas and
generation demand.

Specific Needs

Coal comes in many varieties, with many quailities and various chemical
make-ups. However, generating units are designed to burn only certain types of coal.
For example, when Cromby Generating Station, in Pheonixville, PA., was
designed in the early 1950's, the engineers designed it to burn coal found in
Western Pennsylvania. Today, the coal market is larger, but the fuels group
still must buy coal that has similar properties to coal the plant was designed
to burn, limiting the current supplier base.
Exelon's coal currently comes from several regions: northern Appalachia,
central Appalachia; the Powder River Basin in Wyoming; and Venezuela.

The Buying Process

Several factors make the coal-buying process very different than other
fossil fuels:

- Coal is more labor-intensive to produce than oil or natural gas.

- Coal companies can estimate the various properties that their coal will
contain but cannot be certain until it is mined, making it difficult when
contracts are made months, even years, in advance of mining.

- Timing of shipments cannot be built into a contract-coal producers can only
estimate amounts they will produce and Exelon can only estimate how much they will need at a given time.

Because of these factors, "a major part of buying coal is the relationship
you build with the company," said Kathy Gmelin, a fuels trader for Power Team. "When we negotiate a contract, we say we're going to get this amount of coal over this amount of time, at a certain price. But we need a good relationship with the company because it's not an exact science."

Mining Coal

Before coal can be used in Exelon Power's plants, it has to be extracted
from the earth. Coal is mined in two ways: surface mining and underground
mining.
Surface mined coal is much closer to the Earth's surface, usually 80 to 100
feet down, making it possible for miners to remove the "overburden," or top
layer of rock and soil. Next, the coal is extracted using bulldozers and
cranes.
Exelon's surface-mined coal comes from Peabody's North Antelope Rochelle Mine, located in the Powder River Basin in Wyoming. This coal is sent by rail to Kincaid Generating Station, in Christian County, Ill., and Stateline
Generating Station, in Hammond, Ind. Exelon Generation has power purchase
agreements with these stations, meaning Exelon supplies the fuel and sells the electricity, while another company owns and operates the facility.
Underground mined coal is much deeper under the Earth's surface making it impossible to use surface mining methods. There are four methods used in
underground mining: longwall, continous, conventional, and shortwall. Of the
four, long wall mining is the most modern, efficient, and reliable.
The easiest way to understand the longwall process is to picture an 1,100
foot long hallway that is five and a half feet high. On the left hand side is a
wall of coal being mined, next to which runs a conveyor belt that cut-away coal
falls onto and is moved out of the mine. On the right hand side are shields,
wedge-shaped hydraulic lifts that go from floor to ceiling, holding up the roof
of the mine. A machine, known as a shaler, runs back and forth along the wall
and cuts away sections three feet deep. As the shaler cuts away coal, the
shields sense the newly exposed three-foot section of ceiling, and automatically shift to support the new section of ceiling.

A Miner's Life

On a recent trip to the Baily Coal mine, a longwall mine in Green County,
Pa., members of the Power Team fuels group had the chance to experience a day in the life of a coal miner.
All mine tours at Baily begin with extensive safety training. Safety
personnel explain locations of emergency exits and how to use emerergency oxygen devices. In very rare instances, ventilation systems in the mine can fail
allowing flammable methane gases (methane is buried in pockets with the coal and exposed during mining) to reach unsafe levels. Underground computers monitor oxygen, methane, other gas levels and other factors that could pose a safety problem.
"We operate one of the safest mines in the world, and we're proud of that," said Roy Pride, superintendent at the Baily mine.
After a quick elevator trip 600 feet down, visitors enter a well-lit mine entranceway. The mine walls are white, sprayed with powdered limestone that serves as dust supression and helps prevent a potential fire from spreading.
To travel around the mine quickly, miners use electric coal cars that run on tracks, and are equipped with two tiny headlights to illuminate the pitch-black darkness. All hard hats are also fitted with miner's lights.
"There are 400 employees that work here," noted Dan Anderson, assistant superintendent of the Baily mine. "we haven't seen one yet, and we're several miles into the mine. That should give you a sense of how large this place really is."

All Aboard

Once coal is mined, it is a major task to move it from a mine to the generating station. The domestically mined coal that Exelon purchases for its plants in the east is shipped by rail, on the Norfolk Southern Railroad, which operates more than 22,000 miles of railroad in the United States and Canada.
According to Chuck Fike, utility manager for Norfolk Southern's northern region, the shipping process begins approximately one month before the coal is ready for shipment with Norfolk Southern, the coal producer and Exelon agreeing to a permit, outlining when the coal will be ready, how much coal will be shipped and the quality of the coal.
A typical coal train, destined for Exelon's eastern plants, is 115 cars, weighs more than 12,000 tons and takes three diesel locomotives to pull it over the Allegheny Mountains. On average, it takes the train 30 hours to reach the Exelon's eastern plants from the Baily coal mine.
Once the train travels over the mountains, it chugs through Harrisburg, Pa., and on to Cromby station unloading 35 to 50 of its 115 cars. As the trains moves closer to metropolitan areas, specifically the last 12 miles of the journey to Eddystone Generating Station, Norfolk Southern has to obtain special clearances because it now shares portions of the line with SEPTA, a local commuter passenger train service, and Amtrak, a national passenger train network.

Final Destination

When the coal arrives at a station, Exelon Power employees in the station's fuels group begin unloading it. A dumper secures the train car to its platform and flips the entire car upside down.
Once flipped, coal enters a hopper, or underground storage tank, and is moved by conveyor belt to the crusher, which crushes the coal into more storable size pieces, roughly 1.25 inch chunks.
After going through the crusher, the coal is moved by conveyor belt to a hopper inside the plant. Hoppers are giant storage containers, holding on averag, 2,500 tons of coal until it is ready for use. A plant typically has four hoppers.
When the coal is ready for use, it is sent through a mill to be crushed into a powder. The coal powder is then blown into the steam boiler furnace where it is burned. The heat generated by this combustion is used to produce steam which in turn, rotates the turbine generators to produce electricity.
Coal provides Exelon Generation with a domestic fuel, giving the company the diversity it needs in today's demanding market. Looking to the future, it seems coal plants will be an area of growth in the power industry. John W. Rowe, Exelon chairman, president and CEO, recently said during an interactive broadcast that the area for new construction "looks more like for a coal plant" than any other.
And with newer clean coal technology making coal a more environmentally sound fuel, it seems clear coal plants will be around for some time to come.

[Anonymous]

Dave,

Thanks for sharing this very interesting and informative piece of literature. It's nice to know the full story of coal from mine to power plant. Every time I run a coal drag I have often wondered about the process as a whole and now I know a whole lot more!!!

[CSSHEGEWISCH]

Exelon is the parent company of Commonwealth Edison (northern Illinois) and Philadelphia Electric (SE Pennsylvania). It's interesting to find out how far they have to go to get suitable coal for their plants. Also note that the plants are designed for a specific grade of coal and new supply sources have to be carefully selected. Using the wrong grade of coal can affect a power plant's performance as surely as it affected a steam locomotive's performance.

[Anonymous]

Your article is great. I was a Southern Company employee back in my 20's and early 30's building two similar plants (Wansley and Scherer) as you described. After reading you companies article the hurtles of time fell down and I was back on the base slab looking up at a real large piece of work. There is nothing in the world quite like watching those things come out of the ground when they are being built and the come to life in commercial operation for the first time. The reciept of the first shipment of coal from the railroad (Norfolk Southern) is viewed as the beginning of "bringing the baby to life." thanks for the thread, you made a 50 something mans day.

[MP173]

88:

Great article. Thanks for taking the considerable time and effort to share it.

ed

[Anonymous]

Lots of coal trains here in British Columbia, but none are going to power plants here in the province, all are headed overseas, most to China I would imagine.

[locomutt]

Very GOOD article,Thanks for sharing it with us.[:)]

[mvlandsw]

Surprising to hear of coal coming from Venezuela.