Wyoming Coal Market Shrinking?

[Anonymous]

Rail problems could shrink Wyoming coal market
Total Powder River Basin rail delivery between BNSF Railway and Union Pacific is about 20 million tons short of contracted delivery due in part to derailments in 2005 and ongoing capacity issues, according to the Gillette, Wyo., Sttar Tribune.
A spokesman for the National Rural Electric Cooperative Association said the ongoing rail delivery problems could force Powder River Basin coal customers to seek other fuel sources or turn to the wholesale market to meet service commitments to their customers.

That doesn't bode well for Wyoming's export coal industry, which injects more than $450 million into local and state coffers annually in taxes and royalties.

"It will have an impact on the economy of coal-producing regions," said NRECA spokesman Patrick Lavigne. "(Utilities) that are unable to receive their contracted allotment of Powder River Basin coal will, out of necessity, either have to increase investment in natural gas-fired generation or buy electricity on the wholesale market."

The shortfall of Powder River Basin coal deliveries could increase utility bills by $2 billion in 2006, according to Basin Electric Power Cooperative, which has filed a grievance to the Surface Transportation Board regarding coal delivery with BNSF Railway.

Despite coal delivery shortfalls, both railroads delivering Powder River Basin coal have posted strong earnings. Union Pacific, for example, reported this week that it doubled its profits to $311 million during the first quarter of 2006, crediting an increase in overall commodity volumes to help the railway overcome increased fuel costs.

Local coal producers have said they are confident that both railroads are investing in major maintenance and capacity improvements to the Powder River Basin rail system.

(This item appeared in the Star Tribune April 27, 2006.)

[edbenton]

From talking to a couple friends of mine out there in the PRB they are loading trains as fast as possible and right now are catching up on deliveries. They should meet the goals this year as long as the tracks and engines hold up.

[PNWRMNM]

A far more serious threat was discussed in a Wall Street Journal article of about a week ago on scrubbers at coal fired plants. The short version is that with scrubbers the utilities can burn high sulfur eastern coal at about the same per ton delivered price as PRB coal but with far higher heating value per pound and therefore lower cost per million BTU. The implication was that with scrubbers seeming to be mandated regardless of type of coal, the utilities would be able a shift back to eastern coal. If so, that is a serious threat to PRB coal.

Mac

[dldance]

It takes much more than the addition of a scrubber to convert a PRB burning power plant to some other source. Don't sell your stock just yet.

dd

[spbed]

This is really old news (yawn). Reported on this board & Trains magazine already some months ago. They did not even mention that UPRR is suing BNSF due to the condition of the tracks in the PRB cause BNSF is suppose to be maintaining them & UPRR pays BNSF for the maintanence. [:(]

QUOTE: Originally posted by Limitedclear

Rail problems could shrink Wyoming coal market
Total Powder River Basin rail delivery between BNSF Railway and Union Pacific is about 20 million tons short of contracted delivery due in part to derailments in 2005 and ongoing capacity issues, according to the Gillette, Wyo., Sttar Tribune.
A spokesman for the National Rural Electric Cooperative Association said the ongoing rail delivery problems could force Powder River Basin coal customers to seek other fuel sources or turn to the wholesale market to meet service commitments to their customers.

That doesn't bode well for Wyoming's export coal industry, which injects more than $450 million into local and state coffers annually in taxes and royalties.

"It will have an impact on the economy of coal-producing regions," said NRECA spokesman Patrick Lavigne. "(Utilities) that are unable to receive their contracted allotment of Powder River Basin coal will, out of necessity, either have to increase investment in natural gas-fired generation or buy electricity on the wholesale market."

The shortfall of Powder River Basin coal deliveries could increase utility bills by $2 billion in 2006, according to Basin Electric Power Cooperative, which has filed a grievance to the Surface Transportation Board regarding coal delivery with BNSF Railway.

Despite coal delivery shortfalls, both railroads delivering Powder River Basin coal have posted strong earnings. Union Pacific, for example, reported this week that it doubled its profits to $311 million during the first quarter of 2006, crediting an increase in overall commodity volumes to help the railway overcome increased fuel costs.

Local coal producers have said they are confident that both railroads are investing in major maintenance and capacity improvements to the Powder River Basin rail system.

(This item appeared in the Star Tribune April 27, 2006.)

[jeaton]

Not likely.

[miniwyo]

well The mines are putting oout more coal than the ever have before. Its just getting them loaded, once the RR's get fixed up and get some more capacity going things will return to normal.

[jeaton]

What is the latest word on the shortage of tires for the monster off road trucks?

[miniwyo]

Now that is a problem. The mines are buying them just as fast as the factories can make them.