CNX Coal: Bad Timing?

Is there a worse time for an IPO of a coal company? 

Or, is this the best time to realize maximum value in an investment?   Article link: http://goo.gl/fQEoPo

Given the recent pile-on by the press for all things coal, one might expect Consol's spinning off of its coal assets into CNX Coal may be a case of really bad timing. Could there be a more troubled industry to invest in?

There are certainly investments less likely to pay off than CNX Coal. When it is all over with, CNX will be the last company to mine the last carload of coal in the US, whenever that day comes. And that be for a long while.

So, until then they will operate their superwall mines in multi-market Pittsburgh 8 coal and continue a strong presence in the low vol met markets. This insures that CNX Coal will survive and possibly do quite well.

We Knew All Along......

 

We Knew It All Along

There was an unmistakable momentum this past week for issuing press releases declaring a divestiture from all things coal.

A few of these were heartfelt changes in corporate approach and some were clearly press relations stunts. Even some nations which neither mine or use coal substantially were compelled to jockey to the highest place in the public square to denounce the industry.

This public handwashing was meant to stake one's ground as an early skeptic for coal's place in the future energy triumvirate and, to an intellectually lazy public, it probably worked as intended. We just knew all along.

The spectacle reminded me of a scene from the movie Wall Street where protagonist Bud Fox's boss, once all too eager to enjoy the profits of his lehrling's success, became all too eager to let the world know he had reservations about Fox and his methods all along. Just knew all along.

For the rest of us living in the real world, coal will continue to provide for the world's baseload energy, steelmaking, chemical production, filtration uses and others, albeit at a reduced production rate. Just like we have- all along.


#coal   #mining   #pressrelease   #economy   #environment   #processing   #wv  

Not Dead Yet....

Philadelphia, PA: Contrary to some recent press articles, the coal industry in general, and the anthracite coal industry in particular, are not yet dead.

Story: http://goo.gl/dGqQFp

A global economic slowdown coupled with changes in the power generation matrix in the United States are the major contributing factors in reduced coal production. While the effect of global economies on the coal industry are cyclical and recoverable, the changes in the power production matrix are transformative and will require a recalibration of our industry.

Coal will survive, albeit at reduced production rates. Some are predicting a return to 1980's production levels which is still substantial and economically important to the nation. Presently, mining and processing capacities far exceed the immediate delivery markets and this is unlikely to change for the next 24 months. How will we rightsize to meet this challenge?

Rightsizing of the industry will probably follow the arc of the 1982-1983 downturn which idled many of the higher cost mines and advanced the closing of older mines which were too inefficient to keep in production. Some coal qualities will fall from favor while proven qualities such as Pittsburgh No. 8 and low volatile coals will maintain their niches in the market mix.

We will rightsize. We will re-calibrate. And, we will survive. As we always do.

So, let's stop chipping away at that epitaph for now.

Shale Gas and Coal

Once upon a time a person could enter any of fifty hotels in Pithole, Pennsylvania and pay for a shot of

whiskey with a gold coin. Today, Pithole is an empty field in Venango county indicating little of its importance as the epicenter of the world's first oil boom. The oil boom in Pithole had little effect on the state's coal industry which had operated for nearly forty years and was quite stable.

Today's Pithole 2.0, known as the Marcellus shale gas play, seems poised to strike the death knell for Pennsylvania coal with the endlessly abundant supply of this fracked methane supply.

NPR Link:  http://goo.gl/MzwI17

Power developers have rushed into the region to build gas-fired combined cycle plants as replacements for an aging fleet of coal-fired utilities across the state. The claims being made for these projects are almost as epic as the Pithole story must have been in 1860.

We are told that shale gas-fired plants offer a more environmentally friendly; less carbon-laden and more reliable approach to electrical production. But is that really true?

Natural gas burns cleaner, they say. Gas is a natural partner to the renewable energy sector, they say. What they don't say is that the full lifecycle of shale gas production from spudding-in to production brings a myriad of serious environmental and carbon impacts that rarely get mentioned- fugitive methane emissions, to name but one. And, let's not forget that gas plants have no means for onsite fuel storage like coal or nuclear facilities. If the fuel doesn't arrive for any reason, the plant doesn't operate and that should dispel the myth of reliability.

Seeking to displace the availability and reliability of coal as a foundation fuel for Pennsylvania and the PJM with a fuel source which could turn out to be another Pithole is just not wise.

Let's not buy a shot of whiskey with that gold coin just yet.

Coal Under Siege

 

Under Siege....

Each day seems to bring a new setback for the coal industry.

Financial institutions announce their intentions tocease investing in, or financing coal related projects. Mining companies announce cutbacks in productionor, worse still, layoffs and terminations of their labor force. Global economic indicators point to yet another quarter of decreased industrial production and yet another coal-fired power plant is scheduled for decommissioning.

Advances in clean coal technology, carbon capture and storage and full lifecycle fuel management are made moot by a mob-like mentality that blames coal for every ill that ails us. Few seem willing to support a planned and graceful transition of coal in the energy mix over the next sixty or so years.

The giddiness surrounding our newfound shale gas resources is premature. Production curves from early Marcellus wells have already been scaled back and this should temper our rush to gas-fired power plants. And besides, natural gas is still fossil fuel no matter how many public relations companies are assigned to say otherwise.

We need a strategy and a plan to survive what has become a siege. The barbarians are at the gate.



#coal   #shalegas   #marcellus   #layoffs   #mine  #mining   #naturalgas

Is Bituminous Coal the New Anthracite?

This is not the first downturn in coal, nor the last.

In previous downturns we accepted that business would return to earlier levels at some time in the future. We think of this current downturn as being more transformative than any before but, is that really true?

The coal industry has experienced a transformative decline in its past and we may be able to learn from that experience.

Anthracite coal mining was the first truly commercial, large scale mining endeavor in the United States. The coal was difficult to burn and difficult to mine but the industry created and advanced both end user marketing and mining engineering to grow its annual production from a few hundred tons in 1823 to its peak production of 99 million tons in 1919.

When World War I ended in 1919, anthracite coal faced market pressures from many different areas: fuel oil replacement in home heating and loss of industrial and power generation markets to a rapidly mechanizing, and cheaper, bituminous coal industry. Except for temporary upturns in production during World War II, the decline of the anthracite industry was a constant.

Just as bituminous coal faces a permanent loss of power generation markets due to environmental regulation and legislation, anthracite faced its own permanent loss of markets from sweeping technology shifts, the greatest being the wide area distribution of electrical power for which anthracite coal was not competitive. It is not without irony that bituminous coal is losing the very market space which had been originally taken from anthracite.

If history can inform us of the future, then perhaps reading about the decline of the anthracite industry will help us formulate plans for addressing our own long-tail production decline.


The Face of Decline: The Pennsylvania Anthracite Region in the Twentieth Century: Dublin and Licht.

Amazon link: http://goo.gl/aLRF2J

A New Process for an Old Process

This is always a process- beginning a new social media presence for a company. The old days were fax machines and telephone calling cards but today we are communicating across our mobile devices at such rapid rates that it boggles the imagination.

For many years, coal's place in the order of things was assured and predictable, even against market turns and twists. Now the industry seems embattled along nearly every front and there seems no end in sight.

We have weathered economic downturns before, but the current unpredictability will likely render us a very different industry when the downturn ends.

It is clear that larger mines, especially longwall and superwall mines will rule the future with the smaller operators simply not being able to compete against the technical economies of scale available to the top tier of operations.

We will survive this and we will exit this gauntlet a stronger and even more viable industry. Change is good and our industry is fully prepared to meet that challenge.