Coal’s Vital Role in America’s Energy Future Education 07-09.pdf · Coal’s Vital Role in America’s Energy Future Kim Link, Spokeswoman ... Call 307-464-2201 for details and

Arch Coal, Inc.

Coal’s Vital Role in America’s Energy FutureKim Link, SpokeswomanArch Coal, Inc.

July 24, 2009William Jewel College, Liberty, Missouri

Arch Coal, Inc.

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P R O G R E S S I V E R E S P O N S I B L E V I T A L G R O W I N G

Arch Coal is a leader in the U.S. coal industry

Source: ACI

• One of the largest coal producers in the United States

• Supply roughly 12 percent of the U.S. coal supply

– Provide cleaner-burning, low-sulfur coal to domestic power producers to fuel 6 percent of the nation’s electricity

– Ship coal to domestic and international steel manufacturers as well as international power producers

• Talented workforce operates large, modern and efficient mines

• Industry leader in mine safety and environmental commitment

Arch Coal, Inc.

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Source: ACI assigned reserves at 12/31/08

12

234 5 21

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Arch’s national scope of operations and reserve base includes presence in four major U.S. coal basins

Western Bituminous1. Arch of Wyoming2. Skyline3. Dugout4. Sufco5. West Elk

Powder River Basin1. Coal Creek2. Black Thunder

Illinois BasinKnight Hawk

Central Appalachia1. Mountain Laurel2. Coal-Mac3. Cumberland River4. Lone Mountain

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Free surface coal mine tour offered to the public during the summer at Thunder Basin Coal Company’s Black Thunder mine near Wright, Wyoming. Fly into Rapid

City, South Dakota and incorporate sight seeing at Mt. Rushmore and Devil’s Tower. Call 307-464-2201 for details and reservations.

Arch Coal, Inc.

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What is coal?

Coal is a combustible rock formed from

the remains of trees, ferns and other

plants that existed and died during the

time of the dinosaurs

Source: ACI

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Where is coal found?

Source: EPRI

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What is coal used for?

Coal (85%)

Source: EIA, Annual Energy Review 2008 Projected

2008 U.S. Coal Consumption: 1.1 billion tons

Electric generation (94%)

Industrial, Residential& Commercial (5%)

Metallurgical (2%)

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Coal is the dominant fuel source for U.S. electric generation

Coal (85%)

Source: EIA Flash Report

2008 Net Electricity Generation by Source(per billion KwH)

Coal (48%)

Nuclear (20%)

Natural gas (21%)

Hydro (6%)

Other Renewables (4%)

Oil (1%)

Arch Coal, Inc.

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Missouri gets nearly 82% of its electricity from coal

Coal (85%)

Source: EIA State Electricity Profiles

2008 Net Electricity Generation in Missouri(per billion KwH)

Coal (82.4%) Nuclear (10.3%)

Natural gas (5.5%)

Hydro (1.3%)

Crude Oil / Other (.5%)

Arch Coal, Inc.

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Myth #1Perception

Mining coal is hard, back-breaking work performed for low pay

RealityModern coal mining is an engineering marvel performed by highly skilled and well-paid engineers, technicians and

equipment operators

Arch Coal, Inc.

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Today’s coal mine is highly mechanized and computerized

• Workers are generally equipment operators, mechanics, electricians, engineers

• New generation of miners comfortable with joysticks and computers

• Among the most regulated industries in the nation

Source: ACI

Arch Coal, Inc.

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Anatomy of a longwall operation

Copyright Arch Coal, Inc. 2007

Arch Coal, Inc.

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A longwall is the most efficient method for extracting coal underground

Source: ACI

Arch Coal, Inc.

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Anatomy of a dragline operation

Copyright Arch Coal, Inc. 2007

Arch Coal, Inc.

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The dragline is one of the world’s largest earth-moving machines

Source: ACI

Arch Coal, Inc.

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The dragline’s bucket can dig an Olympic-sized swimming pool in 25 minutes

Source: ACI

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After the soil and rock are removed, electric shovels move coal to haul trucks

Source: ACI

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A single load of coal in the typical haul truck can power the average U.S. home for 30+ years

Source: ACI

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Coal is loaded in rail cars, barges or trucks and transported to power producers

Source: ACI

Arch Coal, Inc.

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Myth #2Perception

Mining is the most dangerous occupation in America

RealityIn terms of injuries, working in a coal mine is safer than working on a farm, in a factory or even at a retail outlet

Arch Coal, Inc.

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U.S. Industry Injury & Illness Rates(per 100 employee-hours worked)

Public perception of unsafe work conditions contradicts today’s modern coal mining

Sources: NMA, MSHA, Department of Labor Statistics

U.S. Coal Mine Safety & Productivity Trends(1970-2007)

0

50

100

150

200

250

300

1970

1980

1990

2000

2002

2004

2006

2008

No.

of F

atal

ities

0

200

400

600

800

1000

1200

1400

Milli

on S

hort

Tons

Fatalities U.S. Production

The U.S. coal mining industry is safer than construction, forestry and fishing, manufacturing

Arch Coal, Inc.

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Myth #3Perception

Environmental issues outweigh any positive benefits for using coal

RealityThe increasingly clean use of coal has led

to dramatic improvements in the quality of America’s natural environment

Arch Coal, Inc.

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Coal use is consistent with the nation’s environmental objectives

Source: EPA Air Quality Trends 2008

Coal-based electricity has increased >180% since 1970

Comparison of Growth Areas and Emissions, 1970-2008

Arch Coal, Inc.

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Reclaiming the land is part of the engineering plan and carefully followed• Great care is taken to return the land

to a natural and productive state

• Every affected acre must be restored to an equal or better condition

• In West Virginia less than 1% of the state has been, is or ever will be affected by surface mining, and some of those former sites are developed for economic diversity

• In the West, reclaimed land is virtually indistinguishable from surrounding terrain within a few growing seasons

Source: ACI, West Virginia Department of Environmental Protection

Arch Coal, Inc.

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Myth #4Perception

The United States must eliminate fossil fuel use to reduce global climate change

RealityThe developing world will continue to use

indigenous energy sources, the U.S. must provide technology leadership to

make an impact

Arch Coal, Inc.

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Economic growth around the world is putting pressure on energy markets

Source: EIA International Energy Outlook 2009, EIA International Energy Annual 2006 (published 12-08)

Electricity demand in developing nations will nearly triple the growth rate of the developed nations through 2030, as defined by membership in the Organization for Economic Cooperation and Development (OECD)

Electricity Consumption 1996-2006(percent change, billion kilowatt hours)

U.S. India

17.0%

60.1%

174.6%

China

Worldwide Electric Generation & Forecast(billion kilowatt hours)

04,0008,000

12,00016,00020,00024,00028,00032,00036,000

2008 2030

OECD Non-OECD

Arch Coal, Inc.

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Coal has been the world’s fastest-growing fuel source in the past seven years

Source: BP Statistical Review of World Energy 2009

Cumulative Percent Change in Global Energy Consumption2000 – 2008

(in million tonnes of oil equivalent)

41%

19%

25%

11%

6%

Coal

Hydro

Nat. Gas

Oil

Nuclear

• Since 2000, global coal use has grown by 41%, roughly double the consumption growth in natural gas

• Growth in coal demand will continue to be driven by consumption in the developing world, with gains in the developed world as well

• Fossil fuels are expected to remain dominant global energy sources through 2030

Arch Coal, Inc.

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Oil

Natural Gas

Coal

0

100

200

billions of tonnesof oil equivalent

Coal’s advantage: abundant, secure and widely dispersed

Source: ACI, Bank of America, BP Statistical Review 2009 and Blackwell Energy Research

Based on current production levels and proven reserves, coal should outlast both gas supplies and oil reserves by more than 3 times

North America

Central and South America

Europe

Middle East

Africa

Russia

India

China

Other Asia Pacific

Arch Coal, Inc.

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Coal is an affordable and secure energy choice for America

Coal Natural Gas Oil

Coal: 94%

U.S. Petroleum Supply(million barrels per day, 2007)

U.S. Energy Reserves(in trillion Btu)

Source: EIA, BP Statistical Review of World Energy 2008, Argus Coal Daily and NYMEX

Domestic OPEC Non-OPEC

OPEC 30%

Domestic 35%

OtherImports

35%

PRB8800

NaturalGas

CrudeOil

FOB rail (3Q09)

Wellhead (prompt month)

$10.33=

$60perbbl

>7x>7x

$0.50

$3.37

~23x~23x

U.S. Fuel Prices($/million Btu at 7/10/09)

Arch Coal, Inc.

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Where will the United States get its future power, if not from coal?

Source: EIA, ACI and Baker Hughes

• U.S. natural gas production is keeping pace with demand at current 20% market share levels – but the ability to expand share significantly is questionable.

• Since 2000, nuclear utilization has been at or close to 90% and the fleet is aging. At least 30 new units are needed by 2030 just to maintain current market share.

• Hydro power is concentrated in the Northwest. No net additions to capacity are anticipated.

• While renewables can play a growing role (beyond 3% currently), they face enormous hurdles before achieving baseload status.

– Even if the U.S. can meet an ambitious goal of 25% renewable energy by 2030, it still leaves 75% of our power requirements to other fuels.

Arch Coal, Inc.

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Coal can and will handle the lion’s share of new electricity demand in the U.S.

Source: EIA (2007 actual data; 2030 projected in AEO 2009)

Net Generation by Fuel Type (in billion kilowatt hours)

Coal

Nuclear

Hydro

Renewables

Natural Gas

Crude Oil

2,4142,022

908805

1012892

301248

730352

61 66

2030

2007

2030

2007

2030

20072030

2007

2030

2007

2030

2007

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Coal: 94%

Low-cost electricity enhances America’s standard of living and global competitiveness

Source: EIA Electric Power Annual, March 2009, EIA International Electricity Prices for Households

Power Costs(U.S. cents per kilowatt hour)

Ireland 24.4Germany 22.2 United Kingdom 21.9Japan 17.8France 15.8United States 10.6

NY 18.8CA 14.4TX 12.8 MO 9.1

There is a strong correlation between coal use and power prices.Electricity is a major input cost in most economic enterprises – esp. manufacturing.

30%

63% 91%8%

66%95%

65%

7%

73%

74%

22%1%

82%

52%

37%

77%

60%

48%

81%

48%

37%

66%

47%

26%

61%

95%85%

2%

14%

35% 51% 63%

41%

94%44%

53%

98%

61%63%

0%

% = % of total generation from coal Note: Hydro states rank in top 10 states

for low electricity prices

Lower 48 states plus DC

Least expensive

Most expensive

Hydro#1

CT: #49

Arch Coal, Inc.

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Coal can be converted into transportation fuel

• At current oil prices, coal-to-liquids facilities are economically feasible

A plug-in hybrid is one entry for coal into the transportation market

• Likely to create significant off-peak demand for electricity

Gasification can reduce emissions and transform coal into pipeline-quality natural gas

• IGCC and CCS should enable coal to prosper in a carbon-constrained world

Public policy initiatives aimed at domestic energy security are spurring debate on energy legislation and incentivesfor clean-coal technology development

Over the long term, clean-coal technologies can broaden market demand for coal

Source: ACI

Arch Coal, Inc.

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Coal can play a significant role in meeting America’s future energy needs• Nearly half of electric generation and growing• Coal conversion technologies will help satisfy

America’s oil addiction and provide greater U.S. energy independence

• Coal has an economic advantage versus competing fuels, and it has been proven more reliable

• Technology is enabling increasingly clean and carbon-friendly uses of coal

• America has well-developed and reliable infrastructure in place to produce and transport coal—expansion is possible albeit with significant levels of investment

Source: ACI

Arch Coal, Inc.

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This presentation and other teaching materials and links are available online

www.archcoal.com/community/justforteachers.aspx

Source: ACI

Arch Coal, Inc.

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www.teachcoal.org is an excellent resource

Source: American Coal Foundation

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And a site for your students… kcplkids.com

Documents

Coal’s Vital Role in America’s Energy Future Education 07-09.pdf · Coal’s Vital Role in America’s Energy Future Kim Link, Spokeswoman ... Call 307-464-2201 for details and