Eastern Railroad Discussion > [Coal] Alpha Natural Resources files for bankruptcy

Coal miner Alpha Natural Resources filed for bankruptcy this weekend.  The company is expected to shrink, but continue to operate many of its mines over the next 18 months with "debtor in possession" financing.  That means its lenders have agreed to lend it even more money, but have taken over control of the company.  The bankruptcy court can impose changes on management and labor as the new owners try to save some of the company's operations. At this point there are no plans to liquidate / close the company.

Other eastern coal operators which have filed for bankruptcy in recent months include James  River and Patriot.  Many coal companies are finding their bonds are treated as junk or near junk (substantial probability the company won't be able to pay interest or principal in the future).

It continues to be a perilous time to be in the coal business, selling equipment to the coal business, or hauling away its coal in unit trains.

 

From Wikipedia...Alpha Natural Resources is a large American producer of metallurgical coal ("met coal") for the industrial production of steel and iron and low-sulfur thermal coal ("steam coal") to fuel steam boilers for the production of electrical power. The company also provides industry services relating to equipment repairs, road construction and logistics with domestic operations and coal reserves within the states of Virginia, West Virginia, Kentucky, Wyoming, Utah, Illinois, Tennessee, and Pennsylvania. Alpha Natural Resources doesn't produce all of the coal it sells; much of the coal sold by Alpha Natural Resources is purchased from independent mining operations and then resold in the worldwide market.The 2009 takeover of Foundation Coal also provided Alpha Natural Resources with the ability to directly access the Cumberland Mine Railroad and to rail transport coal in Pennsylvania.

Thanks for the connection. I didn't realize they had taken over the old US Steel New Cumberland marketing and re-selling.

During my past week of train watching, I saw ONE coal train in PA........and I saw a LOT of trains.

I think that speaks VOLUMES........... 



Edited 1 time(s). Last edit at 08/03/15 14:22 by ns1000.

Based on today's announcement, it is Obama's intention to "clear the air" by driving coal power plants out of existence, except for a very few, which are totally modernized.

MEKoch Wrote:
-------------------------------------------------------
> Based on today's announcement, it is Obama's
> intention to "clear the air" by driving coal power
> plants out of existence, except for a very few,
> which are totally modernized.

He said that wad one of his goals on a SF radio station just weeks before his first election.

Regards
Russ

Posted from Android

NSTopHat Wrote:
-------------------------------------------------------
> MEKoch Wrote:
> --------------------------------------------------
> -----
> > Based on today's announcement, it is Obama's
> > intention to "clear the air" by driving coal
> power
> > plants out of existence, except for a very few,
> > which are totally modernized.
>
> He said that wad one of his goals on a SF radio
> station just weeks before his first election.
>
> Regards
> Russ
>
> Posted from Android

And by executive fiat through the rulemaking process he today has kept his promise -- plus 6 percent more. As if that were a trivial amount. I was amazed at Mitch McConnell's composure in his reaction speech on the Senate floor. Like any really good politician, he must have ice water running in his veins to keep his cool like that. He and the people of the Commonwealth of Kentucky (and other states too) have to be beside themselves. Everyone knew this was coming, but the arrogance of taking the previous targets and pushing them up by another 6 percent out of the blue like that is beyond breathtaking. Lackawanna484 has said it memorably here on TO before: "These guys would suspend the law of gravity if they could".

I'd bet that a lot of spreadsheets are being recalculated tonight by NS, CSX, BNSF and UP.

MC
Columbia, Missouri

ironmtn Wrote:
-------------------------------------------------------
> (snip)
>
> And by executive fiat through the rulemaking
> process he today has kept his promise -- plus 6
> percent more. As if that were a trivial
> amount. I was amazed at Mitch McConnell's
> composure in his reaction speech on the Senate
> floor. Like any really good politician, he must
> have ice water running in his veins to keep his
> cool like that. He and the people of the
> Commonwealth of Kentucky (and other states
> too) have to be beside themselves. Everyone knew
> this was coming, but the arrogance of taking the
> previous targets and pushing them up by another 6
> percent out of the blue like that is beyond
> breathtaking. Lackawanna484 has said it memorably
> here on TO before: "These guys would suspend the
> law of gravity if they could".
>
> I'd bet that a lot of spreadsheets are being
> recalculated tonight by NS, CSX, BNSF and UP.
>
> MC
> Columbia, Missouri

Mitch McConnell and the people of Kentucky saw the light in 2012.  AEP proposed eliminating the Big Sandy electric plant (IIRC) due to the new EPA rules applied to the middle aged coal fired plant.  Everyone went nuts, demanding AEP keep the plant open.

AEP said "fine". We'll keep the plant open, and we'll burn Kentucky coal. But we won't make our Ohio, Indiana, Texas etc customers share in the cost. Here's the deal - "rates for Kentucky rate payers will go up about $100-$125 a month to pay for this, and commercial costs will go up about 15%.  Support melted like an ice cream cone on a hot day, and the miners were standing there, all alone.  Mitch and the Kentucky legislators read those tea leaves and that was that...

Before assigning blame for the eastern coal industry entirely to EPA regulations, I suggest you look at the cost of natural gas. Hydraulic fracturing has opened up major supplies of gas and lowered the price. So if you are an electric company, it is a lot more ecomical to burn natural gas to make steam than coal. The fact that you don't have environmental costs (coal ash, storage, and air pollution) is an added bonus.

It will be interesting how quickly the railroads react to declining coal traffic. Is it time to sell of their coal branches to regionals and short lines?



Edited 1 time(s). Last edit at 08/04/15 05:46 by Christo.

Lackawanna484 Wrote:
-------------------------------------------------------
> Mitch McConnell and the people of Kentucky saw the
> light in 2012.  AEP proposed eliminating the Big
> Sandy electric plant (IIRC) due to the new EPA
> rules applied to the middle aged coal fired
> plant.  Everyone went nuts, demanding AEP keep
> the plant open.
>
> AEP said "fine". We'll keep the plant open, and
> we'll burn Kentucky coal. But we won't make our
> Ohio, Indiana, Texas etc customers share in the
> cost. Here's the deal - "rates for Kentucky rate
> payers will go up about $100-$125 a month to pay
> for this, and commercial costs will go up about
> 15%.  Support melted like an ice cream cone on a
> hot day, and the miners were standing there, all
> alone.  Mitch and the Kentucky legislators read
> those tea leaves and that was that...

Thanks for that information. I was not aware that this had occurred. This information certainly helps to explain Mitch McConnell's cool-as-a-cucumber reaction today (even by his generally courtly and gentlemanly standard). Maybe not so much ice water flowing in the veins after all.

Christo Wrote:
-------------------------------------------------------
> Before assigning blame for the eastern coal
> industry entirely to EOA regulations, I suggest
> you look at the cost of natural gas. Hydraulic
> fracturing has opened up major supplies of gas and
> lowered the price. So if you are an electric
> company, it is a lot more ecomical to burn natural
> gas to make steam than coal. The fact that you
> don't have environmental costs (coal ash, storage,
> and air pollution) is an added bonus.
>
> It will be interesting how quickly the railroads
> react to declining coal traffic. Is it time to
> sell of their coal branches to regionals and short
> lines?

I am very much aware of the impact that the tremendous increase in natural gas production has had in recent years on fuel choices for electric power generation. The economics are very favorable -- that's well understood. And I don't entirely blame EPA regs at all. That said, I still find the addition to the target that was announced today to be rather stunning, particularly after the draft target was already considered to be steep. I don't think I am alone on that. Everything I saw on television during the evening newscasts on several channels of various political persuasions seemed to suggest some rather surprised folks.

And to clarify: in my original post, I cited a 6 percent increase in the target. That was in error. The 6 percent increase is in the plan for use of renewable sources, not the target for CO2 emissions reductions from power plants. That is correctly a 2 percent increase to a 32 percent reduction from 2005 levels (as compared to the draft target of a 30 percent reduction from 2005 levels). I regret the error. But I still find the increase in both targets to be surprising and not without challenges, even for a 2030 target date.

Renewables ain't going to be so easy, I think, for a 6 percent jump over the draft target. There is gradually growing opposition to large wind farms. And here in Missouri, a major transmission line to bring wind-generated electricity into the Midwest from western sources, the so-called Grain Belt Express, was recently turned down by state regulatory authorities. The reasons: considerable opposition from landowners whose property the line would cross, and a state PSC finding that not enough of the power being carried would go to regional utility grids. It is is an example of the fact that it is not a hands-down case for renewables, and for the necessary support infrastructure build-out. I've heard the mantra so often from the wind energy people that. "What we need are the transmission lines to get to market."  This decision demonstrated that it could be more difficult to achieve than might have been thought by some.
http://www.kansascity.com/news/government-politics/article26031445.html

I'll still bet on some adjusted plans at NS, CSX, BNSF and UP. Time to hit the Excel sheets.

MC
Columbia, Missouri



Edited 1 time(s). Last edit at 08/03/15 21:14 by ironmtn.

Coal has been ona general decline since at least WWII,  Oil replaced coal as a heating fuel,  Railroads diezelized,  Mining mechanized and laid off
thousands of workers over the past 60 years,  Powder River coal gave mining an uptick, but fracking for Natual Gas, not to mention Wind and Solar
are gaining as the cost per KW goes down.   Hydo electtric projects both in the West and the Tennessee Valley cut coal out from markets in those regions.
Fracking may not long continue if it proves to pollute dringing water over large regions.  

    

kpcmcpkva Wrote:
-------------------------------------------------------
> Coal has been ona general decline since at least
> WWII,  Oil replaced coal as a heating fuel, 
> Railroads diezelized,  Mining mechanized and laid
> off
> thousands of workers over the past 60 years, 
> Powder River coal gave mining an uptick,
> but fracking for Natual Gas, not to mention Wind
> and Solar
> are gaining as the cost per KW goes down.   Hydo
> electtric projects both in the West and the
> Tennessee Valley cut coal out from markets in
> those regions.
> Fracking may not long continue if it proves
> to pollute dringing water over large
> regions.  
>
>     

The wastewater disposal problem with small earhquakes will also be a huge problem for fracking.

(Areas of Texas and Oklahoma have experienced frequent small earthquakes since high pressure injection of waste water has been instituted. There are several compalints working their way into the courts.

Whether the complaints eventually make it to trial and subject the process to the rule of law will be very interesting to watch.  But the outcome is not likely to be a return to burning KY or WV coal...)

kpcmcpkva Wrote:
-------------------------------------------------------

> Fracking may not long continue if it proves
> to pollute dringing water over large
> regions.  

Many folks in PA have a huge issue with this, as well water out of their faucets is flamable. There are many YouTube videos showing this occuring. The fracking companies and local & regional governmental agencies are responding with "prove it is our fault that your well water has issues that are caused by fracking", while the natural gas well head is right next to the folks who are raising concerns about their well water being contaminated.

Russ

NSTopHat Wrote:
-------------------------------------------------------
> kpcmcpkva Wrote:
> --------------------------------------------------
> -----
>
> > Fracking may not long continue if it proves
> > to pollute dringing water over large
> > regions.  
>
> Many folks in PA have a huge issue with this, as
> well water out of their faucets is flamable. There
> are many YouTube videos showing this occuring. The
> fracking companies and local & regional
> governmental agencies are responding with "prove
> it is our fault that your well water has issues
> that are caused by fracking", while the natural
> gas well head is right next to the folks who are
> raising concerns about their well water being
> contaminated.
>
> Russ

While that was absolutely true about early fracking, it has not been a complaint in newer (since the mid-2000s) wells to the best of my knowledge.  People have complained, however, that their well water has stopped, or has become brackish, since drilling was undertaken.  Most of the U tube videos are taken at a town called Dimock, site of the earliest and shallowest drilling. Fracking allowed natural gas liquids trapped into the rock to enter the water table.

In Pennsylvania, at least since 2005, water samples are taken from residences and wells prior to any drilling, and analyzed under government supervision. This is the baseline. And it is done before permits are issued.  In some counties, freshwater pipes are installed at the driller's expense.

Unlike Dimock and some of the other early sites, new  wells are concrete and pipe lined, and often go several hundred feet below the water table level. That's not to say leaks won't happen, but the level of safeguards has risen considerably.

(Ironically, it's not a lot different than the Centralia coal mine fire, which has been burning for 60 years. A fire started inside an old mine, and it can't be put out. Fractures in the earth allow air to enter, and the fire continues to burn, and to expand slowly. Coal mining didn't stop in the US, although enhanced safety standards were applied.)

What gripes me is that we are cleaning up our air with higher costs to the producers and consumers but China continues to polute the same world we live in big time and we continue to buy their products. They are literally killing their own people as cancer in China is out of control.. Some places are so bad that the air is yellow. If they have some kind of international event in a major city they have the populace stop burning the stoves that heat their apartments for a few days.  We've made a communist country rich that can invest a lot of money in their military might and Vietnam is another communist country that will follow suit.



Edited 1 time(s). Last edit at 08/04/15 07:56 by wabash2800.

wabash2800 Wrote:
-------------------------------------------------------
> What gripes me is that we are cleaning up our air
> with higher costs to the producers and consumers
> but China continues to polute the same world we
> live in big time and we continue to buy their
> products. They are literally killing their own
> people as cancer in China is out of control.. Some
> places are so bad that the air is yellow. If they
> have some kind of international event in a major
> city they have the populace stop burning the
> stoves that heat their apartments for a few
> days.  We've made a communist country rich that
> can invest a lot of money in their military might
> and Vietnam is another communist country that will
> follow suit.


That's actually a reason cited as a need for a carbon tax.  Under that proposal, anything that used a fossil fuel in its production would have a use tax attached tto it.  So that Chinese made computer chip in your Apple computer might have a $2 tax on it, due to the use of coal fired electricity.  The ship which carried it to the US might add a buck to the cost, with bunker fuel and all that. The railroad and truck would add to it.

A US made Tesla, with much of its factory electricity from solar sources, might have a credit, while a GM made Tahoe or Ford Explorer might have additional carbon taxes for the pollution caused by its manufacture.

Needless to say, Asian etc manufacturers don't much like the carbon tax idea.  Nor do many  US manufacturers...

> Needless to say, Asian etc manufacturers don't
> much like the carbon tax idea.  Nor do many  US
> manufacturers...

Nor do most US consumers.

41bridge Wrote:
-------------------------------------------------------
> > Needless to say, Asian etc manufacturers don't
> > much like the carbon tax idea.  Nor do many 
> US
> > manufacturers...
>
> Nor do most US consumers.

Show me anybody that likes paying ANY taxes at all......

chs7-321 Wrote:
-------------------------------------------------------
> 41bridge Wrote:
> --------------------------------------------------
> -----
> > > Needless to say, Asian etc manufacturers
> don't
> > > much like the carbon tax idea.  Nor do
> many 
> > US
> > > manufacturers...
> >
> > Nor do most US consumers.
>
> Show me anybody that likes paying ANY taxes at
> all......

Carbon taxes are one way to right size sharing of pollution burdens. If China etc wants to burn lots of coal, include that cost in the final price.

Of course, carbon taxes would be a big advantage for the rails. Much more efficient than trucks.

Posted from Android

So what makes you think they want to play "fair"?



Edited 1 time(s). Last edit at 08/05/15 21:29 by wabash2800.