Delivered-coal prices

A delivered coal price of 12.85/tonne and a mine mouth price of 5.45/tonne were used in the analysis. Both prices are based on 1997 average coal prices in the state of Wyoming2. 

The prices of natural gas or an alternate light hydrocarbon reformer feed, resid, and electricity are assumed to apply to all geographical locations in the U. S. However, delivered-coal prices vary from one geographical location to another. Mine-mouth coal prices are affected by mining costs and coal quality. Transportation costs for moving the coal to manufacturing sites have been assumed to be proportional to the transportation distance. 

Unit trains can pose problems to small manufacturers who do not have the volume to use them. This effectively gives the big producer a price advantage this is frowned upon in Washington. In 1969 the Dow Chemical Company, which was using unit trains to deliver coal from West Virginia to Midland, Michigan, was accused of violating railroad tariff rate. It was claimed Dow paid less than published tariff rates. In an out-of-court settlement Dow paid 350,000 in claims. ... 

Coal prices delivered to manufacturing sites on the East Coast, the Mid-Continent (Illinois), the Gulf Coast, and the West Coast were estimated and the transportation cost in unit trains was added to the estimated mine-mouth coal prices to provide estimated prices of coal delivered to the manufacturing sites as are shown in Table 9. 

Today, the choice of feedstock for chemicals production depends on complex technical, economic, environmental, and political factors. Clearly, not all chemicals are suitable for production from coal with current technology. Some factors to be considered in the evaluation of the appropriate feedstock for a particular chemical product are (1) the relationship between the carbon/hydrogen ratio in the chemical product and the feedstock, (2) the delivered cost of alternative raw materials, (3) capital costs, (4) environmental protection, and (5) the reliability of supply. Recently, except for special situations, such as that for Sasol in South Africa, the manufacture of chemicals from coal at coal prices relative to the prices of petroleum and natural gas has not been attractive economically. 

US coal prices have increased somewhat due to rising transportation costs (Figure 2.6). However, the overall trend in coal prices as measured at the mine (mine mouth) is downward as coal producers continue to find ways to increase the productivity of the average mine. The average delivered price for utilities increased just 5.7% during 2004 (EIA 2004), but 13.2% for industrial users. The widespread use of futures contracts in the coal industry has helped to keep prices stable. The overall stability of coal prices likely also will lead to a renewed interest in coal by utility officials and others, who until recently, believed natural gas was the fuel of the future. Anecdotal evidence purports an increase in coal use at the residential level. Homeowners with access to delivered coal found it is possible to heat less expensively with coal than natural gas or oil in the 2005-2006 heating season (Kamery 2006). 

Implementation of the 1998 Kyoto Protocol, which is designed to reduce global carbon emissions, will have dramatic effects on fossil fuel usage worldwide. The Kyoto Protocol mostly affects delivered prices for coal and conversion of plants to natural gas, nuclear and/or renewable resources. However, as pointed out by the International Energy Agency, increased natural gas consumption in the United States may likely have the effect of increased reliance... 

The price of the fuel delivered to the place where it is needed as some fuels require storage and feeding equipment, as for example, steam-heated lines are necessary in the cases of some heavy fuel oil and some coal tar fuels... 

The price of the coal delivered to the plant, and the basis for all of the cost elements of the operating cost estimate. 

The questions of market insecurity and market price reminds me of a study the ESCOE recently completed. We were asked to do a coal fuel cycle study. The study was an examination of all the possible ways that coal from a mine could be processed and transported to deliver energy to "the city gate." After many, many pages of looking at all of the alternatives and the best estimates of price that go along with these, we were asked if it was possible to reduce the study conclusions to a single sentence. The answer is "Yes. The cheapest way to use coal is to burn it."... 

A discounted cash-flow analysis of the system was made using conservative financing assumptions. These included 100% equity, 12% return on investment, and a plant life of 20 years plus a construction time of five years. Strip-mined western coal was priced conservatively at 15 per ton. This is a reasonable price, for example, for coal delivered from Gillette, Wyoming by unit train to a plant serving the Chicago area (mid-1977 prices) alternatively, a mine-mouth plant site would obtain coal at lower prices, but product transportation costs would be higher. 

Solvent-refined coal (SRC) as a de-ashed, low sulfur fuel for electric utilities is discussed from the standpoint of economics. The overall lowest delivered cost of SRC results from processing at minehead sites because of minimized transportation costs of the ash and sulfur fractions that are eventually removed by the processing. A potential market of 300-800 rnUlion tons per year of SRC by 1990 is projected on the basis of the competitive price of delivered Btus from low sulfur fossil fuels and synthetic fuels at the various power-generating sites in the U. S. SRC can be supplied in either a liquid or solid form therefore it is a potentially versatile competitor for the low sulfur, fossil-fuel power generation market. 

When solvent-refined coal is compared with low sulfur oil as a competitive fuel, the local delivered price situation would determine the competitive balance. For example, in the Chicago area where low sulfur fuel oils are selling for 71-75 /MM Btu, the solvent-refined coal could be furnished from the aforementioned hypothetical plant for 53-75 /MM Btu. However, on seacoast locations such as New York, the Gulf Coast, and the West Coast, low sulfur fuel oil could be currently obtained for 61-73 /MM Btu. For the East Coast, a mine-processing plant complex in West Virginia could deliver solvent-refined coal for 53-65 /MM Btu at most population and industrial centers, which is certainly competitive. However the longer transportation distances between a plant in the Wyoming area and the West Coast areas would probably be less attractive in comparison with delivered fuel oil. 

Petroleum reserves are limited and supplies are becoming expensive and unstable. Extensive efforts are underway in the United States and abroad to find alternative sources for fuel and chemicals by employing coal, oil shale, tar sands, and biomass. But complicated processing of these raw materials is required to deliver environmentally acceptable products at a competitive price. It is, therefore, increasingly important to obtain better characterization of these raw materials and better understanding of their transformation in a process. 

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