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Thu, Jul 20, 2017 01:49 PM
Wednesday, March 8, 2017 issue
2003-06-04 more news
Coal outlook shows Martin's reliance on resource
Lilly Adkins
BIG SANDY REGION Eastern Kentucky relies heavily on coal for jobs, especially in Martin County, where nearly 30 percent of people earn their living in the coal mines.

Based on statistics provided by the Kentucky Coal Association for 2000, Martin County exceeds all other counties in Kentucky with 29.9 percent of the workforce deriving its income from the mining industry, earning an average of $922.30 per week.

Only 1.4 percent of the workforce in Johnson County is employed with the mining industry at an average of $763.10 per week. In Floyd County, 4.8 percent earn an average of $564.23, Lawrence County has approximately 1.5 percent earning $660.92 per week and Magoffin County has 3.2 percent earning an estimated $779.74 per week.

Eastern Kentucky coal fields cover 10,500 square miles and contain approximately 52.7 billion tons of remaining resources.

During 2003, coal production in the United States is expected to be approximately six percent lower than 2002, according to a report released May 12 by Merrill Lynch, while consumption is expected to increase by two percent.

According to the report, total coal production in the U.S. for 2002 totaled 1,090 million short tons compared to 1,121 in 2001, a 2.8% decrease.

Coal consumption in the U.S. is dependent on economic growth and weather patterns.

Coal consumption is expected to rise by approximately two percent from 2002, with utilities being the main consumer. In 2002, approximately 90 percent of coal was consumed by utilities with the other 10 percent consumed in the coking process, by miscellaneous manufacturers and by retail customers.

Approximately 38.3 percent of all electricity generated in the world is generated by coal. In Kentucky, 97 percent of all electricity comes from coal, with the average cost for electricity in Kentucky 23 percent below the national average in 2000.

It costs approximately $18.51 per megawatt hour to produce electricity using coal. The only cheaper method is hydroelectric power, which uses water and costs only $9.63 per megawatt hour.

The U.S. Department of Energy announced in February that the U.S. is leading the effort to construct and operate a $1 billion dollar, nearly emission-free, coal-fired electric and hydrogen production plant. The project is to build a 275 megawatt prototype plant that produces electricity and hydrogen with close to zero emissions. The plant would be able to sequester at least 90% of CO2 emissions from the plant, produce electricity with less than a 10% increase in cost from an existing coal fired plant, and an estimated cost of $4.00/mbtu to produce hydrogen.

The top 10 coal producers are Peabody Holding Co. Inc.; Arch Coal, Inc.; Kennecott Energy & Coal Co.; RAG American Coal Holding, Inc.; CONSOL Energy Inc.; A.T. Massey Coal Co., Inc.; Vulcan Partners, L.P.; Horizon Natural Resources Inc.; North American Coal Corp.; and TXU Corporation.

Five coal companies are in Chapter 11 bankruptcy and, according to the Merrill Lynch report, more are "on the cusp."

Anker Coal Group has been in Chapter 11 since October but has seen a big jump in its average coal sales price, which is reportedly helping the company get out of bankruptcy.

The court rejected motions by Cotiga Development LP and Huntington Realty to have prior leases reestablished with Horizon Natural Resources. Cotiga and Huntington own much of the coal reserves at Horizon's recently shutdown Marrowbone Development complex in West Virginia.

James River Coal went into Chapter 11 bankruptcy protection in March but was granted an extension by the court to Sept. 26, which will reportedly give the company time to reorganize.

Wexford Capital, a major lender to Lodestar Energy, won a bidding contest against Appalachian Fuels LLC and Empire Coal Holdings LLC for Lodestar's Tug River assets in Eastern Kentucky.

Pen Coal agreed with secured lenders to hire a mediator to try and resolve their disputes.

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