Contents of Coal Age - DEC 2011

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illinois basin update continued
Looking at total 2016 ILB production vs. 2010, the projected dif- ference would be 194 million tons vs. 107 million tons. Of the 87 million tons of added capacity, 58.5 million tons would originate from Illinois. Illinois currently produced 33.4 million tons in 2010. Coal production in Western Kentucky and Indiana would grow by 14.2 million tons and 13.8 million tons respectively. Illinois would overtake the other two states. Western Kentucky produced 37 mil- lion tons in 2010 and Indiana produced 36.7 million tons. "This does not mean the capital has been invested," Hanou said. "Of the 87 million tons of projected growth, 45% to 50% has been capitalized. This 40 million tons or so will come online no matter what happens. Other companies have announced plans to open mines, such Alliance Gibson County. The remaining companies are looking for markets so they can open new mines." These are not demand numbers, Hanou explained. "This is a sup- ply study and this is planned production. Peabody Energy is expand- ing with the Lively Grove mine. The company's Bear Run is expanding by 4 million tons. Armstrong is looking to grow from 6 million to 12 million tpy. Murray Energy is expanding the Galatia complex by 2 million tpy." Mines such as Foresight Energy's Sugar Camp mine, Peabody Energy's Lively Grove mine, Solar Sources' Charger mine, and James River's Log Creek mine have been capitalized. The study also assumes the higher cost mines will stay in busi- ness. "If they have the reserves, this study projects continued opera- tions," Hanou said.
The ILB has the ability to greatly expand production should the markets develop, Hanou concludes. There are some concerns. Supply is outpacing demand. Prices for natural gas are low and will remain until the economy improves. ILB coal still competes with coals from the Powder River Basin. Bottlenecks exist with trans-
portation. Decision on environmental regulations and regional pol- itics also influence the market.
Some of the potential new markets for ILB include power plants installing new scrubbers systems, new power plants (as much as 15 million tons), and thermal exports, which are expected to reach 6 million tons in 2011 and could possibly grow to 10 million tons or more in the future.
The Illinois Basin Coal Supply Study 2011–2021 is available in hard copy. Founded by John T. Hanou in 2010, Hanou Energy Consulting is based in Annapolis, Md. (www.hanouenergy.com). He can be reached at Tel: 410-279-3818 (E-mail: jthanou@hanouener- gy.com).
December 2011
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