Energy bill impact on coal industry yielding results

Energy bill impact on coal industry yielding results

New York (Platts)--3Apr2006

Since President Bush signed the Energy Policy Act of 2005 into law last
August, the bill seems to be yielding results for the coal industry.

Under EPAct, there's a 20% tax credit for industrial gasification and
integrated gasification combined-cycle projects and a 15% tax credit for other
advanced coal-based projects.

One clean coal facility under way is the IGCC plant being constructed by
Southern Company. The 285-MW plant in central Florida is expected to be in
commercial operation in 2010. Costing an estimated $557 million, the plant
will use transport gasifier technology to significantly reduce sulfur dioxide,
nitrogen oxide and mercury emissions.

The act also authorizes $1 billion over three years for coal-to-liquids
technologies like Fischer Tropsch to create clean synthetic oils. According to
speakers at Platts' 14th annual Coal Properties and Investment conference last
month, there are roughly 17 projects under way and at least another eight in
development, with most expected to come online in 2011.

Texas-based DKRW Energy is planning to build a CTL plant with a start-up date
of 2010. The plant will cost $1 billion to $1.5 billion and would use about 2
million short tons/year of coal purchased from Arch Coal. The plant is
expected to produce about 11,000 barrels/day of ultra-low-sulfur diesel and
naphtha initially.

Increase means more workers

With coal expected to generate more than half of the electricity in coming
years, more workers will be needed in the coal industry. In some states like
West Virginia, the coal industry has already begun searching for workers.

Bill Raney, president of the West Virginia Coal Association, told Platts on
Friday that the state had roughly 17,000 coal miners. He said that, with the
average age of 50 to 52, half the work force will retire in a few years.

"We will need between 6,000 and 8,000 coal miners prepared to enter the
industry, not to mention supporting staff like mine managers and preparation
plant workers," Raney said.

The West Virginia coal industry was looking at a variety of ways to attract
new employees through job fairs and company/university programs to train
students for specific tasks, he said.

"As we go forward, we are talking with the Department of Education and
vocational schools to emphasize science and math skills that are needed in the
coal industry," Raney said.

It will be challenging to find workers, but with the pilot programs between
the industry and schools under way, he is confident that the state would find
the workers it needed.

According to WVCA, there are 270 coal companies operating in the state and 544
mines with more than 40,000 employees.

-- Regina Johnson, regina_johnson@platts.com

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