UP warns PRB recovery could last two weeks; markets see impact

Washington (Platts)--4Apr2007

Union Pacific warned that the recovery from the weather-related mine shutdowns
in the Powder River Basin could last for two weeks. But market participants
said they do not expect the weather disruptions to have a lasting impact on
coal supply, as sufficient transportation and mine capacity should allow the
producers and railroads to recover swiftly.

Union Pacific said Monday that recovery from last week's extensive
weather-related mine shutdowns in Wyoming could last 10 to 14 days, as coal
producers in the PRB are recovering from a series of storms that began on
March 29. Severe flooding and more than two feet of snowfall forced all 10
mines in the PRB to temporarily idle last week.

The effects of the storms are still being felt as mines are operating at
reduced capacity and railroads are operating far fewer trains than on normal
days, but there are signs that production is coming back to normal levels.

"Our PRB mines have been ramping back up since late last week following the
storm, and we are running at normal capacity the majority of the week," said
Peabody spokeswoman Beth Sutton.

BNSF Railway and UP told Platts they are working with the producers to get
shipments to normal levels and to prevent a backlog from developing once
producers ramp up their production.

"We are working closely with the mines to ramp up our operations in
conjunction with theirs to avoid congestion and delay," said UP spokesman Gene
Hinkle on April 3.

UP was unable to load about 160 trains between March 28 and April 2, citing
the reduced operations at mines. Once highways reopened on March 30, allowing
personnel to return to work, the mines were able to begin repair work and
eventually resume operations.

-- Marcin Skomial, marcin_skomial@platts.com