p. 1


# OAR Box 

# 1828 Prepped byOllie Stewart



## Document

Number: 

# 295 ) IV-A- 5 Docket Number: 

# A-83-2 7

Printed 11/12/200811:12:58AM Sheet 295of 325P. 2 •-i- t -., | 

# A-83-2 7

IV-A- 5


# AVAILABILIT

Y AN D COST OF VER

Y LO WSULFU

RCOAL S FORTH E INDUSTRIA

L MARKET

Prepared For The U.S. Environmental Protection Agency

By ICF Incorporated Apri l 22 , 198 7

IC F INCORPORATE D Internationa l Squar e 185 0 KStreet , Northwest , Washington , D
. C
. 2000 6P. 3

t 0



# AVAILABILIT

Y AN D COST OF VER

Y LO WSULFU

RCOAL S FORTH E INDUSTRIA

L MARKET

Prepared For The U.S. Environmental

Protection Agency

By ICF Incorporated Apri l 22 , 198

7P. 4

PREFAC E

Thi s draf t repor t present s th e finding s o f an analysi s performe d b yIC F Incorporate d fo r th e Environmenta l Protectio n Agenc y(EPA) . Th e assumptions , findings , conclusions , an d judgment s expresse d i n thi s report , unles s otherwis e noted , ar e thos e o f IC F Incorporate d an d shoul d no t b e interprete d a s necessaril yrepresenting th e officia l policie s o f EP Ao r othe r agencie s o f th e U.S . government .P. 5



## TABL E O F CONTENT S Pag e
EXECUTIVE SUMMAR

Y ES- 1 CHAPTE R ONE : INTRODUCTION1- 1 CHAPTE R TWO : ANALYTI C APPROAC H T O DETERMINE AVAILABILITY 2- 1 Burea u o f Mine s Analyti c Dat a 2- 1 FERC For

m42 3 2- 4 BO MWashabilit yDat a 2- 6 McGraw-Hil l Publication s 2- 9 CHAPTE R THRE E : INTERVIEW S WIT H COAL PRODUCER S 3- 1 Centra l Appalachi a 3- 2 Souther n Appalachi a 3- 6 Th e Rockie s 3- 8 Powde r Rive r Basi n 3-1 1 Importe d Coal s 3-1 3 Summaryo f Availabilit yo f VeryLowSulfu r Coal s 3-1 5 CHAPTE R FOUR : INCREMENTAL COST S T O SUPPLY VERY LOWSULFU R COAL S 4- 1 Storag e an

d Handling Cost s 4- 6 Samplin g Requirement s 4-1 1 Incrementa l Cost s b yEPAFedera l Region s 4-1 3 Summaryo f Incrementa l Cost s t o Suppl yVeryLowSulfu r Coal s 4-3 2 APPENDI X A APPENDI X B APPENDI X CP. 6

INDE XO F TABLE S Pag e
EXECUTIVE SUMMARY ES- 1 Summaryo f Availabilit yo f VeryLo wSulfu r Coal s ES- 2 ES- 2 Incrementa l Cost s T o Suppl yVeryLowSulfu r Coal s ES- 4 CHAPTE R TWO : ANALYTI C APPROAC H T O DETERMINE AVAILABILITY 2- 1 Sampl e o f BO

MData : Virgini a 2- 2 FER C 423 : Summaryo f Coa l Shipment s B ySulfu r Content : 1972-198 6 2- 3 Sampl e o f BO

MCoa l Washabilit yDat a 2- 3 2- 5 2- 8 CHAPTE R THREE : INTERVIEW S WIT H COAL PRODUCER S 3- 1 Potentia l Low-Sulfu r Coal s Outsid e th e Contiguou s U. S 3-1 4 3- 2 Summaryo f Availabilit yo f VeryLowSulfu r Coal s 3-1 6 CHAPTE R FOUR : INCREMENTAL COST S T O SUPPLY VERY LO WSULFU R COAL S 4- 1 4- 2 4- 3 4- 4 4- 5 4- 6 4- 7 4- 8 4- 9 4-1 0 4-1 1 Additiona l Additiona l Additiona l Additiona l Additiona l Additiona l Additiona l Additiona l Additiona l Additiona l Summaryo f Cost s

Cost s Cost s Cost s Cost s Cost s Cost s Cost s Cost s Cost s T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n T o EPARegio n 1 :

2 : 3 : 4 : 5 : 6 : 7 : 8 : 9 : 1 0 Incrementa l Cost s T o S Boston , M A4-1 6 Ne wYor k City , NY 4 : 1 9 Philadelphia , P

A4-2 0 Atlanta , G

A4-2 2 Chicago , Illinoi s 4-2 4 Dallas , TX4-2 6 Kansa s City , M O 4-2 8 Denver , C O 4-2 9 San Francisco , C

A4-3 1 Seattle , W

A4-3 3 aplyVeryLowSulfu r Coals.. . 4-3 4P. 7

INDE XO F FIGURE S Pag e
CHAPTE R TWO : ANALYTI C APPROAC H T O DETERMINE AVAILABILITY 2- 1 Burea u o f Mine s Coa l Producing District s 2- 7 CHAPTE R FOUR : INCREMENTA L COST S T O SUPPLY VERY LOWSULFU R COAL 4- 1 EPAFedera l Region s 4-1 4

## EXECUTIVE SUMMAR Y

Th e Environmenta l Protectio n Agenc yha s bee n considering variou s Ne w Sourc e Performanc e Standard s (NSPS ) fo r sulfu r dioxid e fro mindustria l boilers . Some o f th e alternative s unde r evaluatio n woul d allowindustria l boile r owner s t o consume lowe r sulfu r coal s directl ywithou t th e nee d fo r sulfu r reductio n equipment .

T o suppor t it s analyse s o f thes e type s o f performance-base d standards , EPA requeste d tha t IC F identif yth e availabilit yo f "ver ylo wsulfu r coals " fo r th e industria l market . Fo r purpose s o f thi s study , verylo wsulfu r coal s wer e define d a s coal s tha t woul d emi t fro m0. 5 t o 1. 0 pound o f sulfu r dioxid e pe r millio n Bt u i f al l sulfu r i n th e coa l wer e converte d t o sulfu r dioxid e during combustion . No sulfu r retentio n i n th e as hwa s assumed . Th e goa l wa s t o identif ythos e coal s tha t coul d b e supplie d b yth e coa l industryt o mee t a particula r emissio n standar d withou t adjustmen t fo r specifi c combustio n conditions .

Base d o n th e result s o f thi s analysis , th e qualit yo f verylo wsulfu r coal s tha t coul d b e mad e availabl e b ymajo r coa l suppl yarea s t o th e industria l secto r i s summarize d i n Tabl e ES-1 . Thes e estimate s ar e mad e wit h consideratio n o f th e relativel ysmal l coa l demand s (individuall yan d collectively ) expecte d fro mne windustria l demand s i n th e near-term(one t o tw o millio n ton s pe r year ; se e Appendi xB) , an d shoul d no t necessaril yb e viewe d a s indicativ e o f supplie s adequat e t o mee t large r demand s a s require dES- 2 P. 9

TABL E ES- 1 SUMMAR YO F AVAILABILIT YO F VER YLOWSULFU R COAL S 

### •a/ Regio n Centra l Appalachi a Souther n Appalachi a Colorad o NewMexic o Utah Powde r Rive r Basi n Import s Absolut e Minimu m 0.7 8 0.7 5 0. 6 0. 6 0.6 5 0. 5 0. 3 Lbs . S02/MMBt u

Hun t & Scratc h 0.8 5 0.8 5 0. 7 0. 7 0. 7 0. 7 0. 5 -0. 9 -0. 9 Mo r

Ve e Commo n r yLow 1. 0 1. 0 0. 8 0. 8 0. 8 0. 8 0. 6

a / Minimu

msulfu r leve l achievabl e o n a rai l ca r basis ; on e rai l ca r i s assume d t o contai n 10 0 ton s o f coal .P.1 0

ES- 3
t b yth e electri c utilit ysecto r (e.g. , electri c utilit ycoa l consumptio n i n 198 5 wa s nearl y70 0 millio n tons) . Th e sulfu r conten t o f th e coal s tha t coul d b e supplie d i s provide d fo r thre e differen t qualitativ e level s o f availability : 1 ) the "absolut e minimum" , whic hi s th e lowes t sulfu r leve l a t whic han

ycoa l produce r woul d suppl ycoal , 2 ) a "hun t an d scratch " level , whic hcorrespond s t o coa l tha t coul d b e supplie d fro msevera l coa l producers , althoughman

ycoa l producer s i n th e regio n coul d no t suppl ycoal s o f th e indicate d qualit yan d additiona l cost s woul d likel yb e incurre d t o suppl yth e coal , an

d 3 ) a mor e commo n verylo wsulfu r level , whic hindicate s a sulfu r leve l tha t coul d b e supplie d b ysevera l coa l producer s withou t incurring additiona l costs . Th e degre e o f difficult yt o suppl yverylo wsulfu r coa l implie d b

ythes e level s i s inherentl ysubjective , bu t i s intende d t o indicat e th e approximat e degre e o f difficult yth e coa l industrywoul d encounte r t o suppl yverylo

wsulfu r coals . Not e that :

• I n th e East , Appalachia n coa l producer s woul d fin d i t verydifficul t t o suppl ycoa l belo w0. 8 pound s sulfu r dioxid e per . millio n Btu . Coal s betwee n 0. 8 an d 0. 9 pound s sulfu r dioxid e pe r millio n Bt u woul d b e somewha t easie r t o find , althoughcoa l producer s woul d likel yincur additiona l costs .

• I n the West , coa l a s lo wa s 0. 5 t o 0. 6 pound s sulfu r dioxid e pe r millio n Bt u can b e supplie d b ysome coa l producers , althoughthes e coal s ar e s o limite d tha t n o produce r expresse d confidenc e tha t thes e coal s can b e guarantee d wit han yregularity . Coa l wit h0. 7 pound s sulfu r dioxid e pe r millio n Bt u coul d b e supplie d b y severa l coa l producer s t o th e industria l market . I n mos t instances , coa l producer s woul d incur additiona l cost s t o suppl ycoa l belo w0. 7 pound s sulfu r dioxid e pe r millio n Btu .

• Verylo

wsulfu r coal s can b e obtaine d fro mAlask a an d variou s coal-exporting countries . Some source s can suppl ycoa l a t a leve l o f 0. 3 pound s sulfu r dioxid e pe r millio n Btu , an d mor e coul d suppl ycoa l wit ha sulfu r conten t o f approximatel y0. 5 pound s sulfu r dioxid e pe r millio n Btu .ES- 4

TABL E ES- 2 INCREMENTA LCOST S T O SUPPL YVER YLOWSULFU R COAL S a /

(Januar y198 6 dollar s pe rMMBtu ) p.1 1

EPA Regio n 0. 9 Pound s S02/MMBt u 0. 8 Pound s S02/MMBt u 0. 7 Pound s S02/MMBt u

1 2 3 4 5 6 7 8 9 1 0 Bituminou s

0.1 6 0.1 8 0.1 8 0.2 7 0.1 9 0.1 5 0.0 1 0.0 0 0.0 0 0.0 0 Subbi

tuminou s N.A . N.A . N.A . N.A . 0.0 0 0.0 0 0.0 0 0.0 0 0.3 4 0.0 0 Bituminou s b / 0.16/0.5 4 0.18/0.8 0 0.18/0.7 9 0.27/0.4 9 0.1 9 0.1 5 0.0 1 0.0 0 0.0 0 0.0 0 Subbi

tuminou s
c / c / c / c / N.A . N.A . N.A . N.A . 0.0 0 0.0 0 0.0 0 0.0 0 0.3 4 0.0 0 Bituminou s

0.7 5 1.0 1 1.0 0 0.9 7 0.4 0 0.2 8 0.2 2 0.1 3 0.2 1 0.2 1 Subbi

tuminou s N.A . N. A N.A . N.A . 0.1 4 0.1 4 0.1 4 0.1 4 0.4 8 0.1 4

a / Thes e ar e incrementa l cost s compare d t o th e cos t t o produc e complianc e coal s tha t mee t a standar d o f 1. 2 pound s sulfu r dioxid e pe r millio n Btu . Thes e incrementa l cost s appl yonl yt o coal s supplied-b yU.S . producer s i n th e lower-4 8 states . Th e potentia l competitivenes s o f Alaska n o r importe d coal s ha s no t bee n include d i n thes e cos t estimates . b / N.A . mean s "No t Analyzed " becaus e subbituminou s coal s wer e no t assume d t o b e competitiv e wit hbituminou s coal s i n th e easter n Unite d State s (Region s 1-4) . c / Tw o cos t estimate s ar e provided . Th e lowe r cos t estimat e refer s t o Centra l Appalachia n coals ; th e highe r cos t estimate s refe r t o Wester n coal s i n Region s 1- 3 an d Alabama coa l i n Regio n 4 . Bot hestimate s ar e provide d becaus e th e abilit yo f Centra l Appalachia n producer s ;t o suppl y 0. 8 pound coal s i s verylimited . IP.1 2

ES- 5 Th e incrementa l cost s t o suppl yverylo wsulfu r coal s t o prospectiv e industria l coa l consumer s ar e summarize d in Tabl e ES-2 . Thes e cost s ar e show n b yEPAFedera l regio n fo r sulfu r level s o f 0.7 , 0.8 , an d 0. 9 pound s sulfu r dioxid e pe r millio n Bt u fo r bituminou s an d subbituminou s coals .P.1 3

1- 1

J 

## CHAPTE R ON E INTRODUCTION

T o determin e th e availabilit yo f verylo wsulfu r coals , thre e basi c task s wer e undertaken : 1 ) screening analyse s o f dat a o n coa l reserves , production , an d qualit yt o determin e th e probabl e locatio n an d potentia l supplie s o f very lo wsulfu r coal s (se e Chapte r Two) , 2 ) additiona l evaluatio n o f thi s informatio n on verylo wsulfu r coal s wit hcoa l companie s an d preparatio n plan t operator s t o determin e th e potentia l near-termquantit yan d suitabilit yo f thes e coal s fo r th e industria l market s (se e Chapte r Three) , an d 3 ) an assessmen t o f th e additiona l cost s require d t o bring thes e coal s t o marke t (se e Chapte r Four) .
Th e overal l objectiv e o f thi s analysi s wa s t o determin e th e availabilit y o f verylo

wsulfu r coal s an

d th e cost s tha t woul d b e incurre d b ycoa l producer s an

d coa l carrier s t o suppl ythes e coal s t o industria l consumers . Verylo wsulfu r coal s wer e define d a s coal s tha t woul d emi t fro m0. 5 pound s t o 1. 0 pound o f sulfu r dioxid e pe r millio n Bt u i f al l sulfu r i n th e coa l wer e converte d t o sulfu r dioxid e during combustion . Thes e emissio n level s wer e assume d t o b e attainabl e o n a singl e rai l ca r basi s (based o n interview s wit h
coa l producers ; se e Chapte r Thre e fo r furthe r discussion) . Differen t level s o f availabilit yhav e bee n identifie d t o tak e int o accoun t th e varyin g degre e o f difficult ytha t coa l producer s woul d encounte r t o suppl yverylo wsulfu r coals .

I n additio n t o th e sulfu r constraint , coa l producer s had t o b e abl e t o suppl yverylo

wsulfu r coal s t o th e industria l marke t i n th e nea r term , define d fo r thi s analysi s t o includ e th e following :C N 1

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2- 1

CHAPTE R TW O ANALYTI C APPROAC H T O DETERMIN E AVAILABILIT Y

Th e firs t tas k involve d a serie s o f screening analyse s o f dat a on coa l
reserves , production , an d qualit yt o identif yth e area s (b ystate , county , seam , etc. ) tha t hav e the potentia l t o suppl yverylo wsulfu r coal s t o th e industria l marke t (i f theyar e no t alread ydoing so) . Thes e screening analyse s mad e i t easie r t o develo p a lis t o f th e mos t promisin g verylow sulfu r supplier s tha t coul d the n b e contacte d t o discus s in-dept hthei r abilit yt o suppl yver ylo wsulfu r coal s t o industria l consumers . Th e mai n dat a source s use d fo r thes e analyse s were :

• Th e Burea u o f Mines ' analyti c dat a o n coa l quality , comprise d fro

mten s o f thousand s o f min e sample s take n ove r man

yyears ,

• FERC For

m42 3 dat a o n th e qualit yo f coa l shipment s t o electri c utilities ,

• Burea u o f Mines ' washabilit ydat a o n th e sulfu r reductio n potentia l o f coal s du e t o coa l preparation , an d

• Dat a fro

mMcGraw-Hil l publications , a well-known coa l industryinformatio n service , o n producin g coa l mine s b yseam . 

## BUREAUO F MINE S ANALYTI C DAT A

Th e Burea u o f Mine s analyti c dat a i s a compilatio n o f approximatel y 100,00 0 sample s o f coa l qualit ycharacteristic s tha t hav e bee n collecte d fro m producing mine s during th e pas t severa l decades . Th e dat a bas e contain s informatio n o n severa l variables , including sulfu r content , hea t content , an dP.1 6

2- 2 preparatio n leve l (sucha s whethe r th e coa l sample d i s a ra wcoal , washe d coal , o r partiall ywashed) . I t wil l als o indicat e th e sourc e o f th e coal , including th e stat e fro mwhic hth e sampl e wa s taken , th e count yo f origin , th e sea mfro mwhic hth e coa l wa s produced , an d th e name o f the producing mine .

B yanalyzing qualit ycharacteristic s o f eac hsample , thi s informatio n can b e use d t o pinpoin t specifi c coal-producing area s tha t appea r t o produc e very lo wsulfu r coals . Sinc e a singl e sampl e canno t indicat e th e overal l qualit y o f th e producing seam , thes e dat a mus t b e interprete d wit hcaution . T o some exten t th e reliabilit yo f the informatio n can b e approximate d b yreviewing th e numbe r o f sample s an d numbe r o f mine s indicating tha t a particula r sea mmayb e a promisin g verylo wsulfu r coa l candidate . Tha t is , the mor e sample s an d
mor e mine s tha t indicat e coa l o f a certai n qualit ycan b e produced , th e mor e likel yi t i s tha t th e coa l sea munde r consideratio n actuall ycontain s coa l wit hthes e qualit ycharacteristics . Fo r example , conside r th e dat a i n Tabl e 2-1 , whic hprovide s a sampl e summaryo f th e BO Mdat a fo r Virginia . I f a coa l
consume r want s a coa l tha t coul d mee t a leve l o f 0. 8 pound s sulfu r dioxid e pe r millio n Btu , th e BOMdat a can b e use d t o mak e th e following observations :

• Th e Uppe r Seaboard sea mi n Tazewel l Count yaverage s 0.6 8 pound s sulfu r dioxid e pe r millio n Bt u wit hth e highes t observatio n a t 0. 8 pounds . Thi s sea mappear s t o b e a goo d candidate , bu t th e dat a indicat e tha t onl y on e min e ha s provide d an ysample s (9) .

• Th e Pocahonta s # 3 sea mi n Tazewel l Count yaverage s 0.7 4 pound s sulfu r dioxid e pe r millio n Btu , ranging fro m0.5 2 pound s t o 1. 1 pound . Severa l sample s excee d th e 0. 8 poun

d level , bu t th e fac t tha t four mine s provide d 4 7 sample s indicate s tha t th e 0. 8 pound coa l mayb e relativel ycommo n throughou t th e seam .
Fromthi s typ e o f analysi s th e BO Mdat a can b e use d t o highligh t whic h
seam s mayb e promisin g verylo wsulfu r coa l candidates . However , thi sP.1 7

2- 3
TABL E 2- 1 SAMPL E O F BUREA U O F MINE S DATA : VIRGINI A

Count y Russel l Russel l Russel l Russel l Russel l Tazewel l Tazewel l Tazewel l Tazewel l Tazewel l Sea

m Uppe r Banne r Lowe r Banne r Re d As h Jawbon e Tille r Lowe r Banne r Re d As h Jawbon e Uppe r Seaboa r Pocahonta s # 3 ir

M

i o f ine s 4 5 3 2 2 3 7 2 1 4 # o f Sample s 4 8 2 9 6 3 3 2 3 8 8 2 9 4 7 Averag e

S0 2 a / (lb/MMbtu ) 0.8 1 0.9 8 1.0 4 0.7 9 0.7 2 0.8 9 0.9 2 0.8 5 0.6 8 0.7 4 Rang e

S0 2 lo w 0.5 6 0.7 0 0.6 8 0.7 0 0.5 4 0.5 4 0.6 6 0.7 6 0.5 4 0.5 2 o f a / hig h 1.2 6 1.6 8 1.3 4 0.8 4 0.9 4 1.2 4 1.5 2 0.9 4 0.8 0 1.1 0 Media n Valu e a t (lb o r belo w S02/MMBtu ) 0. 9 1. 0 1. 0 0. 9 0. 7 0. 9 1. 0

' 0. 8 0. 7 0. 8

a / Assumin g al l sulfu r i n th e coa l i s converte d t o sulfu r dioxid e durin g combustion .P.1 8

2- 4
approac hi s appropriat e onl ya s a screening device . Severa l drawback s t o th e dat a tha t mus t b e considere d are :

• A s mentioned , eachrecord in th e BO Manalyti c dat a i s onl ya singl e sample . I t doe s no t indicat e the capacit yo f th e producing mine , th e amoun t o f coa l reserve s available , o r the variabilit yo f th e coa l quality . I t mayb e tha t th e indicate d qualit yi s highl yuncharacteristi c o f th e coal , o r tha t coa l o f th e indicate d qualit yexists , bu t can no t b e segregate d fro mothe r coals .

• Th e informatio n i s no t up-to-date . Dat a collectio n cease d in the mid-1970' s an d man yo f the observation s ar e severa l decade s old . Th e min e fro mwhic hthe sampl e i s take n mayn o longe r b e operating , o r coal s o f th e indicate d qualit ymayhav e bee n mine d out .

• No t al l coal-producing region s i n th e U.S . ar e represented , whic hmaymea n tha t promisin g verylo w sulfu r coa l candidate s ma yb e omitte d becaus e some coal-producing regions , o r seam s withi n a coal-producing region , ar e no t include d i n th e dat a base .

• Ther e mayb e error s i n th e data , eithe r du e t o incorrec t laboratoryanalyse s o r error s i n compiling th e dat a base .
FER C FOR M

42 3

Anothe r dat a sourc e tha t can hel p identif ypotentia l verylo wsulfu r coa l supplie s i s FER C For m423 , whic hindicate s th e amoun t an d qualit yo f coa l delivere d t o electri c utilit ypowerplants . Thes e report s ar e submitte d t o FERC monthl yb

yelectri c utilities . Tabl e 2- 2 summarize s thes e coa l shipment s t o electri c utilitie s b ysulfu r conten t fo r th e year s 1972-1986 . A s show n i n thi s table , th e coa l qualit yinformatio n can indicat e ho wmuc hverylowsulfu r coa l i s being consume d b yelectri c utilitie s fro meac hmajo r lo

wsulfu r coal-producing regio n a s a proportio n o f tota l productio n fro mth e region . Thes e verylo

wsulfu r coal s can b e identifie d b yproducing state , Burea u o fP.1 9

2- 5
TABL E 2- 2 FER C 423 : SUMMAR YO F COA LSHIPMENT S B YSULFU R CONTENT : 1972-198 6

BO M DISTRIC T
7 8 1 3 1 6 1 7 1 8 1 9 2 0 1972-8 6

TOTAL SHIPMENT S (million tons )
24. 7 1,438. 8 198. 9 13. 3 125. 0 327. 5 1,001. 0 88. 7 Percen t o f To t

(pound s s u 0. 5
0.0 0 0.0 2 0.0 5 5.4 5 0.3 7 0.0 3 0.7 6 0.1 7 0. 6

0.0 2 0.0 3 0.0 9 17.9 8 5.2 9 0.0 4 1.7 1 2.0 7 a l Shipment s Les s lfur dioxide 0. 7
0.0 6 0.0 7 0.1 1 25.1 8 18.2 0 1.0 6 5.9 4 14.6 8 Tha n O r Equ<

ipe r millio n Btu ) 0. 8
0.2 3 0.4 4 0.2 6 31.9 9 36.7 6 13.9 0 23.8 3 30.6 3 0. 9

0.5 3 1.4 3 3.3 3 38.3 8 68.6 3 23.3 5 45.6 0 59.7 6 a

l to : 1. 0
3.4 4 4.3 9 5.1 2 44.9 5 83.1 2 41.2 0 59.8 8 78.2 92- 6

Mine s (BOM ) Distric t o f origi n (se e Figur e 2- 1 fo r a map o f thes e districts) , an d i n some instances , b yproducing mine . I n additio n t o identifying potentia l verylo

wsulfu r areas , FERC For m42 3 dat a can als o b e use d t o observ e historica l trend s i n the qualit yo f coa l fro meachcoa l suppl yregion .
BO M WASHABILIT YDAT A

In some cases , coa l tha t migh t no t otherwis e b e considere d verylo wsulfu r coa l can b e washe d a t a preparatio n plan t t o reduc e th e amoun t o f sulfu r i n th e fina l product . Th e coa l industrygenerall ywashe s a coa l t o reduc e th e amoun t o f as hi n th e coal , no t t o reduc e th e sulfur . However , a s a consequenc e o f th e coa l preparatio n process , th e pyriti c (inorganic ) sulfu r i n th e ra wcoa l can ofte n b e reduce d a s well. 1 J Accordingly , fo r thi s analysi s w e als o analyze d th e possibilit ytha t certai n lowsulfu r coal s coul d b e washe d t o a ver

ylo wsulfu r coa l level .
Th e primarysourc e fo r determining whethe r sulfu r reductio n throughcoa l preparatio n coul d produc e a verylo wsulfu r coa l i s th e washabilit ydat a fro m th e U.S . Burea u o f Mines. 2 J Th e dat a demonstrat e th e amoun t o f preparatio n likel yt o b e require d t o clean the coa l t o a verylo wsulfu r level . Tabl e 2- 3 provide s a sampl e o f th e typ e o f washabilit yinformatio n available . Th e

1 J Pyriti c sulfu r i s on e o f thre e type s o f sulfu r i n coal . Th e othe r two ar e organi c sulfur , whic hi s chemicall ybound t o th e coa l particle s an d can no t b e washe d out , an d sulfat e sulfur , whic hcan b e washe d ou t bu t typicall ycomprise s onl ya verysmal l portio n o f th e tota l sulfur . Pyriti c sulfu r average s fro m3 0 t o 7 0 percen t o f tota l sulfu r i n bituminou s an

d subbituminou s coals . 2 J See , fo r example , Sulfu r Reductio n Potentia l o f th e Coal s o f th e Unite d States , U.S . Burea u o f Mine s Repor t o f Investigation s 8118 ; 1976 .FIGUR E 2- 1 BUREA U O F MINE S COAL-PRODUCIN G DISTRICT S

Ver yLo wSulfu r Coa l Regio n h o I



# ISTAT E : COUNTY :

PRODUC T FLOAT-1.3 0 FLOAT-1.4 0 FLOAT-1.6 0 TOTA L VIRGINI A

DICKENSO N TABL E 2- 3 SAMPL E O F BO M COA LWASHABILIT YDAT A

COALBED : UPPE R BANNE R RA WCOA L MOISTURE : 1. 0 % CUMULATIV E WASHABILIT Y DAT A SAMPL E CRUSHE D T O PAS S 1-1/ 2 INCHE S RECOVERY, * WEIGH T BT U 61. 9 82. 1 87. 7 100. 0 68 . 6

8 9 . t l 95. 3 100. 0 BTU/L B

1490 1 1471 4 1462 1 1 345 4 ASH> %

3. 5 4. 7 5. 3 12. 8 SULFUR, *

PYRITI C TOTA L .0 1 .0 5

. 1 3 .2 0 .5 9

.5 9 .6 6 .6 9 L B S02/ MBT U

. 8

. 8

. 9 1. 0 RA WCOA L MEET S EPAEMISSIO NSTANDAR D O F 1.2 0

PRODUC T FLOAT-1.3 0 FLOAT-1.4 0 FLOAT-1.6 0 TOTAL RECOVERY, % WEIGH T BT U 64. 3 8 1 . 8 8/. 2 100. 0 72. 0

90. 5 95. 3 100. 0 SAMPL E CRUSHE D TO PAS S 3/ 8 INC H

BTU/L B ASH, * SULFUR, * PYRITI C TOTAL 1496 3 3. 1 .0 4 .5 5 1477 7 4. 3 .0 8 .5 8 1460 6 5. 4 .1 6 .6 6 1336 1 13. 4 .2 4 .7 0 L B S02/ MRT U

. 7

. 8

. 9 1. 0 RA wCOA L MEET S EPAEMISSIO NSTANDAR D O F 1.2 0 SAMPL E CRUSHE D TO PAS S 1 4 MES H PRODUC T FLOAT-1.3 0 FLOAT-1.4 0 FLOAT-l.6 0 TOTAL RECOVERY, * WEIGH T BT U 62. 9 6 1 . 7 88. 4 00. 0 70. 2

39. 9 95 . H 100. 0 BTU/L B

1504 1 1483 9 1462 1 1348 6 ASH , h

2. 6 3. 9 5. 3 12. 6 SULFUR, *

PYRITI C TOTAL .0 4 .0 8

. 1 3 .2 2 .6 3

.6 6 .7 0

. 7 4 L B S02/ MBT U

. 8 1 . 0 1 . 1 RA WCOA L MEET S EP AEMISSIO NSTANDAR D O F 1.2 0

Source : Sulfu r Reductio n Potentia l o f th e Coal s o f th e Unite d States , U.S .

Burea u o f Mines , RI8118 , 1976 .2- 9

result s fro

mcleaning ar e show n fo r thre e differen t level s o f crushing (i.e. , maximu mallowabl e top siz e o f 1 1/ 2 inches , 3/ 8 inch , an d 1 4 mesh ) an

d fo r differen t performanc e level s withi n the preparatio n plan t (e.g. , float-1.40) . Base d o n thes e results , some conclusion s can b e mad e abou t the technica l an d economi c potentia l o f coa l preparatio n t o produc e a ver ylo wsulfu r coa l b

y analyzing th e amoun t o f crushing required , th e weigh t yield , an d th e Bt u yiel d
o f the cleaning process .

A s wit hth e othe r dat a sources , some car e mus t b e take n whe n interpreting the BO Mwashabilit ydata . Eve n i f the dat a wer e t o showtha t a particula r coa l coul d b e washe d t o a verylo wsulfu r level , ther e i s n o guarante e tha t thi s wil l occur . Fo r on e thing , th e BO Mdat a d o no t showtypica l preparatio n practice s b

yth e coa l industry , onl yperformanc e result s i f the coa l wer e t o b e washe d t o th e leve l indicated . I n man ycase s th e coa l compan yproducin g th e coa l ma

yno t b e washin g th e coa l a t all , o r no t t o th e leve l tha t maximize s sulfu r removal . I n addition , th e BOMdat a ar e base d o n laboratory analyses , no t full-scal e commercia l preparatio n plants . Thes e full-scal e commercia l facilitie s mayno t achiev e th e leve l o f performanc e indicate d b y th e laboratoryanalyses .
MCGRAW-HIL LPUBLICATION S

Th e analysi s o f thes e type s o f dat a source s - - th e BOManalyti c data , FER C For m423 , an

d BO Mwashabilit ydat a - - wil l highligh t whic hcoa l seam s i n whic h regio n o f the countrymayb e verylo wsulfur . However , i t wil l no t identif y whethe r coa l fro

mthes e coa l seam s i s currentl ybeing mined . Sinc e mos t ne w industria l coa l consumer s ar e likel yt o purchas e coa l fro man existingP.2 4

2-1 0 produce r rathe r than contracting fo r the developmen t o f a ne wmine , th e nex t step involve d identifying th e mining companie s tha t ar e currentl yproducing fro mth e verylo

wsulfur coa l seams . Thi s lis t woul d indicat e th e mos t promising candidate s t o contac t o n the potentia l availabilit yo f verylo w sulfu r coals .
Thes e candidate s wer e identifie d using primaril ytwo source s fro m McGraw-Hil l publications , a coa l industryinformatio n service : 1 ) U.S . Coa l Min e Productio n B

ySea man d 2 ) th e Keyston e Coa l Industr yManual . Th e firs t
sourc e show s whic hcompanie s wer e minin g a particula r coa l seam . However , whil e thi s sourc e i s reasonabl yaccurate , i t doe s no t matc hal l mine s t o th e appropriat e sea

mname . I n addition , some o f th e informatio n tend s t o b e a littl e dated . T o hel p verif ywhic hmine s ar e stil l producing , th e Keyston e Coa l IndustryManua l wa s als o used . Thi s sourc e tend s t o b e fairl y up-to-date , allowing u s t o adjus t fo r th e rapi d change s i n th e coa l industry recentl ytha t hav e cause d man ycompanie s t o clos e o r sel l mines . Sinc e Keyston e als o contain s informatio n o n companie s no t mentione d elsewhere , w e wer e abl e t o develo p a concise , comprehensiv e lis t o f curren t coa l producer s tha t coul d potentiall ysuppl yverylo wsulfu r coal s t o industria l consumers .P.2 5

3- 1

CHAPTE R THRE E INTERVIEW S WIT H COA L PRODUCER S

Th e screening analysi s o f thes e dat a source s provide d a lis t o f coa l producer s and/o r coal-producing area s tha t appeare d t o b e promising candidate s fo r supplying verylo wsulfu r coal . Thi s dat a screening analysi s wa s followe d b ya telephon e screening o f potentia l verylo wsulfu r coa l producer s t o identif ywhic hcompanie s no t onl yowne d ver ylo wsulfu r coals , bu t tha t thes e coal s coul d b e mine d (or ar e being mined ) i n sufficien t quantitie s t o suppl y industria l customers . Thi s initia l telephon e screening wa s use d t o identif y specifi c coa l companie s tha t wer e th e mos t promising verylo wsulfu r coa l suppl ycandidates . I t als o eliminate d fro mfurthe r consideratio n thos e coa l companie s tha t woul d no t b e abl e t o provid e relevan t informatio n during th e forma l telephon e interviews . Tha t is , onc e th e fewmos t promising companie s wer e identified , thes e companie s coul d the n b e interviewe d i n greate r detai l t o determin e th e availabilit yo f verylo wsulfu r coals . Th e ke yitems t o discus s i n thes e interview s were :

• Th e locatio n o f th e verylo wsulfu r coals , b

y producin g mine , count yo f origin , an d th e geologi c sea

m fro mwhic hth e coa l woul d b e mined .

• Qualit yspecification s o f th e coal , including Bt u content , as hcontent , an d mos t importantly , sulfu r content .

• Natur e o f th e sulfu r characteristic s i n th e coal , including th e amoun t o f variability , th e pattern s o f variability , amoun t o f organi c sulfur , etc .

• Typ e o f handling requirement s a t th e min e tha t woul d b e necessaryt o suppl yverylo wsulfu r coals . Thes e requirement s woul d b e i n additio n t o curren t procedure s an d includ e blending arrangements , storag e capabilities , sampling requirements , etc .P.2 6

3- 2

• Th e amoun t o f coa l preparatio n currentl yundertaken , including the differen t type s o f washin g tha t mayoccu r fo r differen t siz e coa l fractions . Th e purpos e o f thes e question s i s t o ascertai n howmuc hsulfu r reductio n ma

yalread

yoccu r du e t o preparation , whethe r an yspecifi c siz e fractio n a t th e min e i s particularl y amenabl e t o sulfu r reduction , an d th e potentia l fo r additiona l sulfu r reductio n t o occur .
Amor e complet e discussio n o f th e type s o f question s raise d during th e telephon e interview s can b e foun d i n Appendi xA , whic hprovide s a sampl e discussio n outlin e fo r th e interview s wit hpotentia l verylo wsulfu r coa l producers .

Th e interview s wit hpotentia l verylo wsulfu r coa l producer s reveale d tha t th e mos t likel yarea s o f verylo wsulfu r coa l productio n i n th e continenta l U.S . ar e foun

d i n part s o f th e following regions :

• I n Centra l Appalachia , th e coa l field s i n extreme souther n Wes t Virgini a an d wester n Virgini a nea r th e Wes t Virgini a border .

• I n Souther n Appalachia , th e Warrio r Basi n i n Alabama .

• I n th e Rockies , th e Gree n Rive r an d Nort hPar k field s i n Colorado , th e Rato n Mes a regio n i n Ne wMexico , an d th e Wasatc hPlatea u i n Utah .

• Th e Powde r Rive r Basi n i n Wyomin g an d Montana .
Eac ho f thes e potentia l suppl yarea s wil l b e discusse d i n turn .
CENTRA LAPPALACHI A

I n centra l Appalachi a th e coa l field s i n easter n Kentucky , souther n Wes t Virginia , an

d Virgini a ar e reknow n fo r thei r lo

wsulfu r coa l potential , particularl ycomplianc e coa l belo w1. 2 pound s sulfu r dioxid e pe r millio n Btu .P.2 7

3- 3 Withi n thi s regio n the lowes t sulfu r coal s currentl yproduce d come fro mth e countie s nea r the Virginia-Wes t Virgini a borde r aroun d Ceda r Bluff , Virgini a (e.g. , Buchanan , Russell , an d Tazewel l Countie s in Virgini a an d McDowel l Count yi n Wes t Virginia) . Th e keyverylo wsulfu r coa l seam s ar e th e Pocahonta s # 3 i n Wes t Virgini a an d Virgini a an

d th e Tiller , Re d Ash , an d Lowe r Banne r seam s in Virginia . Base d on the interview s wit hcoa l producer s i n thi s area , th e following observation s on verylo wsulfu r coa l availabilit ycan b e made :

Th e lowes t sulfu r conten t tha t coul d b e supplie d i s

slightl ybelo w0. 8 pound s sulfu r dioxid e pe r millio n Btu . However , i t i s difficul t t o guarante e tha t muc h coa l wil l b e availabl e a t thi s level . Th e Pocahonta s #3 an d Lowe r Banne r seam s maycontai n some mineabl e deposits , bu t supplie s ar e probabl ylimite d t o n o mor e than a fe

whundre d thousand ton s annuall yfro ma smal l numbe r o f producer s (e.g. , les s tha n ten). 1 J N o compan ywa s confiden t o f it s abilit yt o suppl ymuc h coa l a t thi s leve l o f quality . H.C . Bosti c Coa l Compan yi n Virgini a mine s th e Lowe r Banne r seam . Th e sulfu r conten t can b e a s lo wa s 0.7 9 pound s sulfu r dioxid e pe r millio n Btu , bu t theywil l b e abl e t o min e th e sea mfo r onl y anothe r tw o t o thre e years . Genera l Coa l Compan ymine s th e Pocahonta s # 3 i n Wes t Virginia . Th e minimu msulfu r conten t i s 0.7 9 pound s sulfu r dioxid e pe r millio n Bt u (0.55 % sulfur , 14,00 0 Bt u pe r pound ) whe n th e coa l i s full ywashed . However , sinc e th e lowe r sulfu r coa l come s ou t o f th e min e randomly , theyprefe r no t t o guarante e muc hbelo wabou t 1. 0 pound sulfu r dioxid e pe r millio n Btu .

1 J An yestimate s presente d herei n o n th e amoun t o f potentia l productio n o r numbe r o f producer s shoul d b e viewe d a s roug happroximations . Sinc e thes e statement s ar e base d o n discussion s wit ha smal l sampl e o f potentia l coa l producers , no t an exhaustiv e survey , mor e accurat e quantificatio n i s no t possible .3- 4

• Coa l i n th e 0.8 5 t o 0. 9 poun d rang e i s definitel y availabl e fro

mthi s region , althoughonl ya fe w companie s min e coal s o f thi s quality . In additio n t o th e Pocahonta s # 3 an d Lowe r Banne r seams , th e Re d As h an d Tille r seam s can als o suppl ysome coa l belo w0. 9 pound s sulfu r dioxid e pe r millio n Btu . Th e Kno xCree k Coa l Compan ymine s the Tille r sea m i n Virgini a ou t o f tw o differen t mines . Thi s coa l average s 0.8 5 t o 0. 9 pound s sulfu r dioxid e pe r millio n Btu . Currently , thi s coa l i s typicall y blende d wit hothe r coal s t o produc e a metallurgical-grad e product . Theyals o min e th e Re d As hseam , whic hrange s i n sulfu r fro m0.6 5 pound s t o 1. 0 pound . Th e sulfu r conten t i n th e coa l change s to o quickl yt o expec t muc hbelow0. 9 t o 1. 0 pound sulfu r dioxid e pe r millio n Btu .

• Severa l companie s coul d suppl ycoal s wit hn o mor e tha n 1. 0 pound sulfu r dioxid e pe r millio n Btu .
I n additio n t o th e limite d availabilit yo f some o f thes e coals , ther e ar e othe r factor s tha t mayaffec t the suitabilit yo f thes e coal s fo r the industria l market . Fo r example , mos t industria l coa l customer s usuall y purchas e a stoker-typ e coa l tha t ha s specifi c siz e specification s a s wel l a s a limi t o n th e amoun t o f fines , the powderlik e portio n o f th e mine d coal . However , man

yo f th e verylo

wsulfu r coal s mentione d here , suc ha s coa l fro m th e Pocahonta s # 3 seam , hav e traditionall ybee n mine d a s metallurgica l coals . Thes e coal s ten

d t o b e lowe r volatile , highgrin d (soft) , highl yfriabl e coal s tha t woul d no t bur n wel l i n conventiona l stoker-fire d boilers . Thi s doe s no t
mean thes e type s o f coal s can no t b e burne d b yindustria l customers . Sinc e th e focu s i n thi s analysi s i s o n boiler s ye t t o b e ordere d tha t woul d b e subjec t t o a revise d NSPS , thes e fue l constraint s can b e take n int o accoun t whe n th e boile r i s designed . Tha t is , fro man engineering standpoin t a boile r can b e designe d t o bur n almos t an yfue l a s lon

g a s th e qualit yspecification s3- 5
t o f th e fue l ar e know n beforehand. 1

- 1 Nevertheless , fo r some o f thes e very lo wsulfu r coal s th e boile r design woul d b e differen t tha n mos t existing industria l boilers. 2

- 1

I n some instances , coal s wit hsulfu r content s significantl ybelo w0. 8 pound s sulfu r dioxid e pe r millio n Bt u can b e foun d i n Centra l Appalachia , bu t i t mayno t b e feasibl e fo r th e coa l compan yt o segregat e the verylo wsulfu r coa l fro

mothe r coa l supplies . Fo r some companie s theymayno t kno wwhe n th e verylo wsulfu r coa l wil l b e mine d whe n i t i s par t o f a large r mining operation , eithe r becaus e theyhav e no t conducte d enoughcor e sampling t o kno w whe n i t wil l b e availabl e o r th e sulfu r conten t varie s to o quickl yt o ensur e tha t the lowe r sulfu r coa l can b e segregated . In othe r cases , th e layou t o f th e min e doe s no t allowsegregatio n o f differen t coa l supplie s withou t unacceptabl e losse s i n productivity . Fo r example , i n a longwal l minin g operatio n the min e developmen t pla n i s usuall yengineere d t o maximiz e extractio n withou t regard t o qualit ycharacteristics . I t woul d no t b e feasibl e t o segregat e coa l i n thi s situation . Finally , fo r some companie s th e verylo wsulfu r coal s coul d no t b e sol d separatel yeve n i f physica l segregatio n wer e no t a problembecaus e thes e coal s ar e neede d t o blend wit h othe r coal s t o satisf yoveral l qualit yspecification s o n othe r coa l contracts . I f th e verylo wsulfu r coal s wer e segregate d fro mthes e othe r coals , th e remaining produc t woul d b e difficul t t o sell .

1 J Persona l communicatio n wit hNei l Johnson , Detroi t Stoke r Company , Decembe r 8 , 1986 . 2 J Fluidize d be d combustio n boiler s provid e on e alternativ e metho d fo r burning coal s wit ha wid e rang e o f qualit ycharacteristics .P.3 0

3- 6
Fo r th e ver

ylo wsulfu r coal s i n thi s region , i t i s unlikel ytha t additiona l coa l preparatio n woul d offe r an ychanc e fo r increase d sulfu r reduction . Mos t o f thes e coal s ar e alread ybeing washe d suc htha t an ysulfu r reductio n t o b e gaine d b ywashin g ha s alread yoccurred . In our discussion s wit hcoa l companie s fro mthi s area , mos t o f the companie s fel t tha t littl e sulfu r reductio n occurre d anywa ywit hthes e coal s sinc e mos t o f the remaining sulfu r wa s organi c tha t coul d no t b e remove d wit hconventiona l washin g techniques .

SOUTHER NAPPALACHI A

I n Souther n Appalachia , verylo wsulfu r coal s can b e foun d i n th e Warrio r Basi n i n Alabama (near Birmingham) . Mos t o f the seam s i n thi s regio n ten d t o b e relativel ythi n (e.g. , two t o four fee t thick ) an d ar e quit e deep , i.e. , u p t o 200 0 fee t belo wground . Th e keyseam s fo r ver ylo wsulfu r coa l productio n ar e th e Blu e Creek , Blac k Creek , Jefferson , an d MaryLe e seams . I n term s o f sulfu r content , thes e coal s ten d t o b e slightl yhighe r qualit ythan verylo w sulfu r coal s fro

mCentra l Appalachia . Fo r example :

• Sulfu r level s hav e bee n reporte d clos e t o 0. 7 pound s pe r millio n Btu , particularl yfro mth e Blu e Cree k an d MaryLe e seams . Du e t o th e organi c sulfu r conten t i n typica l Alabam

a coals , i t i s unlikel ytha t coal s belo w 0. 7 t o 0. 8 pound s sulfu r dioxid e pe r millio n Bt u wil l b e available . Eve n a t 0. 8 pounds , onl ya fewproducer s hav e indicate d theywoul d b e abl e t o suppl ycoal .

• Severa l producer s coul d suppl ysome coa l t o mee t a 0. 9 pound level . Fo r example , Ji mWalter s Resource s Inc . i s presentl ysupplying coa l wit hsulfu r content s o f 0. 7 t o 0. 9 pound s sulfu r dioxid e pe r millio n Bt u t o Alabama Powe r Company ; thi s i s t o mee t a 0. 9 pound limi t o n a carload-by-carloa d basi s fo r eachrai l ca r shippe d t o it s powerplants .P.3 1

3- 7

• Coal s ar e mor e readil yavailabl e a t 1. 0 pound sulfu r dioxid e pe r millio n Btu . Drummond Coa l Compan yi s presentl ysupplying coa l a t thi s sulfu r leve l t o Alabama Power . 1 J

T o attai n th e qualit ylevel s mentione d above , Alabama coal s typicall y underg o ful l preparatio n t o minimiz e the amoun t o f impuritie s in th e coa l tha t i s marketed . Thi s i s necessarybecaus e of :

• Th e thi n natur e o f some o f th e coa l seam s usuall y mean s tha t substantia l amount s o f as h(non-coa l material ) ar e remove d wit hth e coa l during the mining process .

• Alabama Powe r Company' s requirement s fo r onl ylo w sulfur , highBt u coals , whic hcan b e supplie d mos t easil yb

yful l preparation . Th e primaryexceptio n t o thi s rul e ar e some portion s o f th e Blu e Cree k
seam , whic hcan contai n 0. 7 t o 0. 8 pound s sulfu r dioxid e pe r millio n Bt u whe n mined . Eve n on th e unwashe d portion s o f th e Blu e Cree k seam , washin g woul d b e unlikel yt o significantl yreduc e th e sulfu r content . A s a result , th e exten t
o f washin g o f Alabama coal s indicate s tha t littl e o r n o additiona l sulfu r reductio n can b e expecte d wit hconventiona l washin g techniques .

Some o f Alabama' s coa l producer s hav e some reservation s abou t providin g verylo wsulfu r coa l t o the industria l sector , primaril ybecaus e mos t companie s nee d t o blend thes e coal s wit hhighe r sulfu r coal s t o produc e an acceptabl e produc t fo r market . I n thes e instances , verylo wsulfu r coal s may b e produce d bu t wil l no t b e sol d separatel ys o tha t th e coa l compan ycan insur e a marke t fo r al l o f it s coal .

1 J Persona l communicatio n wit hDavi d J . Putman , Vic e Presiden t a t Alabama Power .P.3 2

3- 8

• Mos t o f th e verylo wsulfu r coal s i n Alabama ar e no t typica l stoker-qualit ycoals . Lik e man yo f the verylo

wsulfu r coal s i n Centra l Appalachia , th e Souther n Appalachia n coal s ten d t o b e verysof t coal s (e.g. , grindabilit yindice s averag e fro m8 0 t o ove r 100 ) tha t quickl ybreak dow n into , fine s unde r norma l handling an d loading conditions . Some portion s o f th e Mary Le e an d Blu e Cree k seam s in the norther n portio n o f th e Warrio r Basi n ar e a n exceptio n sinc e theyhav e reasonabl e stoke r characteristics , bu t fo r mos t ver y lo wsulfu r coal s fro

mAlabama th e boile r design wil l hav e t o tak e int o accoun t tha t th e coa l wil l no t bur n lik e a typica l stoke r product .


## TH E ROCK Y MOUNTAI NARE A

Th e Rock

yMountai n Are a include s th e coal-producing region s o f Colorado , Utah , th e Rato n Mes a regio n o f NewMexico , an d th e Gree n Rive r regio n o f Wyoming . Withi n th e Rockie s ther e ar e severa l area s wher e verylo wsulfu r coal s coul d b e produce d fo r th e industria l sector , including :

• I n Colorado , the lowes t sulfu r coal s come fro mthe Gree n Rive r regio n i n northwes t Colorad o an d th e Nort h Par k regio n i n nort hcentra l Colorado . Th e keyvery lo wsulfu r seam s ar e th e Suddut hsea mi n th e Nort hPar k region , an

d th e A , B , C , D , X , an d Y seam s fro

mth e Danfort hHill s Formatio n an d th e I sea

mi n th e Uppe r William s For k Formatio n i n th e Gree n Rive r regio n (som e o f thes e same verylo wsulfu r seam s exten d int o th e Gree n Rive r regio n o f Wyomin g a s well) .

• I n Ne wMexico , th e Yor k sea mi n th e Rato n Mes a regio n i n th e northeaster n par t o f th e stat e currentl y produce s verylo

wsulfu r coal .

• I n Utah , th e lowes t sulfu r seam s ar e th e Bea r Canyo n an d Hiawatha seam s i n th e Wasatc hPlatea u field .P.3 3

3- 9
Th e sulfu r leve l attainabl e fro mcoal s fro

mth e Rockie s i s lowe r than th e leve l attainabl e in the East . Base d on conversation s wit hproducers , i t appear s tha t severa l companie s woul d b e abl e t o suppl ycoal s t o mee t 0. 8 pound s sulfu r dioxid e pe r millio n Bt u using thei r curren t mining procedures . I n man ycase s th e coa l actuall ysupplie d coul d b e substantiall ylowe r than 0. 1 pound s sulfu r dioxid e pe r millio n Btu , bu t th e compan yi s no t confiden t i t coul d guarante e anything lowe r than 0. 8 pound s du e t o th e sulfu r characteristic s o f th e coal . Fo r example :

Blac k Butt e Coa l Compan yi n Wyomin g produce s abou t 500,00 0 ton s pe r yea r tha t average s 0. 5 pound s sulfu r dioxid e pe r millio n Btu , varying fro m0. 4 pound s t o 0. 8 pound . Th e sulfu r conten t can varys o quickl ytha t th e compan yi s veryreluctan t t o guarante e coa l below0. 8 pound s sulfu r dioxid e pe r millio n Btu . Soldie r Cree k Coa l Compan yi n Utahha s mad e deliverie s tha t averag e les s than 0. 7 pound s pe r millio n Bt u o n an annua l averag e basi s fo r it s utilit y customers . Du e t o the stringen t sulfu r contro l require d t o guarante e coa l i n muc hsmalle r quantitie s (o n a carload basi s t o industria l customers) , i t i s eve n hesitan t t o guarante e i t can mee t the 0. 8 pound level . Empir e Energyproduce s coa l fro mth e Gree n Rive r regio n i n Colorad o wit habou t 0.7 3 pound s sulfu r dioxid e pe r millio n Btu . Sinc e th e sulfu r conten t i s veryconsisten t a t thi s level , i t wil l no t guarante e coa l belo w0. 7 pounds . Ther e ar e a fe

wproducer s tha t coul d suppl ycoa l t o mee t a leve l o f 0. 7 pound s sulfu r dioxid e pe r millio n Btu . I n th e cas e o f th e Ker r Coa l Company , i t can currentl yproduc e a 0. 7 pound coa l fro mth e Suddut hsea

mi n th e Nort h Par k fiel d i n Colorad o withou t altering it s curren t minin g procedures. 1 J

1 J Persona l communicatio n wit hDav e Gossett , minin g engineer , Ker r Coa l Company , Decembe r 30 , 1986 .P.3 4

3-1 0
However , in mos t instance s th e coa l companie s supplying thes e coal s woul d no t followthei r typica l mining procedures . Fo r example :

• At it s Danfort hHill s Min e in Colorado , Colowy o Coa l Compan ymine s the A , B , C , D , E , X , an d Y seam s i n the Axia l Basi n i n th e Gree n Rive r region . B ysegregating th e E an

d F seams , whic hten d t o b e highe r i n sulfu r than the othe r seams , Colowyo coul d guarante e delivery o f a coa l below0. 7 pound s sulfu r dioxid e pe r millio n Btu .

• At it s Cimarro n Min e in the Rato n Mes a regio n o f Ne w Mexico , Kaise r Coa l Compan yproduce s tw o differen t type s o f coa l fro

mthe Yor k seam . Kaise r can mee t a 0. 7 pound leve l b

ywashin g it s norma l run-of-min e coa l t o produc e a dee p cleane d coa l i t typicall ysell s t o metallurgica l customer s abroad . Th e abilit yo f coa l producer s i n th e Rockie s t o suppl ycoa l t o industria l customer s t o mee t a sulfu r conten t o f 0. 7 pound s sulfu r dioxid e pe r millio n Bt u i s ofte n limited . Fo r on e thing , a s wa s the cas e fo r some Easter n coa l companies , the ver

ylo wsulfu r coal s ar e ofte n neede d fo r blending t o mee t th e sulfu r specification s o f electri c utilit ycustomers . Segregating the verylo w sulfu r coal s coul d mak e i t difficul t t o achiev e the desire d qualit yo n th e remaining coal , whic hofte n comprise s th e majo r portio n o f th e company' s business . Companie s mayals o hav e a limite d abilit yt o produc e verylow sulfu r coa l specificall yfo r th e industria l marke t becaus e thei r min e capacit y ma yalread

yb e committe d t o othe r customers . I n th e majorit yo f case s thes e othe r customer s ar e electri c utilitie s wit hlong-ter mcontrac t commitment s wit hth e coa l company . Verylo wsulfu r coa l wil l b e produce d fo r the industria l marke t onl yt o th e exten t thes e sale s d o no t jeopardiz e othe r busines s an

d additiona l min e capacit yexist s t o suppl ythes e coals . Whil e i t appear s tha t severa l companie s coul d suppl ya 0. 7 pound coal , i t i s unlikel y3-1 1

tha t an yon e min e coul d suppl ymor e than 500,00 0 ton s annually . (Se e Appendi x B t o relat e thi s amoun t o f productio n t o estimate d coa l demand fro mindustria l boiler s purchase d recently) .
POWDE R RIVE R BASI N

Th e Powde r Rive r Basi n i s locate d i n northeaster n Wyomin g an d southeaster n Montan a an

d contain s substantia l reserve s o f subbituminou s coa l tha t i s generall ylo

wi n sulfur . Almos t al l operating mine s hav e some verylo wsulfu r coal . However , no t al l o f the mar e willin g t o guarante e a verylo wsulfu r produc t fo r on e o r mor e o f the following reasons :

• Th e seam s being mine d showinconsisten t latera l variation s i n thei r sulfu r content , makin g i t difficul t t o predic t whe n th e verylo wsulfu r portio n can b e mine d an

d delivered .

• Th e verylo

wsulfu r seam s occu r a s pocket s withi n highe r sulfu r coa l an d mus t b e use d t o blend th e coa l int o a marketabl e product .

• Alarg e numbe r o f th e mine s ar e locate d completel yo r almos t completel yon federa l land s wher e regulation s suc ha s maximu

meconomi c recoveryan d diligen t developmen t coul d discourag e th e selectiv e minin g o f th e verylo

wsulfu r coa l portions .
Ver ylo wsulfu r coal s ar e foun d primaril yi n th e Roland , Smith , Anderson , Canyon , an

d Wyodak-Anderso n seam s o f Wyoming 1 ^ and , i n limite d quantitie s fro mth e Anderso n an

d Diet z seam s o f Montana . Ther e i s some uncertaint yove r th e lowes t sulfu r leve l tha t coul d b e supplied , althoughcoa l i s occasionall y shippe d belo w0. 5 o r 0. 6 pound s sulfu r dioxid e pe r millio n Btu . Fo r example , th e Nort hAntelop e Coa l Compan yshippe d coa l fro mit s Nort hAntelop e Min e tha t

1 J I n some case s i n Wyoming , th e same sea mi s give n differen t name s b y differen t mines .P.3 6

3-1 2
average d 0. 5 pound s sulfur dioxid e pe r millio n Bt u during 1986 . However , th e coa l fro

mthi s min e i s generall yunavailabl e sinc e th e min e i s full y contracted .

Severa l othe r coa l producer s indicate d tha t theycoul d suppl ycoa l wit ha sulfu r conten t o f n o mor e than 0. 7 pound s sulfu r dioxid e pe r millio n Bt u t o industria l customers . In some instances , th e 0. 7 pound s coa l coul d b e supplie d wit hcurren t mining procedures . Fo r example :

• Thunde r Basi n Coa l Company' s Blac k Thunde r min e can occasionall ydelive r a 0. 7 pound coa l whe n i t reache s lowe r sulfu r portion s o f th e Wyoda k seam . Thi s wa s th e cas e i n 1986 .

• NERCO' s Antelop a mine , whic hi s jus t startin g up , i s minin g th e Canyo n seam . Becaus e th e sea mha s vertica l rathe r than latera l variabilit yi n sulfu r content , th e min e i s abl e t o produc e an d guarante e some o f it s coa l a t 0.6 7 pound s sulfu r dioxid e pe r millio n BTU .
I n mos t cases , however , th e coa l producer s woul d hav e t o mak e some adjustment s i n thei r mining method s t o produc e th e 0. 7 pound coal . Thes e adjustment s usuall yinvolve d additiona l sampling t o ensur e tha t 0. 7 pound coa l i s actuall yshippe d t o the industria l custome r and/o r extr a coa l handlin g an d storag e equipmen t t o keep th e verylo wsulfu r coa l segregate d fro mothe r coa l supplies . Overall , severa l hundre d thousand ton s o f coa l annuall ywit ha sulfu r conten t o f 0. 7 pound s sulfu r dioxid e pe r millio n Bt u coul d b e supplie d t o industria l user s eac hyea r fro mexisting min e capacities . (Se e Appendi xB fo r estimate d industria l coa l demand fro mne wboiler s purchase d recently) .

Some producer s hav e indicate d tha t theywoul d hav e littl e o r n o difficult y supplying coa l wit ha sulfu r conten t n o greate r than 0. 8 pound s sulfu r dioxid e pe r millio n Btu . Thes e are :P.3 7

3-1 3

• Th e following four mine s in th e souther n portio n o f Campbel l County , Wyoming : NERCO' s Antelop e min e wit ha productio n capacit yo f 3 millio n ton s pa r year , Peabody' s Norther n Antelop e min e whic hi s a full y contracte d min e wit ha productio n capacit yo f 10. 5 millio n ton s pe r year , EXXON' s Caball o min e wit ha productio n capacit yo f 1 2 millio n ton s pe r year , an d Thunde r Basi n Coa l Company' s Blac k Thunde r min e wit ha productio n capacit yo f 2 2 millio n ton s pe r year .

• I n Montana , th e Decke r Coa l Company' s Decke r min e wit ha tota l capacit yo f 1 8 millio n ton s pe r yea r fro m al l it s units .
Mos t Powde r Rive r producer s indicate d a reluctanc e t o alte r curren t minin g practice s t o suppl ycoa l t o industria l customers . Thi s reluctanc e i s du e t o thei r concer n t o avoi d an ynegativ e impac t o n othe r coa l business . I n particular , min e plan s i n th e Powde r Rive r Basi n ar e geare d t o highvolume shipment s t o th e electri c utilit ysector . Coa l companie s wil l no t jeopardiz e overal l min e productivit yt o sel l t o th e industria l market . Wit hthi s i n mind , alteratio n i n mining practice s t o accomodat e coa l sale s t o th e industria l secto r wil l occu r onl yi f long-term , highvolume coa l shipment s t o electri c utilitie s ar e no t adversel yaffected .

IMPORTE DCOAL S

Thi s analysi s focuse d o n th e abilit yo f coa l producer s i n th e lower-4 8 state s t o produc e verylo wsulfu r coals . Unde r some circumstances , however , ther e ma

yb e opportunitie s fo r industria l coa l consumer s t o obtai n verylo w sulfu r coal s elsewhere . Asummaryo f thes e othe r potentia l verylo wsulfu r coa l suppl yarea s i s show n i n Tabl e 3-1 . Not e that :P.3 8



### 3-1 4
TABL E 3- 1 POTENTIA LLOW-SULFU R COAL S OUTSID E TH E CONTIGUOU S U.S
.

Min e Name Min e Capacit y (millio n tons/yr ) Heatin g valu e (Btu/lb ) Sulfu r (% ) As h(% ) Volatil e Matte r (?„ ) Grindabilit y(HGI ) Alask a Usibell i
1. 7 790 0 0. 2 8 N.A . N.A . Australi a

Blai r Atho l
8. 0 ' 10,70 0 0. 3 1 6 27. 9 6 0 Canad a

Lusca r 2. 8 12,10 0 0.1 8 1 9 19. 0 8 7 Colombi a

Cerrejo n
3 0 13,00 0 0. 5 1. 0 34. 9 5 0 S . Afric a

Greensid e
2. 6 12,00 0 0.5 6 1 3 23. 2 N.A .

lbs . S02/MMBt u 0.5 1 a / 0.5 6 0. 3 0.7 6 "0.4 6

a / Lowe r sulfu r coal s d o exis t i n Alaska , bu t ar e no t currentl ybeing mined .P.3 9

3-1 5

• Supplie s o f 0. 3 pound sulfu r dioxid e pe r millio n Bt u coa l can b e obtaine d fro mwester n Canada . Thes e coal s ar e generall yshippe d ou t o f Britis hColumbia .

• Coa l wit ha sulfu r leve l o f abou t 0. 5 pound s sulfu r dioxid e pe r millio n Bt u can b e obtaine d fro mSout h Afric a an

d Australia .

• Colombi a produce s coa l tha t average s abou t 0. 8 pound s sulfur dioxid e pe r millio n Btu , althoughsome coa l significantl ybelo wthi s leve l ha s bee n shipped . Colombia n coal s hav e bee n purchase d b ysevera l U.S . electri c utilitie s along th e Gul f Coas t an d Eas t Coast , althoughusuall yo n a tria l basi s only . In on e instance , a coa l compan yimporte d Colombia n coa l t o blen d wit h a U.S . coa l fo r resal e t o industria l customer s in th e southeaster n Unite d States .

• Alask a produce s subbituminou s coa l wit ha sulfu r conten t o f abou t 0. 5 pound s sulfu r dioxid e pe r millio n Btu . Thes e coal s ar e currentl yconsume d withi n Alaska , with.additiona l shipment s recentl ybeginning t o Pacifi c Ri mmarkets .
I t i s no t clea r unde r wha t circumstances , i f any , thes e coal s migh t b e supplie d t o th e U.S . industria l market . I t wa s beyond the scop e o f thi s analysi s t o conduc t a detaile d examinatio n o f thes e potentia l impacts . However , i t ma

yb e possibl e fo r importe d coal s t o compet e i n the U.S . industria l coa l marke t in some cases . Furthe r analysi s woul d b e require d t o explor e th e condition s unde r whic himporte d coal s mayb e consume d b y industria l consumers . SUMMAR YO F AVAILABILIT YO F VER YLOWSULFU R COAL S

Base d o n th e interview s wit hcoa l producer s i n differen t region s o f th e U.S. , th e qualit yo f verylo wsulfu r coal s tha t coul d b e mad e availabl e t o industria l coa l consumer s i s show n i n Tabl e 3-2 . Thi s availabilit yi s show n fo r th e keyver

ylo wsulfu r coal-producing region s tha t coul d suppl ycoa l t oP.4 0

3-1 6
TABL E 3- 2 SUMMAR YO F AVAILABILIT YO F VER YLO WSULFU R COAL S



### a / Regio n Centra l Appalachi a Souther n Appalachi a Colorad o NewMexic o Utah Powde r Rive r Basi n Import s Lbs . S02/MMBt u Absolut e Minimu m 0.7 8 0.7 5 0. 6 0. 6 0.6 5 0. 5 0. 3 Hun t

Ser a 0.8 5 0.8 5 0. 7 0. 7 0. 7 0. 7 0. 5 _ tc h -0. 9 -0. 9 Mor e Commo n

VeryLow 1. 0 1. 0 0. 8 0. 8 0. 8 0. 8 0. 6

a / Minimu

msulfu r leve l achievabl e o n a rai l ca r basis ; on e rai l ca r i s assume d t o contai n 10 0 ton s o f coal .P.4 1

3-1 7
th e U.S . industria l market . A s the informatio n presente d earlie r i n thi s chapte r fo r eac hsuppl yregio n indicates , coa l producer s can encounte r varying level s o f difficult yt o suppl yver ylo wsulfu r coals , depending o n the specifi c sulfu r conten t demanded . T o tak e thes e difference s int o account , th e sulfu r conten t o f the coal s tha t coul d b e supplie d fro meac hregio n i s show n fo r thre e differen t qualitativ e level s o f availability :

• Th e "absolut e minimum, " whic hi s th e lowes t sulfu r leve l at whic han

ycoa l produce r in th e regio n woul d suppl ycoa l wit han ytyp e o f guarantee , althoughth e amoun t o f thi s qualit yo f coa l wa s usuall yverylimited ,

• A"hun t an

d scratch " level , whic hcorrespond s t o a verylo wsulfu r coa l tha t coul d b e supplie d fro m severa l coa l producer s in the region , althoughman y coa l producer s i n the regio n woul d no t b e abl e t o suppl ycoal s o f th e indicate d qualit yan d additiona l cost s woul d likel yb e incurre d b ythos e coa l producer s wh o coul d suppl yth e coal , an d

• Amor e commo n verylo wsulfu r coa l level , whic h indicate s a sulfu r leve l tha t coul d b e readil ysupplie d b ysevera l producer s i n th e regio n withou t incurring additiona l cost s sinc e theyofte n produc e coa l o f th e indicate d qualit ywit hthei r curren t minin g operations . Th e degre e o f difficult yt o suppl yverylo wsulfu r coal s implie d b ythes e level s i s inherentl ysubjective , bu t doe s indicat e th e approximat e degre e o f difficult ytha t woul d b e encountere d b ycoa l producer s i n th e regio n t o suppl y verylo wsulfu r coals . Th e thre e differen t level s hav e bee n provide d t o indicat e th e potentia l rang e o f availability , fro man absolut e minimu mtha t producer s wil l guarante e t o mor e widely-availabl e coals .P.4 2


## 4-1
CHAPTE R FOU

R INCREMENTAL COST S T O SUPPLY VERY LOWSULFU R COAL S Depending on the specifi c sulfu r conten t demanded , some coa l producer s can suppl yverylo

wsulfu r coal s fro

mthei r existing operation s withou t incurring additiona l costs . Fo r thes e producer s th e coa l theysel l regularl yi s alread y lo wenoughin sulfu r tha t theycan sel l i t directl yt o the industria l custome r jus t lik e an

yothe r coa l transaction . However , i n man ycase s th e coa l produce r wil l incur additiona l cost s i n orde r t o mee t th e specifi c need s o f th e industria l customer . Thi s i s ofte n th e cas e fo r verylo wsulfu r coal s tha t approac hth e lowe r en d o f the sulfu r rang e availabl e fro ma particula r suppl yregion . T o suppl ythes e verylo wsulfu r coal s t o an industria l customer , th e coa l produce r ma yb e require d t o undertak e additiona l sampling , handlin g an

d storage , and/o r mor e comple xcoa l preparatio n technique s i n orde r t o guarante e tha t th e verylo wsulfu r coa l attain s the desire d sulfu r level .

An ycost s incurre d b ya coa l produce r t o suppl yverylo wsulfu r coal s wil l b e i n additio n t o it s norma l cost s o f productio n t o suppl ylo wsulfu r coals. 1

- 1 Thes e increase s i n mining cost s represen t a minimu mpric e increas e t o b e pai d b

yth e industria l custome r i f th e verylo wsulfu r coal s ar e t o b e produced . Fromth e industria l customer' s standpoint , i t i s als o possibl e tha t othe r cost s wil l b e incurre d a s well . Fo r example , assume tha t a n industria l
coa l consume r locate d i n Chicago , ILlinoi s (EP ARegio n 5 ) woul d normall yhav e purchase d it s lo

wsulfu r coa l fro

mCentra l Appalachi a a t a mine-mout hpric e o f

1 J Fo r purpose s o f thi s analysis , a lo wsulfu r coa l i s assume d t o emi t 1. 2 pound s sulfu r dioxid e pe r millio n Btu .4- 2

$2 0 pe r ton , plu s anothe r $1 5 pe r ton t o transpor t the coa l t o Chicago , fo r a tota l delivere d cos t o f $3 5 pe r ton . However , let' s assume tha t thi s same consume r mus t nowpurchas e a ver ylo wsulfu r coa l tha t can onl yb e obtaine d fro mColorado . T o purchas e thi s coal , th e industria l consume r discover s tha t hi s cos t a t th e mine-mout hha s increase d $1 0 pe r ton t o $3 0 pe r ton becaus e th e coa l produce r i n Colorad o sell s lo wsulfu r coa l fo r $2 5 pe r to n plu s hi s incrementa l cost s fo r producing th e ver ylo wsulfu r coa l o f $ 5 pe r ton . Additionally , wherea s th e industria l custome r pai d $1 5 pe r to n t o transpor t th e coa l fro

mCentra l Appalachia , i t nowcost s hi m$2 0 pe r ton t o transpor t i t fro mColorado . Thi s exampl e illustrate s tw o type s o f incrementa l cost s tha t
ma yb e incurre d b

ya n industria l custome r i f h e mus t switc hfro ma lo wsulfu r coa l t o a verylo

wsulfu r coal :

Mine-mout hcos t difference s - - Thes e ar e an ycos t increase s incurre d by ' th e industria l coa l consume r t o purchas e verylo

wsulfu r coals . Ther e ar e two type s o f cost s t o consider : Regiona l Mining Cos t Difference s - - I f a coa l consume r mus t chang e suppl yregion s i n orde r t o purchas e a verylo wsulfu r coal , ther e mayb e cos t change s associate d wit hdifferen t mining condition s an d technique s whe n comparing on e suppl yregio n wit hanother . Thes e regiona l cos t difference s appl yt o th e same qualit yo f coal , e.g. , th e differenc e in cos t t o th e industria l consume r t o purchas e a 1. 2 pound coa l fro mon e regio n t o another . I n th e example s above , the industria l coa l consume r i n Chicag o woul d hav e pai d $2 0 pe r to n a t th e mine-mout hfro mCentra l Appalachi a fo r a lo wsulfu r coal , bu t $2 5 pe r to n fo r th e same qualit ycoa l fro

mColorado . Th e increas e o f $ 5 pe r to n i s th e regiona l minin g cos t differenc e tha t i s born e b yth e industria l consume r becaus e h e n o longe r purchase s coa l fro mhi s origina l choic e o f suppliers . Verylo wsulfu r mining cost s - - Thes e ar e an y incrementa l cost s incurre d b yth e coa l produce r t o suppl yth e verylo

wsulfu r coa l t o th e industria l coa l customer . I n th e exampl e above , thes e incrementa l mining cost s wer e $ 5 pe r to n i nP.4 4

4- 3 additio n t o th e $2 5 pe r to n fo r th e basi c lo w sulfu r coal . Transportatio n Cos t Difference s - - I f a n industria l coa l custome r purchase s verylo wsulfu r coa l fro

ma suppl yare a tha t i s differen t fro mhi s origina l choice , shipmen t cost s ma

ychange . In the exampl e above , th e industria l coa l customer' s transportatio n cost s increase d b

y$ 5 pe r ton whe n tota l transportatio n cost s increase d fro

m$1 5 pe r ton fro

mCentra l Appalachi a t o $2 0 pe r ton fro

mColorado .
Fo r the verylo

wsulfu r mining costs , the mos t likel ychange s wil l b e du e t o 1 ) increase d sampling requirement s an d 2 ) extr a coa l storag e an d handling facilities . Sampling cost s wil l increas e becaus e mor e sampling need s t o b e don e t o assur e th e qualit yo f th e coa l t o industria l customers . Currently , mos t producer s sampl e t o mee t th e need s o f thei r electri c utilit ycustomers . Thes e sampling practice s d o diffe r fro mon e operatio n t o th e nex t depending o n th e utility' s requirement s an d th e expecte d variabilit yi n th e coal' s quality , among othe r factors . I t i s no t uncommon , however , fo r th e coa l produce r t o sampl e ever

yworkin g shif t a t th e min e and/o r fo r eachtrainload shipped .
Thi s sampling frequencyi s no t necessaril ysatisfactoryfo r industria l customers . Fo r example , conside r a n industria l custome r wit ha 10 0 millio n Bt u pe r hou r boile r operating a t a 50 % utilizatio n rate . Ove r a 3 0 da y period , thi s boile r wil l consume 3 6 billio n Btu , o r abou t 163 6 ton s o f coa l assuming a hea t conten t o f 2 2 millio n Bt u pe r ton . Wit ha singl e uni t trai n comprise d o f 10 0 car s tha t typicall ycontai n abou t 10 0 ton s pe r carload , th e industria l custome r woul d onl ynee d abou t 1 6 car s eac hmonth . Aguarante e fro mth e produce r tha t th e entir e trainloa d meet s a certai n sulfu r specificatio n mayb e inadequat e i f th e sulfu r variatio n i n th e coa l i s substantial .4- 4

t \ T o accoun t fo r thi s problem , w e discusse d wit hcoa l producer s th e qualit y o f coa l theywoul d delive r on a carload basis . I n man ycases , suc ha stringen t standard mayno t b e necessary , bu t thi s assumptio n seeme d conservativ e enought o ensur e tha t th e sulfu r leve l cite d b yth e producer s coul d reasonabl yb e supplie d t o industria l customer s tha t consume smalle r amount s o f coal .
Man ycoa l producer s ar e als o likel yt o incur additiona l coa l handlin g an d storag e costs . Fo r man yproducer s some portio n o f the coa l theymin e i s very lo wsulfur , bu t th e verylo wsulfu r coa l i s par t o f a singl e sea mwit hhighe r sulfu r coa l o r on e o f severa l seam s mine d concurrently . T o segregat e th e very lo wsulfu r coa l fro

mothe r coa l types , additiona l equipmen t and/o r handlin g procedure s ma

ybe . necessary . Th e magnitud e o f thes e additiona l cost s mayvary fro mon e operatio n t o the next , bu t wil l typicall yinvolv e some duplicatio n o f equipmen t a s the coa l i s remove d th e mine . Fo r example , extr a conveyo r systems , dozers , storag e bins , an d labo r mayb e required .

I t i s assume d tha t coa l producer s wil l no t undertak e majo r change s i n thei r min e developmen t plan s t o suppl yverylo wsulfu r coals . Fo r example , a min e tha t utilize s a longwal l mining systemt o extrac t coa l wil l no t alte r thi s design i f some portio n o f th e coa l tha t i s verylo wsulfu r coul d b e extracte d b

yothe r means . A s severa l producer s commented , sale s o f verylow sulfu r coal s t o th e industria l marke t wil l occu r onl yi f suc hsale s ar e an adde d benefit , no t a hindrance , t o th e company' s overal l mining operations . Fo r simila r reasons , additiona l coa l preparatio n t o remov e sulfu r wil l no t b e undertake n fo r th e industria l market . Coa l companie s wil l no t typicall y inves t i n cleaning facilitie s fo r th e industria l market . A s a result , th eP.4 6

4- 5

coa l mus t alread

yb e washe d o r i t wil l b e sol d a s mine d fo r th e industria l market . Thi s limitatio n i s no t a s restrictiv e a s i t migh t see msinc e washabilit ydat a fo r potentia l ver ylo wsulfu r coal s indicate d tha t littl e additiona l sulfu r reductio n i s likel ythroughcoa l cleaning on thes e coals .

I t shoul d b e emphasize d tha t an yincrementa l cost s t o suppl yver ylo w sulfu r coal s t o industria l consumer s d o no t necessaril yrepresen t th e marke t pric e tha t actuall ywil l b e charge d fo r th e coal . Th e pric e fo r ver ylo w sulfu r coal s wil l depen d o n severa l factor s i n additio n t o thes e incrementa l costs , including th e amoun t o f deman d fo r thes e coal s an d th e abilit yo f ver y lo wsulfu r coa l producer s t o extrac t economi c rent s b ycharging a premiu mfo r supplying verylo

wsulfur coals . A s mor e producer s fro mmultipl e region s instal l capacit yt o suppl ythes e demands , competitiv e force s woul d increas e an d ac t t o hol d incrementa l price s close r t o incrementa l costs .
Price s woul d ten

d t o approac hthes e incrementa l cos t particularl yin ' a sof t coa l market , i.e. , whe n deman d i s les s tha n supply , sinc e price s ar e mor e likel yt o b e a t o r nea r variabl e productio n costs . I n a tighte r coa l market , price s coul d increas e i n respons e t o marke t conditions . Th e siz e o f th e increas e woul d depen d o n severa l factors , including th e competitivenes s o f othe r fue l alternatives . Fo r example , assume tha t an industria l custome r ha s two choice s - - bur n ver ylo wsulfu r coa l o r scru bhigher-sulfu r coa l a t an incrementa l cos t o f abou t $0.90-$1.0 0 pe r millio n Bt u (se e Appendi xC fo r th e derivatio n o f thi s estimate) . I f th e price s o f verylo wsulfu r coal s increase d significantly , th e industria l custome r coul d choos e t o scru b higher-sulfu r coa l a t th e incrementa l cos t o f abou t $0.9 0 - .$1.0 0 pe r millio n Bt u i n lie u o f burning verylo wsulfu r coal . I n thi s case , verylo wsulfu rP.4 7

4- 6
cioa l price s woul d no t likel yris e abov e th e cos t o f scrubbing sinc e th e industria l custome r coul d switc ht o the scrubbing option . Th e cost s o f othe r alternative s woul d ten d t o restric t the exten t t o whic hver ylo wsulfu r coa l price s increase d abov e th e incrementa l cost s presente d i n thi s report .

Thes e incrementa l cost s d o represent , however , the minimu mincreas e in marke t price s tha t wil l occu r i f verylo wsulfu r coal s ar e t o b e produced . Withou t pric e increase s o f thi s magnitude , coa l producer s coul d no t cove r thei r cost s t o suppl yver ylo wsulfu r coals . Unles s theycoul d assur e tha t th e marke t pric e fo r verylo wsulfu r coal s woul d a t leas t payfo r thei r costs , theywoul d b e unw ; illin g t o suppl ythes e coal s sinc e i t woul d b e mor e profitabl e t o sel l thei r coa l a s typica l lo wsulfu r coa l withou t increasing thei r tota l cost s o f production .


### STORAG E AN DHANDLIN GCOST S

I n orde r t o suppl yver ylo wsulfu r coals , mos t producer s wil l nee d t o instal l additiona l storag e an d handling capabilitie s fo r segregatio n o f th e verylo wsulfu r coa l fro

mothe r type s o f coal . Th e natur e o f thes e additiona l investment s wil l depen d on the typ e o f facilitie s currentl yuse d b yth e mine , th e min e developmen t plan , an d th e amoun t o f verylo wsulfu r coa l tha t coul d b e supplied , among othe r factors . T o some exten t eac ho f thes e factor s wil l b e uniqu e t o eac hmining operation . However , fro mth e informatio n obtaine d fro mour discussion s wit hcoa l producers , ther e ar e certai n storag e an d handling requirement s tha t ar e commo n fo r coa l producer s withi n a particula r coa l suppl yregion . Thes e requirement s can b e divide d int o thre e categorie s b ygeographi c locatio n - - Appalachia , th e Rockies , an d th e Powde r Rive rP.4 8

4- 7
Basin . I n summary , storag e an d handling cost s woul d b e $0.1 5 pe r millio n Bt u in Appalachia , $0.1 2 pe r millio n Bt u in the Rockies , an d $0.1 3 pe r millio n Bt u in th e Powde r Rive r Basin . Eac ho f thes e area s wil l b e discusse d in turn . Appalachi a

On e o f th e keyfactor s affecting the leve l o f storag e an d handling cost s i s the amoun t o f ver ylo wsulfu r coa l tha t need s t o b e segregated . In Appalachi a thi s amoun t i s unlikel yt o excee d a coupl e hundre d thousan d ton s annuall yfro

man ysingl e producer , wit hamount s belo w100,00 0 ton s th e mos t likely . Th e mai n reaso n th e amoun t o f ver ylo wsulfur coa l availabl e i s s o limited i s becaus e man ycoa l mine s in Appalachi a wit hsome ver ylo wsulfu r coa l potentia l typicall yproduc e n o mor e than a fe whundre d thousand ton s annuall yo f al l type s o f coa l fro mthe entir e mining operatio n (som e large r operation s d o exist) . T o b e conservative , w e wil l assume tha t the typica l
verylo wsulfu r coa l produce r i n Appalachi a wil l produc e abou t 50,00 0 ton s o f
verylo wsulfu r coa l annually . An yincrementa l cost s fo r storag e an d handlin g incurre d b

yth e coa l produce r wil l hav e t o b e recovere d fro mthe pric e h e receive s fo r selling th e 50,00 0 tons .
Th e specifi c facilitie s th e coa l produce r wil l nee d mus t b e capabl e o f keeping th e verylo wsulfu r coa l segregate d fro mothe r coa l tha t i s mined . Fo r Appalachia n mines , th e following requirement s ar e assume d (al l cost s ar eP.4 9

4- 8
i n January198 6 dollars): 1

- 1

Cos t Storag e Are a - - 12,00 0 To n Capacit yS425,00 0 Conveyo r Bel t t o Coa l Bin s $300,00 0 Coa l Storag e Bin s (2 ) - - 1,20 0 ton capacit yeach$170,00 0 Tota l Capita l Cost s $905,00 0

Sinc e eachmin e i s assume d t o produc e 50,00 0 ton s o f ver ylo wsulfu r coa l annually , al l cost s wil l b e estimate d o n a n annualize d basis . On an annualize d basis , tota l capita l cost s o f $905,00 0 amoun t t o $135,75 0 (usin g a 1 5 percen t rea l capita l charg e rate). 2

- 1 I n additio n t o thes e capita l costs , operatio n an

d maintenanc e cost s exclusiv e o f labo r wer e assume d t o b e fiv e percen t o f tota l capital , o r $45,00 0 annuall y(Fiv e percen t i s an industry rule-of-thumb) . Si xman-month s o f additiona l labo r a t a cos t o f $25,00 0 pe r yea r wa s als o assumed . A s a result , tota l annualize d cost s ar e estimate d t o b e $205,750 .
Wit hannualize d cost s o f $205,750 , th e cos t pe r ton fo r th e 50,00 0 ton s o f
ver ylo wsulfu r coa l woul d b e $4.10 . Assumin g a hea t conten t o f 2 7 millio n Bt u pe r to n (i.e. , thes e coal s ten d t o averag e 13,000-14,00 0 Bt u pe r pound as-shipped) , th e cos t woul d b e abou t $0.1 5 pe r millio n Btu .

1 J Th e specifi c cos t element s presente d herei n ar e averag e cost s fo r th e investment s indicated ; thes e cost s ma ydiffe r fro

mon e mining operatio n t o th e next . Fo r mor e detaile d example s o f thes e costs , se e A n Engineering/Economi c Analysi s o f Coa l Preparatio n Plan t Operatio n an d Cost , U.S . Environmenta l Protectio n Agency , EPA-600/7-78-124 , Jul y1978 . 2 J Acapita l charg e rat e translate s al l capita l charge s associate d wit ha particula r capita l investmen t ove r it s lifetime int o a constan t strea mo f annua l fixe d costs . Th e capita l charge s includ e th e retur n o f capita l (i.e. , depreciation) , the return o n capita l (i.e. , interes t o n deb t an d retur n o n equity) , an d th e ancillarycharge s associate d wit hcapita l (i.e. , local , state , an d Federa l taxe s an d insurance) .P.5 0

4- 9

i i Thes e cost s ar e intende d t o b e a conservativ e (high ) estimat e o f the cost s tha t woul d b e incurre d b ya coa l produce r t o segregat e verylo wsulfu r coa l fro mothe r coa l supplies . In man yinstances , th e produce r mayb e abl e t o us e existing equipmen t and/o r personnel , thereb yincurring onl yminima l additiona l costs . However , sinc e some mining operation s woul d b e require d t o mak e thes e investment s an

d man ycoa l producer s indicate d some concer n tha t attempting t o sel l a differen t coa l t o th e industria l marke t coul d jeopardiz e thei r remaining business , thes e investment s wer e assume d t o b e necessaryfo r th e ver ylo wsulfu r coal s t o b e supplied . Rockie s

Fo r the Rockies , mining operation s ten d t o b e large r compare d t o Appalachia , wit hsevera l operation s capabl e o f producing two t o thre e millio n ton s pe r year . Fro mth e discussion s wit hcoa l producers , some mine s coul d suppl yup t o 500,00 0 ton s o f verylo wsulfu r coa l annually . Fo r thi s analysi s
w e have , assume d tha t the averag e productio n leve l woul d b e 300,00 0 ton s annually .

Du e t o th e greate r quantitie s o f coa l tha t mus t b e handled , producer s i n th e Rockie s wil l nee d t o inves t i n larger , mor e expensiv e suppor t facilitie s than Appalachia n producers . Fo r coa l producer s i n the Rockies , th e following requirement s wer e assumed :P.5 1

4-1 0
Coa l Storag e Area--20,00 0 to n capacity , including conveyo r syste m$750,00 0 Doze r (1 ) $270,00. 0 Coa l Storag e Sil o --15,00 0 to n capacit y$2,750,00 0 Tota l Capita l Cost s $3,770,00 0

O n a n annualize d basis , capita l charge s woul d b e $565,00 0 ($3.7 7 millio n x 15 % capita l charg e rate) . Operatio n an d maintenanc e cost s (excluding labor )
ar e estimate d t o b e five percen t o f tota l capital , o r abou t $185,00 0 pe r year . Labo r requirement s ar e assume d t o b e on e additiona l perso n a t $50,00 0 pe r year . Base d on thes e costs , tota l annualize d cost s ar e abou t $800,000 .
Wit hannualize d cost s o f $800,000 , th e cos t pe r to n base d on a productio n leve l o f 300,00 0 ton s o f ver ylo wsulfu r coa l i s abou t $2.6 5 pe r ton . Th e averag e hea t conten t o f thes e coal s wa s assume d t o b e 2 2 millio n Bt u pe r ton , fo r a tota l incrementa l cos t o f $0.1 2 pe r millio n Bt u fo r storag e an d handlin g i n th e Rockies .
Powde r Rive r Basi n

Coa l mine s i n th e Powde r Rive r Basi n ar e typicall ydesigne d t o produc e severa l millio n ton s o f coa l pe r year . Base d o n conversation s wit hcoa l producers , w e hav e assume d tha t eac hmin e capabl e o f supplying verylo wsulfu r coal s coul d produc e 500,00 0 ton s annually . Give n th e larg e amoun t o f coa l tha t woul d nee d t o b e segregated , th e following capita l investment s wer e assumed :4-1 1

RawCoa l Storag e Are a (befor e crushing)--40,00 0 ton capacit y$1,000,00 0 Conveyo r Bel t t o Crushe r $ 350,00 0 Conveyo r Bel t t o Sil o $ 300,00 0 Coa l Storag e Silo--20,00 0 ton capacit y$3,300,00 0 Doze r (1 ) $ 270,00 0

' Tota l Capita l Cost s $5,220,00 0

O n an annualize d basis , capita l charge s woul d b e abou t $780,000 . At an assume d five percen t o f tota l capital , annua l operatio n an d maintenanc e expenditure s (excluding labor ) woul d b e abou t $260,000 . On e additiona l perso n i s assume d t o b e require d a t a n annua l cos t o f $50,000 . Tota l annualize d costs , therefore , woul d b e approximatel y$1. 1 million .
Wit htota l annualize d cost s o f $1. 1 million , th e cos t pe r to n base d o n a ver ylo wsulfu r coa l productio n leve l o f 500,00 0 ton s annuall ywoul d b e $2.2 0 pe r ton . Th e averag e hea t conten t o f Powde r Rive r Basi n coa l i s abou t 1 7 millio n Bt u pe r ton , resulting i n a tota l incrementa l cos t o f abou t $0.1 3 pe r millio n Btu .
SAMPLIN G REQUIREMENT S

A s discusse d previously , i n orde r t o ensur e tha t the smalle r volume coa l shipment s t o industria l customer s ar e withi n th e desire d sulfu r level , mos t producer s wil l hav e t o increas e th e amoun t o f sampling theydo . Mos t companie s currentl yguarante e th e sulfu r leve l o n a trainloa d basis , bu t they wil l hav e t o sampl e mor e frequentl yt o determin e howsulfu r conten t varie sP.5 3

4-1 2
> throughou t the trainload sinc e industria l customer s wil l nee d t o knowth e sulfu r leve l fo r nearl yever ycarload (depending on the amoun t o f coa l
consume d an

d expecte d variabilit yo f th e sulfu r i n th e coal) . Th e amoun t o f additiona l sampling wil l varysignificantl yfro mon e operatio n t o the next . In man yinstances , th e coa l compan yma ymin e th e very lo wsulfu r coa l during certai n period s o f the yea r becaus e th e sulfu r leve l change s ever

yfe wmonths . Fo r thes e producer s increase d coa l sampling may onl yb e require d whe n the compan yexpect s ver

ylo wsulfu r coa l t o b e produceds o tha t th e sulfur leve l can b e monitore d constantl yduring thes e periods . I n othe r cases , a coa l compan ymaynee d continuou s sampling o n potentia l verylo

wsulfu r coal s (e.g. , i f a multipl e sea mmining operatio n i s segregating on e sea mo r i f th e sulfu r variabilit yi s to o unpredictabl e i n th e sea mt o gaug e whe n th e ver ylo wsulfu r coa l i s likel yt o b e produced) .

T o approximat e th e increase d cos t o f sampling , w e hav e assume d tha t larg e mining operations , e.g. , i n th e Powde r Rive r Basin , requir e on e additiona l sampling technicia n eac hshif t fo r th e entir e year . Smal l mining operations , like man

ythroughou t Appalachia , typicall ysen d coa l sample s t o independen t laboratorie s onc e o r twic e a wee k currently . Assumin g conservativel ytha t
eac hsampl e take s a n entir e da

yt o complete , thi s amount s t o abou t thre e month s pe r year . T o mee t additiona l sampling requirements , w e hav e assume d tha t smal l minin g operation s doubl e th e amoun t o f sampling required .P.5 4

4-1 3 Averag e cost s fo r sampling , including th e laborator ywork , amoun t t o abou t $300 0 pe r perso n pe r month. 1

- 1 Fo r a larg e mining operatio n in th e Powde r Rive r Basi n operating two shifts , tota l sampling cost s woul d b e abou t $72,00 0 pe r year , o r abou t $0.1 4 pe r ton (assuming productio n o f 500,00 0 ton s o f ver y lo wsulfu r coal) . Fo r a smal l mining operatio n in Appalachia , tota l sampling cost s fo r th e additiona l thre e month s woul d b e abou t $9,00 0 pe r year , o r $0.1 8 pe r to n (assuming productio n o f 50,00 0 tons) . Based on thes e cos t estimates , a conservativ e assumptio n fo r the cos t o f additiona l sampling fo r an y coal-producing regio n woul d b e $0.0 1 pe r millio n Btu .

INCREMENTA L COST S B YEP A FEDERA L REGION S

Thes e incrementa l cost s fo r sampling an

d storag e an

d handling o f verylo w sulfu r coal s represen t the additiona l cost s tha t wil l b e incurre d b ycoa l producer s in th e keyver ylo wsulfu r coa l producing region s o f the Unite d States . Thi s sectio n discusse s ho wthes e verylo wsulfu r minin g costs , combine d wit hregiona l difference s i n mining cos t an d change s i n transportatio n costs , affec t the cos t t o delive r coa l t o eac hEP AFedera l Regio n compare d t o th e cos t t o obtai n lo wsulfu r (1. 2 pound ) coals .
Th e magnitud e o f thes e incrementa l cost s t o suppl yverylo wsulfu r coal s hav e bee n estimate d fo r eac hEPAFedera l Regio n (se e Figur e 4-1) , an d fo r thre e differen t type s o f verylo wsulfu r coa l - - 0.7 , 0.8 , an d 0. 9 pound s

1 J Persona l communicatio n wit hGre g Nichol , Cor e Lab , Inc. , January6 , 1987 .P.5 5

4-1 5
sulfur dioxid e pe r millio n Btu . Thes e thre e level s wer e chose n becaus e 0. 7 pound s sulfu r dioxid e pe r millio n Bt u i s th e lowes t sulfu r leve l tha t can b e reasonabl ysupplie d t o the industria l market , whil e incrementa l cost s i n th e 0. 8 t o 0. 9 poun

d rang e highligh t potentia l geographi c difference s betwee n Easter n an

d Wester n coa l suppl yregions .

Th e additiona l cost s t o coa l producer s t o suppl yver ylo wsulfu r coals , i.e. , thei r additiona l sampling an d storag e an

d handling costs , ha s alread y bee n discussed . Industria l coa l consumer s wil l no t onl yincur thes e costs , bu t als o an

ychange s in cos t resulting fro mtransporta t . -.-.u shift s o r difference s in the suppl yregio n fro mwhic htheyobtai n thei r coa l (i.e. , i s th e suppl yregio n fo r ver ylo wsulfu r coa l differen t than th e suppl yregio n fo r 1. 2 poun

d coal?) . Thes e incrementa l cost s d o no t necessaril yrepresen t the pric e tha t wil l actuall yb e pai d b yindustria l consumer s sinc e marke t force s ma

yten d t o driv e price s highe r (Se e pag e 4- 5 fo r furthe r discussio n o f potentia l pric e impacts) . However , thes e cost s d o indicat e th e minimu mamoun t tha t price s wil l ris e sinc e coa l producer s an d coa l shipper s wil l wan t t o recou p thei r cost s i f ver ylo wsulfu r coal s ar e t o b e supplied .

EP A RegionOn e - - Boston , Massachusetts 1 - 1

A n industria l coa l consume r i n EPARegio n 1 woul d hav e purchase d a 1. 2 poun d coa l fro

mCentra l Appalachia , i n thi s case , wester n Virgini a (se e Tabl e 4-1) . Th e following option s ar e availabl e t o obtai n verylo wsulfu r coal :

1 J Onl ycoal s produce d i n th e lower-4 8 state s wer e considere d fo r thi s

analysis . Alaskan coal s o r importe d coal s mayb e competitiv e i n some instances , bu t wer e no t evaluate d fo r thi s analysis .P.5 6

4-1 6

TABL E 4- 1 ADDITIONA LCOST S INT O EP AREGIO N 1 : BOSTON , M Aa /

(Januar y198 6 dollar s pe rMMBtu )

Mining Cost s Regiona l Tota l Storage / Mine-Mout hTransportatio n Additiona l Suppl yRegio n Handling Sampling Difference s Cost s Cost s 0. 9 Poun

d Leve l Virgini a Rato n Mesa--N

M Gree n River--C 0 0. 8 Poun

d Leve l Virgini a Rato n Mesa--N

M Gree n River--C 0 0. 7 Poun

d Leve l Rato n Mesa--N

M Gree n River--C 0 0.1 5 b / b /

0.1 5 b /Icr

0.2 0 d / 0.1 2 0.0 1

b / b /

0.0 1crIcr

0.0 1 0.0 1 c /

(0.22 ) (0.53 )

c / (0.22 ) (0.53 )
(0.22 ) (0.53 ) c /

0.7 6 1.2 1

c / 0.7 6 1.2 1

0.7 6 1.2 1 0.1 6

0.5 4 0.6 8

0.1 6 0.5 4 0.6 8

0.7 5 0.8 1

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s sulfu r dioxid e pe r millio n Bt u i s wester n Virgini a i n Centra l Appalachia . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t mining methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b ythe industria l consume r i s the same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.5 7

4-1 7
Fo r 0. 8 an

d 0. 9 pound coal , Virgini a can provid e coa l fo r a n additiona l cos t o f $0.1 6 pe r millio n Btu , $0.1 5 fo r storag e an

d handling , an

d $0.0 1 fo r sampling . Sinc e Virgini a wa s the supplie r fo r 1. 2 poun d coal , transportatio n cost s d o no t chang e an d ther e ar e n o change s in regiona l mine-mout hcosts . Fo r 0. 7 poun

d coal , the Rato n Mes a are a in NewMexic o i s th e leas t cos t supplie r a t $0.7 5 pe r millio n Btu . Sinc e Appalachi a can no t suppl y0. 7 poun d coal , i t can no t compet e a t thi s level . Th e Rato n Mes a cost s includ e $0.2 0 fo r full ywashin g the coal, 1 J $0.0 1 fo r sampling , a decreas e o f abou t $0.2 2 pe r millio n Bt u becaus e Rato n coal s sel l fo r abou t $ 6 pe r ton les s than Appalachi a coal s (1. 2 poun d coals) , an

d a n increas e o f $0.7 6 pe r millio n Bt u i n transportatio n cost s (abou t $1 9 pe r ton ) du e t o th e additiona l distanc e the coa l mus t b e shipped .
Incrementa l cost s ar e show n fo r level s o f 0. 8 an d 0. 9 pound s sulfu r dioxid e pe r millio n Bt u even thoughth e cos t estimate s ar e th e same . Thi s wa s don e becaus e Centra l Appalachi a ha s verylimite d supplie s o f 0. 8 pound coal . Sinc e thi s coa l typ e wil l b e verydifficul t t o obtain , man yindustria l customer s ma

yfin d tha t Wester n coa l i s thei r onl yeasil yobtainabl e option . I n thi s case , th e Rato n Mes a are a coul d suppl y0. 8 poun d coa l fo r abou t $0.5 4 pe r millio n Bt u in additiona l cost s - - $0.2 2 les s fo r lowe r mining cost s compare d t o Appalachi a plu s $0.7 6 mor e fo r increase d transportatio n costs . Ther e woul d b e n o additiona l storag e an d handlin g o r sampling cost s sinc e 0. 8 pound coa l coul d b e supplie d b ysevera l producer s withou t changing curren t mining methods .

1 J On e wester n coa l compan yindicate d i t can deep clean it s run-of-min e coa l t o mee t a 0. 7 pound leve l a t an estimate d cos t o f $5.00-$6.0 0 pe r ton . Specifi c citatio n withhel d t o avoi d disclosing confidentia l information .P.58 ^

4-1 8

i 

### EPARegio

n Two : Ne wYork , Ne wYork

Th e incrementa l cost s t o obtai n verylo wsulfu r coa l in Regio n 2 ar e illustrate d in Tabl e 4-2 . T o purchas e a 1. 2 poun d coal , a

n industria l coa l
consume r woul d hav e gon e t o souther n Wes t Virginia . Fo r verylo wsulfu r coals , th e following option s woul d b e available :

• Fo r 0. 8 an

d 0. 9 poun

d coal , souther n Wes t Virgini a woul d continu e t o b e a promising optio n a t a n additiona l cos t o f $0.1 8 pe r millio n Bt u (abou t $ 5 pe r ton) . O f thi s amount , $0.1 5 woul d b e fo r storag e an d handling , $0.0 1 fo r sampling , an d $0.0 2 fo r highe r transportatio n costs . Transportatio n cost s increas e eve n thoughth e same suppl yare a i s preferre d becaus e th e industria l custome r woul d hav e t o g o farthe r sout h i n Wes t Virgini a t o purchas e th e verylo wsulfu r coa l compare d t o th e mor e widely-availabl e 1. 2 pound coals .

• Fo r 0. 7 poun

d coal , the leas t cos t suppl yregio n woul d b e the Rato n Mes a are a a t a cos t o f $1.0 1 pe r millio n Bt u (abou t $2 2 pe r ton) . Thi s include s $0.2 0 fo r full ywashin g th e coal , $0.0 1 fo r sampling , a decreas e o f $0.2 3 du e t o lowe r minin g costs , an d an increas e o f $1.0 3 fo r highe r transportatio n costs . EP A RegionThree : Philadelphia , Pennsylvani a

Th e incrementa l cost s t o suppl yverylo wsulfu r coa l t o Regio n 3 ar e show n i n Tabl e 4-3 . Souther n Wes t Virgini a wa s assume d t o b e the preferre d supply are a fo r 1. 2 pound coal . T o purchas e verylo wsulfu r coal , an industria l coa l
consume r woul d hav e th e following options :

• Fo r 0. 8 an

d 0. 9 pound coal , Regio n 3 face s th e same incrementa l cost s a s Regio n 2 sinc e industria l consumer s i n bot hregion s woul d likel yg o t o souther n Wes t Virgini a t o purchas e verylo wsulfu r coal .

• A t 0. 7 pound s sulfu r dioxid e pe r millio n Btu , Wester n coal s woul d b e require d sinc e coal s o f thi s qualit yar eP.5 9

4-1 9

TABL E 4- 2 ADDITIONA LCOST S INT O EP AREGIO N 2 : NE WYOR KCITY , N Ya /

(Januar y198 6 dollar s pe rMMBtu )
Mining Cost s Regiona l Tota l Storage / Mine-Mout hTransportatio n Additiona l Suppl yRegio n Handling Sampling Difference s Cost s Cost s 0. 9 Poun

d Leve l Virgini a Rato n Mesa--N

M Gree n River--C 0 0. 8 Poun

d Leve l Virgini a Rato n Mesa--N

M Gree n River--C O 0. 7 Poun

d Leve l Rato n Mesa--N

M Gree n River--C 0 0.1 5 b /Icr

0.1 5cr b /

0.2 0 d / 0.1 2 0.0 1

b /icr

0.0 1cr b /

0.0 1 0.0 1 c /

(0.23 ) (0.54 )

c / (0.23 ) • (0.54 )
(0.23 ) (0.54 ) 0.0 2

1.0 3 1.4 8

0.0 2 1.0 3 1.4 8

1.0 3 1.4 8 0.1 8 0.8 0 0.9 4

0.1 8 0.8 0 0.9 4

1.0 1 1.0 7

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s S O /MMBt u i s souther n Wes t Virgini a i n Centra l Appalachia . b / No additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t minin g methods . c / No chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s th e same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.6 0

4-2 0



### TABL E 4- 3 ADDITIONA L COST S INT O EPAREGION3 : PHILADELPHIA , PENNSYLVANI Aa/

(Januar y198 6 dollar

s per MMBtu )

Mining Cost s Suppl yRegio n 0. 9 Poun

d Leve l Southern Wes t Virgini a Rato n Mesa--N

M Gree n River--C 0 0. 8 Poun

d Leve l Southern Wes t Virgini a Rato n Mesa--N

M Gree n River--C O 0. 7 Pound Leve l Rato n Mesa--N

M Gree n River--C 0 Storag e

Handli r

0.1 5 b / b /

0.1 5XI b /

0.2 0 0.1 2 / 

### > £

d / Sampling

0.0 1 b / b /

0.0 1crIcr

0.0 1 0.0 1 Regiona l

Mine-Mout h Difference s

c / (0.23 ) (0.54 )

c / (0.23 ) (0.54 )
(0.23 ) (0.54 ) Transportatio n

Cost s

0.0 2 1.0 2 1.4 6

0.0 2 1.0 2 1.4 6

1.0 2 1.4 6 Tota l

Additiona l Cost s

0.1 8 0.7 9 0.9 2

0.1 8 0.7 9 0.9 2

1.0 0 1.0 5

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s S0 2 /MMBt u i s souther n Wes t Virgini a i n Centra l Appalachia . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t mining methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s th e same fo r 1. 2 poun d an d verylo

wsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.6 1

4-2 1
unavailabl e in th e East . In thi s example , the Rato n Mes a are a o f NewMexic o woul d b e th e suppl ysourc e a t an incrementa l cos t o f $1.0 0 pe r millio n Bt u - - cos t increase s o f $0.2 0 fo r deep cleaning , $0.0 1 fo r sampling , an

d $1.0 2 fo r transportation , plu s a cos t decreas e o f $0.2 3 du e t o lowe r mining costs . EP A RegionFour : Atlanta , Georgi a

Th e incrementa l cost s t o obtai n ver ylo wsulfu r coa l fo r Regio n 4 ar e show n in Tabl e 4-4 . I t i s assume d tha t 1. 2 poun d coa l woul d b e purchase d fro m easter n Kentucky . Fo r verylo wsulfur coals , not e that :

• A t level s o f 0. 8 an d 0. 9 pound s sulfu r dioxid e pe r millio n Btu , industria l consumer s woul d ten d t o purchas e coa l fro

mVirginia . Th e tota l incrementa l cos t woul d b e $0.2 7 pe r millio n Btu , o r abou t $ 7 pe r ton delivered . Thes e extr a cost s includ e $0.1 5 fo r storag e an

d handling , SO.0 1 fo r sampling , an d $0.1 1 fo r transportatio n cos t increases .

• Fo r ver

ylo wsulfu r coa l a t 0. 7 pounds , Wester n coa l woul d b e preferred , probabl yfro mthe Gree n Rive r regio n i n Colorado . Incrementa l cost s ar e estimate d t o b e $0.9 7 pe r millio n Btu , o r abou t $21-$2 2 pe r ton . Thes e additiona l cost s includ e $0.1 2 fo r storag e an d handling , $0.0 1 fo r sampling , $1.3 2 fo r transportation , an d a decreas e o f abou t $0.4 8 pe r millio n Bt u (abou t $10-$1 1 pe r ton ) du e t o lowe r minin g costs .
I f 0. 8 pound coa l canno t b e obtaine d (supplie s ar e verylimited fro m Centra l Appalachia) , the n th e mos t likel ysuppl yregio n i s Alabam a a t an additiona l cos t p f $0.4 9 pe r millio n Btu . I n general , though , Alabam a coal s ten d no t t o b e competitiv e veryfar outsid e o f Alabama . Thi s i s du e t o th e generall yhig

hcost s o f mining i n Alabama becaus e th e seam s ten d t o b e relativel ythi n an

d up t o 200 0 fee t belo wground (e.g. , th e regiona l differenc e i n mine-mout hprice s betwee n Alabama an d Centra l Appalachi a i n Tabl e 4- 4 i s $0.6 2 pe r millio n Btu , o r abou t $1 6 pe r ton) .P.6 2
. 4-2 2

TABL E 4- 4 ADDITIONA LCOST S INT O EP AREGIO N 4 : ATLANTA , GEORGI Aa /

(Januar y198 6 dollar s pe rMMBtu )

Minin g Cost s Suppl yRegio n 0. 9 Poun d Leve l Virgini a Alabam a Rato n Mesa--N M Gree n River--C 0 0. 8 Poun d Leve l Virgini a Alabam a Rato n Mesa--N M Gree n River--C 0 0. 7 Poun d Leve l Rato n Mesa--N M Gree n River--C 0 Storage /

Handlin g

0.1 5 b / b / b /

0 . 1 5 b / b /Icr

0.2 0 0.1 2 c / Samplin g

0.0 1 b / b / b /

0.0 1 b / b / b /

0.0 1 0.0 1 Regiona l

Mine-Mout h Difference s

' 0.6 2 (0.17 ) (0.48 )

- 0.6 2 (0.17 ) (0.48 )

(0.17 ) (0.48 ) Transportatio n

Cost s

0.1 1 (0.13 ) 1.0 2 1.3 2

0 . 1 1 (0.13 ) 1.0 2 1.3 2

1.0 2 1.3 2 Tota l

Additiona l Cost s

0.2 7 0.4 9 0.8 5 0.8 4

0.2 7 0.4 9 0.8 5 0.8 4

1.0 6 0.9 7

a / Assume d suppl ysourc e fo r a coa l containin g 1. 2 pound s S0 2 /MMBt u i s easter n Kentuck yi n Centra l Appalachia . b / N o additiona l cost s likel ysinc e coa l ca n alread yb e supplie d a t thi s leve l usin g current minin g methods . c / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.6 3

4-2 3
E P A Regio nFive : Chicago , Illinoi s

Th e incrementa l cost s t o purchas e ver ylo wsulfu r coa l in Regio n 5 ar e show n in Tabl e 4-5 . A n industria l coa l consume r i n Regio n 5 woul d hav e th e choic e o f two differen t suppl yregion s fro mwhic ht o purchas e a lo wsulfu r (1. 2 pound ) coal , depending on the ran k o f coa l desired . Fo r bituminou s coa l i t wa s assume d tha t the mos t likel ysuppl yregion woul d b e easter n Kentucky , whil e th e Powde r Rive r Basi n woul d suppl ysubbituminou s coal . I t i s no t clea r whic htyp e o f coa l woul d b e chose n sinc e th e capita l cost s an d operatio n an

d maintenanc e cost s fo r eachtyp e o f boile r woul d hav e t o b e take n int o accoun t t o determin e whethe r bituminou s o r subbituminou s coa l woul d b e the leas t cos t alternative . Sinc e thi s determinatio n i s beyon d th e scop e o f thi s analysis , th e incrementa l cost s in Tabl e 4- 5 fo r burning a verylo wsulfu r bituminou s coa l ar e compare d t o the cos t o f burning a lo wsulfu r bituminou s coa l (i.e. , a n eastern Kentuck

ycoal) , whil e th e incrementa l cost s o f burning a ver ylo w sulfu r subbituminou s coa l ar e compare d t o the cos t o f burning a lo wsulfu r subbituminou s coa ] (i.e. , a Powde r Rive r Basi n coal) . Thi s distinctio n applie s t o al l incrementa l cost s develope d fo r EPARegion s 5-1 0 wher e eithe r ran k o f coa l mayb e chosen . ' Wit hthi s in mind , an industria l coa l consume r i n Regio n 5 woul d hav e the following options :

• Fo r 0. 8 an

d 0. 9 poun

d coal , bituminou s coa l woul d b e purchase d fro

mth e Rato n Mes a regio n o f NewMexic o a t an incrementa l cos t o f $0.1 9 pe r millio n Btu , o r abou t $4.5 0 pe r ton . Thi s i s du e t o a combinatio n o f lowe r mine-mout hcost s o f abou t $0.1 7 pe r millio n Btu , bu t highe r transportatio n cost s o f $0.3 6 pe r millio n Bt u compare d t o easter n Kentuck ycoal . Fo r subbituminou s coal , n o additiona l cost s woul d b e incurre d sinc e th e Powde r Rive r Basi n woul d stil l suppl yth e coa l an d coa l can b e currentl yproduce d a t thes e level s fro msevera l producer s withou t incurring additiona l costs .P.6 4
4-2 4

TABL E 4- 5 ADDITIONA LCOST S INT O EP AREGIO N 5 : CHICAGO , ILLINOI S a /

(Januar y198 6 dollar s pe rMMBtu )

Minin g Cost s Regiona lTota l Storage /

Mine-Mout hTransportatio nAdditiona l Suppl y Regio nHandlin g Samplin g Difference s Cost s Cost s 0. 9 Poun dLeve l Souther n Wes t Virgini a 0.1 5 0.0 1 0.0 5 0.0 1 0.2 2 Rato n Mesa--N

Mb / b / (0.17 ) 0.3 6 0.1 9 Gree n River--C 0 b / b / (0.48 ) 0.8 0 0.3 2 Powde r River--W

Y b / b / c / c / 0. 8 Poun

d Leve l
0.2 2 0.1 9 0.3 2 Souther n Wes t Virgini a Rato n Mesa--N

M Gree n River--C 0 Powde r River--W

Y 0. 7 Poun

d Leve l 0.1 5crcrIcr 0.0 1 b /cr b / 0.0 5

(0.17 ) (0.48 ) 

## £ / 0.0 1

0.3 6 0.8 0 c /

Rato n Mesa--N

M0.2 0 d / 0.0 1 (0.17 ) 0.3 6 0.4 0 Gree n River--C 0 0.1 2 0.0 1 (0.48 ) 0.8 0 0.4 5 Powde r River--W

Y 0.1 3 0.0 1 c / c / 0.1 4

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s S O /MMBt u i s easter n Kentuck

yi n Centra l Appalachi a fo r bituminou s coa l an d the Powde r Rive r Basi n i n Wyomin g fo r subbituminou s coal . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t minin g methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s th e same fo r 1. 2 pound an d verylowsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.6 5

4-2 5

• Fo r 0. 7 pound coal , the Rato n Mes a remain s the preferre d suppl yregio n fo r bituminou s coa l a t an incrementa l cos t o f $0.4 0 pe r millio n Bt u - - $0.2 0 fo r full ywashing the coal , $0.0 1 fo r sampling , $0.3 6 fo r highe r transportatio n costs , an d a decreas e o f $0.1 7 du e t o lowe r mining costs . Fo r subbituminou s coal , th e Powde r Rive r Basi n woul d suppl yth e coa l a t an additiona l cos t o f $0.1 4 pe r millio n Bt u - - $0.1 3 fo r storag e an

d handlin g an

d $0.0 1 fo r sampling .
EP ARegio n Six : Dallas , Texa s

Tabl e 4- 6 display s th e additiona l cost s fo r consuming ver ylo wsulfu r coa l i n Regio n 6 . T o purchas e lo wsulfu r coal , i t wa s assume d an industria l
consume r woul d likel yg o t o th e Rato n Mes a regio n o f Colorad o fo r bituminou s coa l an d th e Powde r Rive r Basi n fo r subbituminou s coal . Not e that :

Fo r 0. 8 an

d 0. 9 pound coal , bituminou s coa l woul d b e purchase d fro

mth e Gree n Rive r regio n a t a n additiona l cos t o f $0.1 5 pe r millio n Btu , o r abou t $3.5 0 pe r to n

- - a decreas e o f $0.3 6 pe r millio n Bt u i n minin g cost s combine d wit han increas e o f $0.5 1 pe r millio n Bt u i n transportatio n costs . N o additiona l cost s woul d b e incurre d t o purchas e subbituminou s coa l a t thes e level s sinc e thes e coal s can b e currentl yobtaine d fro mth e same suppl yregio n tha t woul d suppl y1. 2 poun d coal , i.e. , the Powde r Rive r Basin . Fo r 0. 7 pound coal , th e Gree n Rive r regio n o f Colorad o woul d b e th e suppl ysourc e a t a n incrementa l cos t o f $0.2 8 pe r millio n Btu , o r abou t $ 6 pe r to n - - cost s woul d increas e $0.1 2 pe r millio n Bt u fo r handling an d storage , $0.0 1 fo r sampling , an d $0.5 1 fo r transportation , plu s a cos t decreas e o f $0.3 6 pe r millio n Bt u fo r lowe r minin g costs . Subbituminou s coa l coul d b e obtaine d fro mth e Powde r Rive r Basi n a t a n additiona l cos t o f $0.1 4 pe r millio n Btu , o r abou t $2.5 0 pe r to n - - $0.1 3 fo r storag e an d handlin g an

d $0.0 1 fo r sampling .P.6 6
4-2 6

TABL E 4- 6 ADDITIONA LCOST S INT O EP AREGIO N 6 : DALLAS , T Xa / (Januar y198 6 dollar s pe rMMBtu )

Minin g Cost s Regiona lTota l Storage /

Mine-Mout hTransportatio nAdditiona l Suppl y Regio nHandlin g Samplin g Difference s Cost s Cost s 0. 9 Poun dLeve l Rato n Mesa--N

M Gree n River--C 0 Powde r River--W

Y 0. 8 Poun

d Leve l Rato n Mesa--N

M Gree n River--C O Powde r River--W

Y 0. 7 Poun

d Leve l Rato n Mesa--N

M Gree n River--C 0 Powde r River--W

Y b / b /Icrcrcr b /

0.2 0 d / 0.1 2 0.1 3 b /cr

b /

b / b /Icr

0.0 1 0.0 1 0.0 1 (0.05 )

(0.36 ) 

### S.I
(0.05 ) (0.36 ) 

### _l
(0.05 ) (0.36 ) c / 0.3 0

0.5 1 

### _l

0.3 0 0.5 1 

### _l

0.3 0 0.5 1 c / 0.2 5

0.1 5

0.2 5 0.1 5

0.4 6 0.2 8 0.1 4

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s S O / MMBt u i s th e Rato n Mes a are a i n Colorad o fo r bituminou s coa l an d th e Powde r Rive r Basi n i n Wyomin g fo r subbituminou s coal . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t mining methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s the same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.67^
4-2 7 'EP ARegio n Seven : Kansa s City , Missour i

Th e incrementa l cost s fo r Regio n 7 ar e show n i n Tabl e 4-7 . Fo r typica l 1. 2 pound coal , a

n industria l coa l consume r woul d purchas e bituminou s coa l fro mth e Rato n Mes a region o f Colorad o an d subbituminou s coa l fro mth e Powde r Rive r Basi n i n Wyoming . Not e that :

• A n industria l coa l consume r wanting t o purchas e a 0. 8 o r 0. 9 poun

d coa l woul d g o t o NewMexic o fo r bituminou s coa l an d th e Powde r Rive r Basi n fo r subbituminou s coal . Incrementa l cost s fo r bituminou s coa l woul d b e $0.0 1 pe r millio n Btu , o r abou t $0.2 5 pe r to n - - mine-mout hcost s woul d b e lowe r b y$0.0 5 pe r millio n Bt u bu t transportatio n cost s woul d b e $0.0 6 higher . N o additiona l cost s woul d b e incurre d fo r subbituminou s coal .

• 0. 7 pound bituminou s coa l woul d b e purchase d fro mNew Mexic o a t a

n additiona l cos t o f $0.2 2 pe r millio n Btu , o r abou t $ 5 pe r ton - - increase s o f $0.2 0 pe r millio n Bt u fo r full ywashing th e coal , $0.0 1 fo r sampling , an d $0.0 6 fo r transportation , plu s a decreas e o f $0.0 5 fo r lowe r mining costs . Subbituminou s coa l a t thi s leve l woul d hav e incrementa l cost s o f $0.1 4 pe r millio n Btu , o r abou t $2.5 0 pe r to n - - $0.1 3 fo r storag e an d handling an

d $0.0 1 fo r sampling .
EP ARegio n Eight : Denver , Colorad o

Tabl e 4- 8 show s th e incrementa l cost s t o suppl yverylo wsulfu r coa l t o Regio n 8 . T o purchas e a 1. 2 pound coal , i t wa s assume d tha t bituminou s coa l woul d b e obtaine d fro mth e Gree n Rive r regio n o f Colorad o an d subbituminou s coa l fro

mth e Powde r Rive r Basi n i n Wyoming . Not e that :

• A t 0. 8 an

d 0. 9 pound verylo wsulfu r coa l levels , ther e ar e n o additiona l cost s fo r a n industria l custome r t o purchas e eithe r a bituminou s o rP.6 8
4-2 8

TABL E 4- 7 ADDITIONA LCOST S INT O EP AREGIO N 7 : KANSA S CITY , M O a /

(Januar y198 6 dollar s pe rMMBtu )

Minin g Cost s Regiona lTota l Storage /

Mine-Mout hTransportatio nAdditiona l Suppl y Regio nHandlin g Samplin g Difference s Cost s Cost s 0. 9 Poun dLeve l Rato n Mesa--N

Mb / b / (0.05 ) 0.0 6 0.0 1 Gree n River--C 0 b / b / (0.36 ) 0.4 8 0.1 2 Powde r River--W

Y b / b / c / c / 0. 8 Poun

d Leve l (0.05 ) 0.0 6 0.0 1 (0.36 ) 0.4 8 0.1 2 c / c / Rato n Mesa--N

M Gree n River--C 0 Powde r River--W

Y 0. 7 Poun

d Leve l Rato n Mesa--N

M Gree n River--C O Powde r River--W

Ycr b / _/

0.2 0 0.1 2 0.1 3 d / b /

b / b /

0.0 1 0.0 1 0.0 1 (0.05 ) 0.0 6 0.2 2

(0.36 ) 0.4 8 0.2 5 c / c / 0.1 4

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s S O / MMBt u i s th e Rato n Mes a are a i n Colorad o fo r bituminou s coa l an d the Powde r Rive r Basi n i n Wyoming fo r subbituminou s coal . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t mining methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s th e same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.6 9
4-2 9

TABL E 4- 8 ADDITIONA LCOST S INT O EP AREGIO N 8 : DENVER , C O a /

(Januar y198 6 dollar s pe rMMBtu )

Minin g Cost s Regiona lTota l Storage /

Mine-Mout hTransportatio nAdditiona l Suppl y Regio nHandlin g Samplin g Difference s Cost s Cost s 0. 9 Poun dLeve l Gree n River--C 0 b / Rato n Mesa--N

Mb / Powde r River--W

Y b /Icr

b / b / c /

0.4 0 c / (0.12 )

c / 0.2 8
0. 8 Poun

d Leve l Gree n River--C 0 Rato n Mesa--N

M Powde r River--W

Y 0. 7 Poun

d Leve l b /

b / b / b /

b /icr c /

0.4 0 

## £ / £ /

(0.12 ) c / 0.2 8

Gree n River--C 0 0.1 2 Rato n Mesa--N

M0.2 0 d / Powde r River--W

Y 0.1 3 0.0 1

0.0 1 0.0 1 c /

0.4 0 c / 

### £ /

(0.12 ) c / 0.1 3

0.4 9 0.1 4

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s SO 2 / MMBt u i s th e Gree n Rive r regio n o f Colorad o fo r bituminou s coa l an d th e Powde r Rive r Basi n i n Wyomin g fo r subbituminou s coal . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t minin g methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s th e same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Cost s t o provid e full ywashe d coa l compare d t o typica l rawcoal .P.7 0

• 4-3 0
subbituminou s coal . Thes e coal s can alread yb e obtaine d fro

mthe same region s tha t woul d hav e supplie d th e 1. 2 pound coa l fro mproducer s currentl yminin g i n thes e region s (th

e Gree n Rive r regio n o f Colorad o fo r bituminou s coa l an

d the Powde r Rive r Basi n fo r subbituminou s coal) . A t 0. 7 pounds , bituminou s coa l woul d cos t an additiona l $0.1 3 pe r millio n Bt u t o suppl yfro mth e Gree n Rive r regio n o f Colorado , o r abou t $ 3 pe r ton - - $0.1 2 pe r millio n Bt u fo r storag e an d handling an

d $0.0 1 fo r sampling . Subbituminou s coa l can b e produce d fro mth e Powde r Rive r Basi n fo r an additiona l cos t o f $0.1 4 pe r millio n Btu , o r abou t $2.5 0 pe r ton - - $0.1 3 fo r storag e an

d handling an

d $0.0 1 fo r sampling .
EP A RegionNine : Sa nFrancisco , California

Th e incrementa l cost s fo r producing verylo wsulfu r coa l fo r Regio n 9 ar e show n i n Tabl e 4-9 . T o obtai n a 1. 2 pound coal , i t wa s assume d tha t a n industria l coa l consume r woul d choos e bituminou s coa l fro mcentra l Uta han

d subbituminou s coa l fro mthe Gree n Rive r regio n o f Wyoming (th e Gree n Rive r regio n i s locate d i n Colorad o an d Wyoming) . Not e that :

A t 0. 8 an

d 0. 9 pound s sulfu r dioxid e pe r millio n Btu , bituminou s coa l can b e obtaine d fro mth e same suppl y regio n - - centra l Utah- - fo r n o increas e i n costs . Fo r subbituminou s coal , th e suppl yregio n woul d b e th e Powde r Rive r Basi n a t an increase d cos t o f $0.3 4 pe r millio n Btu , o r abou t $ 6 pe r to n - - minin g cost s woul d b e lowe r b

y$0.2 4 pe r millio n Bt u bu t transportatio n cost s woul d b e highe r b y$0.5 8 pe r millio n Btu . A t 0. 7 pounds , th e incrementa l cost s fo r bituminou s coa l fro

mcentra l Utahincreas e b y$0.2 1 pe r millio n Btu , o r abou t $ 5 pe r to n - - $0.2 0 pe r millio n Bt u t o full ywas hcoa l normall ysol d unwashe d an d $0.0 1 fo r sampling . Subbituminou s coa l woul d b e supplie d fro m th e Powde r Rive r Basi n fo r an incrementa l cos t o f $0.4 8 pe r millio n Btu , o r abou t $ 8 pe r to n - - cost s woul d increas e b

y$0.1 3 pe r millio n Bt u fo r storag e an d handling , $0.0 1 fo r sampling , an d $0.5 8 fo r transportation , bu t declin e b y$0.2 4 pe r millio n Bt u du e t o lowe r mining costs .P.7 1

4 - 3 1

TABL E 4- 9 ADDITIONA LCOST S INT O EP AREGIO N 9 : SA N FRANCISCO , C Aa /

(Januar y198 6 dollar s pe rMMBtu )

Mining Cost s Storage / Suppl yRegio n H 0. 9 Poun

d Leve l Centra l Utah Gree n River--C 0 Powde r River--MT 0. 8 Poun

d Leve l Centra l Utah Gree n River--C 0 Powde r River--MT 0. 7 Poun

d Leve l Centra l Utah Gree n River--C 0 Powde r River--MT andling

b / b / b /

b /

- b / b /

0.2 0 0.1 2 0.1 3 d / Samplingcr

b / b /

b /cr b /

0.0 1 0.0 1 0.0 1 Regiona l

Mine-Mout h Difference s

c / (0.17 ) (0.24 )

c / (0.17 ) (0.24 )

c / (0.36 ) (0.24 ) Transportatio n

Cost s

c / 0.2 7 0.5 8

c / 0.2 7 0.5 8

c / 0.2 7 0.5 8 Tota l

Additiona l Cost s

0.0 0 0.1 0 0.3 4

0.0 0 0.1 0 0.3 4

0.2 1 0.2 3 0.4 8

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s SO 2 / MMBt u i s centra l Utahfo r bituminou s coa l an d the Gree n Rive r regio n o f Wyomin g fo r subbituminou s coal . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l usin g curren t minin g methods . c / No chang e sinc e th e suppl yregio n likel yt o b e chose n b ythe industria l consume r i s th e same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Include s cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .P.7 2
4-3 2
EP ARegio n Ten : Seattle , Washingto n

Tabl e 4-1 0 show s th e incrementa l cost s t o suppl yverylo wsulfu r coal s t o Regio n 10 . T o obtai n a 1. 2 pound coal , a n industria l coa l consume r woul d hav e gon e t o centra l Utahfor bituminou s coa l an d the Powde r Rive r Basi n i n Montan a fo r subbituminou s coal . T o obtai n ver ylo wsulfu r coal , not e that :

• A t 0. 8 an

d 0. 9 pounds , ther e woul d b e n o incrementa l cost s fo r eithe r bituminou s o r subbituminou s coal s sinc e thes e coal s can currentl yb e obtaine d fro mth e same suppl yregions .

• At 0. 7 pounds , bituminou s coa l can b e obtaine d fro m centra l Utaha t a

n additiona l cos t o f $0.2 1 pe r millio n Btu , o r abou t $ 5 pe r to n - - an additiona l $0.2 0 pe r millio n Bt u fo r deep cleaning coa l typicall ymarkete d unwashe d an

d $0.0 1 fo r sampling . Subbituminou s coa l can b e obtaine d fro mthe Powde r Rive r Basi n i n Montan a fo r incrementa l cost s o f $0.1 4 pe r millio n Btu , o r abou t $2.5 0 pe r to n - - $0.1 3 pe r millio n Bt u fo r storag e an

d handling an

d $0.0 1 fo r sampling . 

### SUMMAR YO F INCREMENTA L COST S T OSUPPL YVER YLO W SULFU RCOAL S

Asummaryo f the incrementa l cost s t o suppl yverylo wsulfu r coal s fo r eachEPAregio n i s show n i n Tabl e 4-11 . Cos t estimate s ar e provide d fo r bot h bituminou s an

d subbituminou s coals . Not e that :

At 0. 8 pound s sulfu r dioxid e pe r millio n Bt u fo r bituminou s coal s i n EPARegion s 1-4 , tw o cost s ar e provided . Th e lowe r cos t estimate s refe r t o th e incrementa l cost s t o obtai n Centra l Appalachia n coal ; th e highe r cos t estimate s refe r t o th e incrementa l cost s t o obtai n Wester n coal s i n Region s 1- 3 an d Alabama coa l i n Regio n 4 . Thi s wa s don e becaus e th e abilit yo f Centra l Appalachia n producer s t o suppl y0. 8 pound coa l i s verylimited . I t i s likel ytha t onl ya fewproducer s woul d b e abl e t o suppl yan yo f thi s coal , an d then , onl yi n smal l quantitie s (e.g. , abou t 50,00 0P.7 3
4-3 3

TABL E 4-1 0 ADDITIONA LCOST S INT O EP AREGIO N 10 : SEATTLE , W Aa / (Januar y198 6 dollar s pe rMMBtu )

Mining Cost s S t Suppl yRegio n Ha 0. 9 Poun

d Leve l Centra l Utah Gree n River--C 0 Powde r River--MT 0. 8 Poun

d Leve l orage /

ndlingcr b /IDSampling

b / b / b / Regiona l Mine-Mout h Difference s

c / (0.25 ) c / Transportatio n

Cost s

c / 0.6 5 c / Tota l

Additiona l Cost s

- 0.4 0

-cr b / b / c /

(0.25 ) c / c /

0.6 5 

## £ /

Centra l Utah Gree n River--C 0 Powde r River--MT 0.2 0 d / 0.1 2 0.1 3 0.0 1

0.0 1 0.0 1 c /

(0.25 ) c / c /

0.6 5 c / Centra l Utahb / Gree n River--C 0 b / b / (0.25 ) 0.6 5 0.4 0 Powde r River--MT ' b / 0. 7 Poun

d Leve l 0.2 1 0.5 3 0.1 4

a / Assume d suppl ysourc e fo r a coa l containing 1. 2 pound s S O / MMBt u i s centra l Utahfo r bituminou s coa l an d th e Powde r Rive r Basi n i n Montan a fo r subbituminou s coal . b / N o additiona l cost s likel ysinc e coa l can alread yb e supplie d a t thi s leve l using curren t mining methods . c / N o chang e sinc e th e suppl yregio n likel yt o b e chose n b yth e industria l consume r i s th e same fo r 1. 2 pound an d verylo

wsulfu r coals . d / Include s cost s t o provid e full ywashe d coa l compare d t o typica l ra wcoal .4-3 4 P.7 4

a / TABL E 4-1 1

SUMMAR YO F INCREMENTA LCOST S T O SUPPL YVER YLOWSULFU R COAL S

(Januar y198 6 dollar s pe rMMBtu )

EP A Regio n 0. 9 Pound s S02/MMBt u 0. 8 Pound s S02/MMBt u 0. 7 Pound s S02/MMBt u

1 2 3 4 5 6 7 8 9 1 0 Bituminou s

0.1 6 0.1 8 0.1 8 0.2 7 0.1 9 0.1 5 0.0 1 0.0 0 0.0 0 0.0 0 Subbi

tuminou s N.A.b / N.A . N.A . N.A . 0.0 0 0.0 0 0.0 0 0.0 0 0.3 4 0.0 0 Bituminou s

0.16/0.5 4 0.18/0.8 0 0.18/0.7 9 0.27/0.4 9 0.1 9 0.1 5 0.0 1 0.0 0 0.0 0 0.0 0 Subbi

tuminou s
c / c / c / c / N.A . N.A . N.A . N.A . 0.0 0 0.0 0 0.0 0 0.0 0 0.3 4 0.0 0 Bituminou s

0.7 5 1.0 1 1.0 0 0.9 7 0.4 0 0.2 8 0.2 2 0.1 3 0.2 1 0.2 1 Subbi

tuminou s N.A . N. A N.A . N.A . 0.1 4 0.1 4 0.1 4 0.1 4 0.4 8 0.1 4

a / Thes e ar e incrementa l cost s compare d t o th e cos t t o produc e complianc e coal s tha t mee t a standard o f 1. 2 pound s sulfu r dioxid e pe r millio n Btu . Thes e incrementa l cost s appl yonl yt o coal s supplie d b yU.S . producer s i n th e lower-4 8 states . Th e potentia l competitivenes s o f importe d coal s ha s no t bee n include d in thes e cos t estimates . b / N.A . mean s "No t Analyzed " becaus e subbituminou s coal s wer e no t assume d t o b e competitiv e wit hbituminou s coal s i n th e easter n Unite d State s (Region s 1-4) . c / Tw o cos t estimate s ar e provided . Th e lowe r cos t estimat e refer s t o Centra l Appalachia n coals ; th e highe r cos t estimate s refe r t o Wester n coal s i n Region s 1- 3 an d Alabama coa l i n Regio n 4 . Bot hestimate s ar e provide d becaus e th e abilit yo f Centra l Appalachia n producer s t o suppl y 0. 8 pound coal s i s verylimited .P.7 5
4-3 5
ton s annuall ype r producer) . Th e coa l producer s wh o posses s thes e coal s di d indicat e i t woul d b e difficul t t o mee t the 0. 8 poun d limit . Th e highe r cos t estimat e mayb e mor e relevan t fo r mos t industria l coa l consumers .

• Subbituminou s coal s wer e assume d t o b e very uncompetitiv e in Region s 1-4 . A s a result , incrementa l cost s wer e no t determine d fo r thi s coa l typ e i n thes e regions .

• Thes e incrementa l cost s assume tha t onl ycoal s fro m U.S . producer s in the lower-4 8 state s wil l b e mad e availabl e t o industria l coa l consumers . I t i s no t clea r thi s i s the case . Verylo wsulfu r coal s fro

m Alaska , Canada , o r othe r coal-producing nation s mayb e competitiv e i n some instances , bu t hav e no t bee n considere d i n thi s analysis .
I t shoul d als o b e emphasize d tha t the incrementa l cost s in Tabl e 4-1 1 represen t th e cost s incurre d b ycoa l producer s an d coa l carrier s t o suppl y verylo wsulfu r coal s t o the industria l market . Theyd o no t represen t the additiona l pric e tha t woul d b e pai d b yindustria l coa l consumer s t o purchas e verylo wsulfu r coals . Thes e price s woul d b e establishe d b ycompetitiv e marke t force s tha t tak e int o accoun t th e leve l o f deman d an d the suppl y quantity , among othe r factors . I n a marke t wher e suppl yi s greate r than deman d (sucha s indicate d b yrecen t marke t conditions) , price s woul d ten d t o approac hthe variabl e cost s o f production . In a tighte r market , though , price s coul d increas e abov e cost s i f increase d demand fo r verylo wsulfu r coa l allow s coa l producer s t o earn economi c rent s abov e th e incrementa l cost s develope d i n thi s report . Thes e incrementa l cost s d o represent , however , th e minimu mincreas e in pric e tha t woul d occu r becaus e coa l producer s woul d a t leas t wan t t o cove r thei r cost s t o provid e verylo wsulfu r coals .P.7 6 

# I 1

APPENDI XAP.7 7



# IC F INCORPORATE D Internationa l Square , 1850 KStreet , Northwest , Washington , D
. C
. 2000 6 (202 ) 86 2 -110 0

Novembe r 24 , 198 6 MEMORANDU M TO : Fre d Porter , EPA/ESE D

Wal t Stevenson , EPA/ESE D FROM : Crai g D . Ebert , ICF / r ~ ^

Danie l E . Klei n ' " SUBJECT : Intervie wOutlin e fo r VeryLo wSulfu r Coa l Interview s Thi s memorandu

mpresent s th e basi c outlin e w e inten d t o us e fo r determining th e potentia l availabilit yo f verylo wsulfu r coal s t o th e industria l sector . Our purpos e her e i s t o outlin e th e keyquestion s tha t wil l nee d t o b e addressed ; i t i s no t intende d t o b e a verbati mtranscrip t o f th e intervie wquestions . I t ha s bee n ou r experienc e tha t eac htelephon e intervie w wil l b e uniqu e t o th e compan yan d th e personalit yo f th e interviewee . A s a result , thes e question s ar e intende d t o b e a guidelin e only . W e wil l b e usin g senio r personne l t o conduc t thes e interview s sinc e they wil l hav e th e experienc e an d knowledg e necessaryt o obtai n th e require d informatio n withou t feeling constraine d b ya specifi c format . Pleas e revie w thi s outline , however , t o mak e sur e yo u ar e comfortabl e wit hth e type s o f question s w e ar e asking . SAMPL E INTRODUCTIO N M yname i s . I wor k fo r IC F Incorporate d i n Washington , D.C . W e ar e a energ

yan d environmenta l consulting fir mcurrentl yworkin g fo r th e U.S . Environmenta l Protectio n Agenc yo n a projec t t o determin e th e abilit yo f th e coa l industryt o provid e verylowsulfu r coal s t o industria l customers . (We defin e verylowsulfu r coal s a s thos e coal s wit ha n approximat e sulfu r conten t o f n o mor e tha n 0.5-0.6% , o r les s tha n 1. 0 pound sulfu r dioxid e pe r millio n Bt u whe n burned) . EPAha s propose d ne wemissio n regulation s fo r industria l coa l customers , an d on e alternativ e approac hunde r revie wi s t o allowthes e customer s t o bur n verylo wsulfu r coals . Th e reaso n w e ar e contacting yo u i s tha t ou r informatio n indicate s tha t you r company' s mine s ar e no wo r coul d produc e a ver ylo wsulfu r coal . (PROVID E BRIE F OVERVIE WO F TH E INFORMATION) .P.7 8



### -2
-
W e wante d t o tal k t o yo u t o verif ywhethe r thi s i s the cas e an d t o understand you r abilit yt o provid e coa l t o industria l customer s wh o maydeman d a muc hlowe r sulfu r coa l than i s currentl yrequired . Yo u coul d hel p u s b y improving our understanding o f the geologi c characteristic s an d minin g condition s tha t affec t you r coal' s sulfu r content . (A T THI S POIN

T STO P T O ANSWE R QUESTIONS . YOUWIL L PROBABLY HAV E T O REPEAT OR CLARIF Y MAN

Y O F TH E POINT S YOUJUS T MADE . TH E IMPORTAN T CONSIDERATIONHER E I S T O ALLA

Y AN Y FEAR S TH E PERSO

NYOUARE TALKIN

GT O MA Y HAVE . ASSUR E HI M(O R HER ) THAT HI S HEL P MA Y ACTUALL Y B E T O HI S BENEFI T SINC E TH E OBJECTIV E O F OU R STUDY I S T O IDENTIFY VERY LO WSULFU R COAL S THAT TH E COAL INDUSTRY , THROUGH COMPANIE S LIKE HI S OWN , COULD ACTUALL Y SUPPLY T O INDUSTRIA L CUSTOMERS. ) COA LQUALIT YINFORMATIO N Onc e hi s initia l question s hav e bee n answered , mentio n agai n the specifi c reason s hi s compan

ywa s contacted . W e nee d t o ge t confirmatio n o f th e basi c coa l suppl yinformation :

• B e explici t abou t th e source(s ) use d t o identif y potentia l producer s o f verylo wsulfu r coals , i.e. , BOMreserv e data , FER C dat a o n coa l deliverie s t o electri c utilities , etc . Ther e i s n o nee d t o g o int o boring detail , onl yenoughinformatio n t o convinc e th e interviewe e hi s selectio n wa s base d o n publicly

availabl e information .

• Verif ywhic hseam(s ) i s being mine d an d th e locatio n o f th e min e (i.e. , stat e an d county) . I n some case s th e compan

ymayow

n th e coa l reserve s bu t ha s no t develope d the

myet . Fin

d ou t th e circumstance s unde r whic hth e coa l woul d b e developed . I s suc h developmen t likel yfo r th e industria l marke t only ?

• Verif ycoa l quality , particularl yBt u content , as h content , an

d sulfu r content . Sulfu r wil l probabl yb e provide d o n a percentag e basis , s o tr yt o fin

d ou t i f h e know s wha t th e valu e i s i n term s o f pound s sulfu r dioxid e pe r millio n Bt u (t o b e accurate , thi s require s assumption s o n sulfu r retentio n i n as han d th e averaging time used , bu t th e interviewe e i s unlikel y t o hav e addresse d thes e issues) .P.7 9

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Ar e ther e an

yspecia l characteristics , suc h a s lo wvolatil e conten t o r excessiv e caking properties , tha t maymak e thi s coa l unsuitabl e fo r some industria l consumers ? B e sur e t o distinguis hbetwee n in-sit u an d run-of-min e quality . T o whic hon e doe s the informatio n we ar e receiving apply ? Ar e ther e an y notabl e difference s o n sulfu r conten t betwee n in-sit u an d run-of-min e qualit y(especiall yo n a pound s pe r millio n Bt u basis) ?


### NATUR E O F TH E SULFU R Afte r th e basi c informatio n o n coa l qualit yha s bee n verified , focu s o n th e natur e o f the sulfu r i n the coal :

• I s th e sulfu r conten t o f th e coa l constan t throughou t the coa l seam , o r doe s i t vary ? (I f i t doe s no t vary , g o t o sectio n o n "Handling Requirements" ) I f i t varies :

• Wha t i s th e rang e o f sulfu r variabilit yi n th e seam ? Tha t is , wha t ar e th e lo wsulfu r value s an

d wha t ar e th e highvalues ? Wha t percen t o f th e coa l i s a t th e lowes t level ? Nex t lowest ? etc .

• Ho wdoe s th e coa l vary ? Doe s i t varyhorizontall y a s yo u mov e throughth e seam , o r doe s i t vary verticall yfro

mtop t o bottom ? I s ther e an ypatter n t o the variability ?

Fo r example , i f i t varie s horizontally , ar e th e change s abrup t o r gradual ? Ca n yo u predic t wit han

ydegre e o f confidenc e whe n thes e change s wil l occur ? Similarly , i f the sulfu r conten t o f th e coa l varie s vertically , d o yo u expect , fo r example , tha t th e lowe r one-thir d o f the sea mwil l b e highe r i n sulfu r tha n th e uppe r two-thirds ? (Ther e ma yb e bot hhorizonta l an d vertica l fluctuations) . Give n thi s variability , wha t i s th e lowes t sulfu r leve l yo u woul d commi t t o i f eac h carload had t o mee t specs ? Woul d thi s chang e i f yo u had trainload limits ? Monthl y limits ?P.8 0

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. I f yo u wante d t o min e jus t the lowe r sulfu r coa l i n th e seam(s) , woul d i t b e possibl e t o separat e th e lowe r sulfur coa l fro mthe othe r coal ? Wha t typ e o f equipmen t and/o r mining operatio n woul d b e necessary ? Howdoe s thi s compar e t o you r curren t operation s (i f i t i s currentl ybeing mined) ? Wha t change s woul d yo u hav e t o mak e i n thes e operations ? (Th e objectiv e i s t o identif ythe typ e o f operatio n currentl yi n place , suc ha s dragline , fron t en d loader , bulldozer , shovel , etc . i f i t i s a surfac e operatio n o r continuou s miner , longwal l operation , augers , etc . fo r underground o r drif t mines , an

d t o contras t thi s wit hthe mining technique s tha t woul d b e require d t o targe t verylo w sulfu r coa l supplies) .

• Wha t volume o f ver ylo wsulfu r coa l shipment s coul d b e extracte d i f thes e change s wer e made , a s measure d o n a weekl ybasis ? Wha t shar e o f the mine' s tota l weekl youtpu t doe s thi s represent ? Ove r howman y year s coul d yo u promis e coa l o f thi s qualit yan d volume ? Ho wabou t a t slightl yhighe r sulfu r levels ?

• Sinc e th e numbe r o f customer s wantin g thes e lowe r sulfu r coal s i s likel yt o b e fairl ysmall , wit hthei r coa l need s als o likel yt o b e smal l compare d t o utilit y customers , d o yo u think you r compan ywoul d b e willin g t o mak e the necessarychange s t o marke t thi s coa l i f some demand existed ?

Ar e thes e lowe r sulfu r coal s neede d t o blend wit hthe res t o f th e coa l i n orde r t o mee t qualit yspecification s fo r othe r customers ? Sinc e industria l customer s als o ten d t o bu y o n a spo t o r short-ter mbasis , woul d you r compan ynee d some assuranc e o f longe r ter m demand fo r verylo wsulfu r coal s yo u mayb e abl e t o produce ? HANDLIN G REQUIREMENT S Thes e question s ar e intende d t o focu s o n specifi c handling issue s befor e th e coa l i s transporte d tha t ma yaffec t th e company' s abilit yt o produc e th e verylo wsulfu r coals .

• Ho wd o yo u remov e th e coa l fro mthe mine ? Woul d i t b e difficul t t o segregat e coa l fo r verylo wsulfu r industria l customer s fro mcoa l fo r othe r customers ? Wha t step s woul d b e require d t o alte r you r coa l handling systemt o achiev e thi s typ e o f segregation ?P.8 1

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I f on^jf-smal l amount s o f verylo wsulfu r coal s ar e availabl e (b e sur e t o defin e "small") , coul d yo u stockpil e th e coa l t o collec t a large r quantity ? Ca n yo u shi p coa l b yrail , truck , and/o r barge ? Wha t typ e o f loadin g facilitie s d o yo u have ? Ho w woul d yo u keep trac k o f shipment s destine d fo r very lo wsulfu r industria l customers ?
PREPARATIO NREQUIREMENT S

• I s th e run-of-min e coa l cleaned ?

I f the coa l i s onl ycrushe d an d screene d (or perhap s jus t crushed) , i s i t onl yfo r top-siz e control ? I f a custome r wer e t o specif ybot ha minimu man d maximu

mcoa l size , coul d yo u provid e suc ha coal ? Wha t i f ther e wa s a maximu mlimi t o n the percentag e o f fine s allowed ? Wha t step s woul d yo u hav e t o tak e t o b e abl e t o provid e thes e type s o f coals ? I f th e coa l undergoe s mor e advance d preparatio n (i.e. , some for mo f washing) :

• Wha t typ e o f washing operatio n i s used , fo r example ,

wate r o r some typ e o f dens e mediu mprocess , an

d wha t typ e o f equipment , e.g. , jigs , cyclones , dens e mediu m vessels , concentrating tables , frot hflotatio n circuits , etc .

• Wha t i s th e purpos e o f the cleaning proces s - - as h reduction , sulfur reduction , o r both ?

• Ar e ther e differen t siz e fraction s a t you r plant , e.g. , plu s one-hal f inch , one-hal f inchb yone-quarte r inch , minu s one-quarte r inch ? Ar e al l siz e fraction s cleaned ? Whic hcleaning proces s i s use d fo r eac h fraction ?

• Wha t i s th e differenc e i n sulfu r conten t betwee n th e rawcoa l an

d th e washe d coal ?

• T o you r knowledg e doe s on e o f th e cleane d fraction s ten d t o hav e a lowe r sulfu r conten t tha n th e res t o f th e coal ? I f so , wha t i s th e sulfu r content ?P.8 2

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Doe s you r was hplan t remov e mos t o f the^pyrit.i c sulfur ? T o you r knowledg e coul d th e equipmen t b e upgrade d t o remove mor e sulfur ? Coul d yo u lowe r the specifi c gravit yo f separatio n t o lowe r the sulfur conten t (o

n a pound s pe r millio n Bt u basis) ? Wha t sulfur leve l d o yo u fee l i s the lowes t leve l yo u coul d attain ? Wha t woul d b e the Bt u an d weigh t yield s i f yo u di d so ? Wha t othe r cost s woul d yo u incur ? Woul d separatio n o f you r lowes t sulfu r coa l fro mthe othe r coa l fo r purpose s o f selling t o the industria l marke t adversel yaffec t you r abilit yt o sel l th e res t o f th e coal ? Fo r example , woul d the sulfu r conten t o f th e remaining coa l increas e s o muc hsuc htha t certai n customer s yo u nowhav e (or coul d have ) woul d b e reluctan t t o purchas e you r coal ?
cc : Michae l Shelby , EPA/OPP E Clin t Burklin , Radia n Davi d White , Radia nP.8 3

APPENDI XBP.8 4

Potential Coa l Deman dFrom Industrial Boilers

Throughou t thi s stud ysome perspectiv e ha s bee n provide d o n th e amoun t o f
verylo wsulfu r coa l tha t coul d b e supplie d b ycoa l producer s in differen t region s o f th e Unite d States . T o understand ho wthes e verylo wsulfu r coa l suppl yestimate s relat e t o th e amoun t o f coa l likel yt o b e demanded , thi s appendi xdiscusse s recen t trend s i n industria l boile r sales . Th e objectiv e i s t o indicat e th e possibl e magnitud e o f coa l deman d fro mne windustria l boiler s ove r th e nex t severa l years . I t i s beyon d th e scop e o f thi s analysi s t o conduc t a detaile d forecas t o f futur e industria l fue l demands ; however , recen t marke t trend s can provid e some perspectiv e o n th e likel ysiz e o f futur e industria l boile r coa l deman d compare d t o othe r marke t segment s (sucha s electri c utilities) .
Accordin g t o th e America n Boile r Manufacturer s Associatio n (ABMA) , sale s t o industria l customer s o f coal-fire d boiler s ha s average d abou t 3. 7 millio n pound s o f stea

mpe r yea r fro

m1978-1986 , ranging fro ma lo wo f 1. 2 millio n pound s o f stea

mcapacit yi n 197 9 t o a higho f 6. 3 millio n pound s o f stea m capacit yi n 1984. 1 J Fo r purpose s o f illustration , assume tha t futur e industria l demand fo r coal-fire d boiler s mayrang e fro mthre e t o si xmillio n pound s o f stea

mcapacit ype r year . T o determin e th e leve l o f coa l demand implie d b

ythes e boile r sale s estimates , the following assumption s wer e made :

1 J Se e Comment s o f the America n Boile r Manufacturer s Association , EPA Docke t No . A-83-27 , Commen t No . IV-D-22 . Thes e number s refe r onl yt o boiler s large r than 10 0 millio n Bt u pe r hour .B 2

Coa l ha s 2 0 millio n Bt u pe r ton . Al l newcoal-fire d boiler s ar e operate d a t a 6 0 percen t utilizatio n rate . Boile r efficienc yi s abou t 8 0 percent . Using th e highe r estimat e o f si xmillio n pound s o f stea mcapacit ype r year , th e amoun t o f coa l demande d woul d b e determine d a s follows :

6 millio n pound s o f s team/hou r x- 10 0 millio n Btu/hou r inpu t 2 J

180,00 0 pound s o f steam/hou r outpu t =7. 5 billio n Btu/hou r hea t inpu t capacit yx8,76 0 hours/yea r x 6 0 percen t capacit yfacto r

= 39.4 2 trillio n Bt u hea t input/yea r / (2 0 millio n Btu/ton )

= 1.97 1 millio n ton s o f coa l consume d pe r year .
In thi s example , industria l demand fo r coa l i n newboiler s woul d rang e fro mon e millio n ton s (assuming thre e millio n pound s o f newstea mcapacit ype r year ) t o two millio n ton s pe r yea r (assuming si xmillio n pound s o f stea m capacit ype r year) . I n comparison , tota l industria l coa l deman d i n 198 5 wa s approximatel y7 5 millio n ton s an d electri c utilit ydeman d wa s nearl y70 0 millio n tons .

2 J Assume d boile r efficiency . Fo r furthe r discussion , se e Fue l Fire d Industria l Boiler s - - Background Informatio n Document , Volum e 1 , prepare d fo r U.S . Environmenta l Protectio n Agency , EPA-450/3-82-006a , pag e 6-12 , 6-13. 0P.8 6

APPENDI XCP.8 7



### Exampl e of Incrementa l Cos t T o Us e Flue Ga s Desulfurizatio nEquipmen t

Th e pric e tha t coa l producer s coul d charg e t o suppl yver ylo wsulfu r coa l coul d b e limite d b

yth e cos t o f othe r alternative s availabl e t o th e industria l customer , e.g. , th e cos t t o instal l an d operat e flu e ga s desulfurizatio n (FGD ) equipmen t i n lieu o f consuming verylo wsulfu r coals . I n respons e t o a reques t fro

mEPA , thi s appendi xprovide s on e estimat e o f the cost s associate d wit hscrubbing .

Fo r example , assume a coal-fire d boile r i n EP ARegio n Fiv e wit ha hea t inpu t o f 15 0 millio n Bt u pe r hour . I f thi s boile r i s operate d a t a 6 0 percen t
annua l capacit yfactor , i t wil l consume abou t 0.7 9 trillio n Bt u pe r yea r (15 0 millio n Btu/hou r x8,76 0 hours/yea r x60 . percen t capacit yfactor) . T o instal l
an d operat e a FGD systemt o remov e 9 0 percen t o f the sulfu r i n th e flu e gases , i t wil l cos t abou t $740,00 0 pe r year. 1 J Thi s i s equivalen t t o a cos t o f abou t $0.9 4 pe r millio n Bt u ($740,00 0 divide d b y0.7 9 trillio n Btu) .

I n thi s hypothetica l example , th e incrementa l pric e tha t industria l customer s woul d hav e t o payt o purchas e verylo wsulfu r coa l woul d probabl y no t excee d $0.9 4 pe r millio n Bt u sinc e th e industria l custome r coul d decid e t o scru bi n lieu o f purchasin g a verylo wsulfu r coa l i f th e incrementa l ver ylo w sulfu r coa l pric e ros e highe r than $0.9 4 pe r millio n Btu .

1 J Radia n Corporation , Industria l Boile r Sulfu r Dioxid e Cos t Report , prepare d fo r U.S . Environmenta l Protectio n Agency, ' EPA-450/3-85-011 , Novembe r 1984 .P.8 8 C 2

. I n actualit yth e pric e pai d woul d depen d o n severa l factors , including th e amoun t o f verylo wsulfu r coa l available , the amoun t demanded , othe r fue l options , etc . Evaluatio n o f th e potentia l impac t o f al l o f thes e factor s i s beyon d the scop e o f thi s analysis .