p.1 

OAR Box 1828 

Prepped by Ollie Stewart 

Document Number: 

295) IV-A-5 

Docket Number: 

A-83-27 

Printed 11/12/2008 11:12:58 AM Sheet 295 of 325 
P.2 

•-i-t -.,| 

A-83-27 

IV-A-5 

AVAILABILITY AND COST OF VERY LOW SULFUR COALS 

FOR THE INDUSTRIAL MARKET 

Prepared For 

The U.S. Environmental Protection Agency 

By 

ICF Incorporated 

April 22, 1987 

ICF INCORPORATED International Square 

1850 K Street, Northwest, Washington, D. C. 20006 
P.3 

t 

0 

AVAILABILITY AND COST OF VERY LOW SULFUR COALS 

FOR THE INDUSTRIAL MARKET 

Prepared For 

The U.S. Environmental Protection Agency 

By 

ICF Incorporated 

April 22, 1987 
P.4 

PREFACE 

This draft report presents the findings of an analysis performed by ICF 

Incorporated for the Environmental Protection Agency (EPA). The assumptions, 

findings, conclusions, and judgments expressed in this report, unless 

otherwise noted, are those of ICF Incorporated and should not be interpreted 

as necessarily representing the official policies of EPA or other agencies of 

the U.S. government. 
P.5 

TABLE OF CONTENTS 

Page 

EXECUTIVE SUMMARY ES-1 

CHAPTER ONE: INTRODUCTION 1-1 

CHAPTER TWO: ANALYTIC APPROACH TO DETERMINE AVAILABILITY 2-1 

Bureau of Mines Analytic Data 2-1 

FERC Form 423 2-4 

BOM Washability Data 2-6 

McGraw-Hill Publications 2-9 

CHAPTER THREE : INTERVIEWS WITH COAL PRODUCERS 3-1 

Central Appalachia 3-2 

Southern Appalachia 3-6 

The Rockies 3-8 

Powder River Basin 3-11 

Imported Coals 3-13 

Summary of Availability of Very Low Sulfur Coals 3-15 

CHAPTER FOUR: INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS 4-1 

Storage and Handling Costs 4-6 

Sampling Requirements 4-11 

Incremental Costs by EPA Federal Regions 4-13 

Summary of Incremental Costs to Supply Very Low Sulfur Coals 4-32 

APPENDIX A 

APPENDIX B 

APPENDIX C 
P.6 

INDEX OF TABLES 

Page 

EXECUTIVE SUMMARY 

ES-1 Summary of Availability of Very Low Sulfur Coals ES-2 

ES-2 Incremental Costs To Supply Very Low Sulfur Coals ES-4 

CHAPTER TWO: ANALYTIC APPROACH TO DETERMINE AVAILABILITY 

2-1 Sample of BOM Data: Virginia 

2-2 FERC 423: Summary of Coal Shipments By Sulfur Content: 

1972-1986 

2-3 Sample of BOM Coal Washability Data 

2-3 

2-5 

2-8 

CHAPTER THREE: INTERVIEWS WITH COAL PRODUCERS 

3-1 Potential Low-Sulfur Coals Outside the Contiguous U.S 3-14 

3-2 Summary of Availability of Very Low Sulfur Coals 3-16 

CHAPTER FOUR: INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS 

4-1 

4-2 

4-3 

4-4 

4-5 

4-6 

4-7 

4-8 

4-9 

4-10 

4-11 

Additional 

Additional 

Additional 

Additional 

Additional 

Additional 

Additional 

Additional 

Additional 

Additional 

Summary of 

Costs 

Costs 

Costs 

Costs 

Costs 

Costs 

Costs 

Costs 

Costs 

Costs 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

To EPA Region 

1: 

2: 

3: 

4: 

5: 

6: 

7: 

8: 

9: 

10 

Incremental Costs To S 

Boston, MA 4-16 

New York City, NY 4:19 

Philadelphia, PA 4-20 

Atlanta, GA 4-22 

Chicago, Illinois 4-24 

Dallas, TX 4-26 

Kansas City, MO 4-28 

Denver, CO 4-29 

San Francisco, CA 4-31 

Seattle, WA 4-33 

aply Very Low Sulfur Coals... 4-34 
P.7 

INDEX OF FIGURES 

Page 

CHAPTER TWO: ANALYTIC APPROACH TO DETERMINE AVAILABILITY 

2-1 Bureau of Mines Coal Producing Districts 2-7 

CHAPTER FOUR: INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COAL 

4-1 EPA Federal Regions 4-14 
EXECUTIVE SUMMARY 

The Environmental Protection Agency has been considering various New 

Source Performance Standards (NSPS) for sulfur dioxide from industrial 

boilers. Some of the alternatives under evaluation would allow industrial 

boiler owners to consume lower sulfur coals directly without the need for 

sulfur reduction equipment. 

To support its analyses of these types of performance-based standards, EPA 

requested that ICF identify the availability of "very low sulfur coals" for 

the industrial market. For purposes of this study, very low sulfur coals were 

defined as coals that would emit from 0.5 to 1.0 pound of sulfur dioxide per 

million Btu if all sulfur in the coal were converted to sulfur dioxide during 

combustion. No sulfur retention in the ash was assumed. The goal was to 

identify those coals that could be supplied by the coal industry to meet a 

particular emission standard without adjustment for specific combustion 

conditions. 

Based on the results of this analysis, the quality of very low sulfur 

coals that could be made available by major coal supply areas to the 

industrial sector is summarized in Table ES-1. These estimates are made with 

consideration of the relatively small coal demands (individually and 

collectively) expected from new industrial demands in the near-term (one to 

two million tons per year; see Appendix B), and should not necessarily be 

viewed as indicative of supplies adequate to meet larger demands as required 
ES-2 

P.9 

TABLE ES-1 

SUMMARY OF AVAILABILITY OF VERY LOW SULFUR COALS 

•a/ 

Region 

Central Appalachia 

Southern Appalachia 

Colorado 

New Mexico 

Utah 

Powder River Basin 

Imports 

Absolute 

Minimum 

0.78 

0.75 

0.6 

0.6 

0.65 

0.5 

0.3 

Lbs. S02/MMBtu 

Hunt & 

Scratch 

0.85 

0.85 

0.7 

0.7 

0.7 

0.7 

0.5 

-0.9 

-0.9 

Mor 

Ve 

e Common 

ry Low 

1.0 

1.0 

0.8 

0.8 

0.8 

0.8 

0.6 

a/ Minimum sulfur level achievable on a rail car basis; one rail car is 

assumed to contain 100 tons of coal. 
P.10 

ES-3 

t 

by the electric utility sector (e.g., electric utility coal consumption in 

1985 was nearly 700 million tons). The sulfur content of the coals that could 

be supplied is provided for three different qualitative levels of 

availability: 1) the "absolute minimum", which is the lowest sulfur level at 

which any coal producer would supply coal, 2) a "hunt and scratch" level, 

which corresponds to coal that could be supplied from several coal producers, 

although many coal producers in the region could not supply coals of the 

indicated quality and additional costs would likely be incurred to supply the 

coal, and 3) a more common very low sulfur level, which indicates a sulfur 

level that could be supplied by several coal producers without incurring 

additional costs. The degree of difficulty to supply very low sulfur coal 

implied by these levels is inherently subjective, but is intended to indicate 

the approximate degree of difficulty the coal industry would encounter to 

supply very low sulfur coals. Note that: 

• In the East, Appalachian coal producers would find 

it very difficult to supply coal below 0.8 pounds 

sulfur dioxide per. million Btu. Coals between 0.8 and 

0.9 pounds sulfur dioxide per million Btu would be 

somewhat easier to find, although coal producers would 

likely incur additional costs. 

• In the West, coal as low as 0.5 to 0.6 pounds sulfur 

dioxide per million Btu can be supplied by some coal 

producers, although these coals are so limited that no 

producer expressed confidence that these coals can be 

guaranteed with any regularity. Coal with 0.7 pounds 

sulfur dioxide per million Btu could be supplied by 

several coal producers to the industrial market. In 

most instances, coal producers would incur additional 

costs to supply coal below 0.7 pounds sulfur dioxide 

per million Btu. 

• Very low sulfur coals can be obtained from Alaska 

and various coal-exporting countries. Some sources 

can supply coal at a level of 0.3 pounds sulfur 

dioxide per million Btu, and more could supply coal 

with a sulfur content of approximately 0.5 pounds 

sulfur dioxide per million Btu. 
ES-4 

TABLE ES-2 

INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS a/ 

(January 1986 dollars per MMBtu) 

p.11 

EPA 

Region 0.9 Pounds S02/MMBtu 0.8 Pounds S02/MMBtu 0.7 Pounds S02/MMBtu 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

Bituminous 

0.16 

0.18 

0.18 

0.27 

0.19 

0.15 

0.01 

0.00 

0.00 

0.00 

Subbituminous 

N.A. 

N.A. 

N.A. 

N.A. 

0.00 

0.00 

0.00 

0.00 

0.34 

0.00 

Bituminous 

b/ 0.16/0.54 

0.18/0.80 

0.18/0.79 

0.27/0.49 

0.19 

0.15 

0.01 

0.00 

0.00 

0.00 

Subbituminous 

c/ 

c/ 

c/ 

c/ 

N.A. 

N.A. 

N.A. 

N.A. 

0.00 

0.00 

0.00 

0.00 

0.34 

0.00 

Bituminous 

0.75 

1.01 

1.00 

0.97 

0.40 

0.28 

0.22 

0.13 

0.21 

0.21 

Subbituminous 

N.A. 

N.A 

N.A. 

N.A. 

0.14 

0.14 

0.14 

0.14 

0.48 

0.14 

a/ These are incremental costs compared to the cost to produce compliance 

coals that meet a standard of 1.2 pounds sulfur dioxide per million Btu. 

These incremental costs apply only to coals supplied-by U.S. producers in 

the lower-48 states. The potential competitiveness of Alaskan or imported 

coals has not been included in these cost estimates. 

b/ N.A. means "Not Analyzed" because subbituminous coals were not assumed to 

be competitive with bituminous coals in the eastern United States (Regions 

1-4). 

c/ Two cost estimates are provided. The lower cost estimate refers to 

Central Appalachian coals; the higher cost estimates refer to Western 

coals in Regions 1-3 and Alabama coal in Region 4. Both estimates are 

provided because the ability of Central Appalachian producers ;to supply 

0.8 pound coals is very limited. I 
P.12 

ES-5 

The incremental costs to supply very low sulfur coals to prospective 

industrial coal consumers are summarized in Table ES-2. These costs are shown 

by EPA Federal region for sulfur levels of 0.7, 0.8, and 0.9 pounds sulfur 

dioxide per million Btu for bituminous and subbituminous coals. 
P.13 

1-1 

J 

CHAPTER ONE 

INTRODUCTION 

To determine the availability of very low sulfur coals, three basic tasks 

were undertaken: 1) screening analyses of data on coal reserves, production, 

and quality to determine the probable location and potential supplies of very 

low sulfur coals (see Chapter Two), 2) additional evaluation of this 

information on very low sulfur coals with coal companies and preparation plant 

operators to determine the potential near-term quantity and suitability of 

these coals for the industrial markets (see Chapter Three), and 3) an 

assessment of the additional costs required to bring these coals to market 

(see Chapter Four). 

The overall objective of this analysis was to determine the availability 

of very low sulfur coals and the costs that would be incurred by coal 

producers and coal carriers to supply these coals to industrial consumers. 

Very low sulfur coals were defined as coals that would emit from 0.5 pounds to 

1.0 pound of sulfur dioxide per million Btu if all sulfur in the coal were 

converted to sulfur dioxide during combustion. These emission levels were 

assumed to be attainable on a single rail car basis (based on interviews with 

coal producers; see Chapter Three for further discussion). Different levels 

of availability have been identified to take into account the varying degree 

of difficulty that coal producers would encounter to supply very low sulfur 

coals. 

In addition to the sulfur constraint, coal producers had to be able to 

supply very low sulfur coals to the industrial market in the near term, 

defined for this analysis to include the following: 
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P.15 

2-1 

CHAPTER TWO 

ANALYTIC APPROACH TO DETERMINE AVAILABILITY 

The first task involved a series of screening analyses of data on coal 

reserves, production, and quality to identify the areas (by state, county, 

seam, etc.) that have the potential to supply very low sulfur coals to the 

industrial market (if they are not already doing so). These screening 

analyses made it easier to develop a list of the most promising very low 

sulfur suppliers that could then be contacted to discuss in-depth their 

ability to supply very low sulfur coals to industrial consumers. The main 

data sources used for these analyses were: 

• The Bureau of Mines' analytic data on coal quality, 

comprised from tens of thousands of mine samples taken 

over many years, 

• FERC Form 423 data on the quality of coal shipments 

to electric utilities, 

• Bureau of Mines' washability data on the sulfur 

reduction potential of coals due to coal preparation, 

and 

• Data from McGraw-Hill publications, a well-known coal 

industry information service, on producing coal mines 

by seam. 

BUREAU OF MINES ANALYTIC DATA 

The Bureau of Mines analytic data is a compilation of approximately 

100,000 samples of coal quality characteristics that have been collected from 

producing mines during the past several decades. The data base contains 

information on several variables, including sulfur content, heat content, and 
P.16 

2-2 

preparation level (such as whether the coal sampled is a raw coal, washed 

coal, or partially washed). It will also indicate the source of the coal, 

including the state from which the sample was taken, the county of origin, the 

seam from which the coal was produced, and the name of the producing mine. 

By analyzing quality characteristics of each sample, this information can 

be used to pinpoint specific coal-producing areas that appear to produce very 

low sulfur coals. Since a single sample cannot indicate the overall quality 

of the producing seam, these data must be interpreted with caution. To some 

extent the reliability of the information can be approximated by reviewing the 

number of samples and number of mines indicating that a particular seam may be 

a promising very low sulfur coal candidate. That is, the more samples and 

more mines that indicate coal of a certain quality can be produced, the more 

likely it is that the coal seam under consideration actually contains coal 

with these quality characteristics. For example, consider the data in Table 

2-1, which provides a sample summary of the BOM data for Virginia. If a coal 

consumer wants a coal that could meet a level of 0.8 pounds sulfur dioxide per 

million Btu, the BOM data can be used to make the following observations: 

• The Upper Seaboard seam in Tazewell County averages 

0.68 pounds sulfur dioxide per million Btu with the 

highest observation at 0.8 pounds. This seam appears 

to be a good candidate, but the data indicate that only 

one mine has provided any samples (9). 

• The Pocahontas #3 seam in Tazewell County averages 

0.74 pounds sulfur dioxide per million Btu, ranging 

from 0.52 pounds to 1.1 pound. Several samples exceed 

the 0.8 pound level, but the fact that four mines 

provided 47 samples indicates that the 0.8 pound coal 

may be relatively common throughout the seam. 

From this type of analysis the BOM data can be used to highlight which 

seams may be promising very low sulfur coal candidates. However, this 
P.17 

2-3 

TABLE 2-1 

SAMPLE OF BUREAU OF MINES DATA: VIRGINIA 

County 

Russell 

Russell 

Russell 

Russell 

Russell 

Tazewell 

Tazewell 

Tazewell 

Tazewell 

Tazewell 

Seam 

Upper Banner 

Lower Banner 

Red Ash 

Jawbone 

Tiller 

Lower Banner 

Red Ash 

Jawbone 

Upper Seaboar 

Pocahontas #3 

ir 

M 

i 

of 

ines 

4 

5 

3 

2 

2 

3 

7 

2 

1 

4 

# of 

Samples 

48 

29 

6 

3 

32 

3 

88 

2 

9 

47 

Average 

S02 a/ 

(lb/MMbtu) 

0.81 

0.98 

1.04 

0.79 

0.72 

0.89 

0.92 

0.85 

0.68 

0.74 

Range 

S02 

low 

0.56 

0.70 

0.68 

0.70 

0.54 

0.54 

0.66 

0.76 

0.54 

0.52 

of 

a/ 

high 

1.26 

1.68 

1.34 

0.84 

0.94 

1.24 

1.52 

0.94 

0.80 

1.10 

Median Value 

at 

(lb 

or below 

S02/MMBtu) 

0.9 

1.0 

1.0 

0.9 

0.7 

0.9 

1.0 

' 0.8 

0.7 

0.8 

a/ Assuming all sulfur in the coal is converted to sulfur dioxide during 

combustion. 
P.18 

2-4 

approach is appropriate only as a screening device. Several drawbacks to the 

data that must be considered are: 

• As mentioned, each record in the BOM analytic data is 

only a single sample. It does not indicate the 

capacity of the producing mine, the amount of coal 

reserves available, or the variability of the coal 

quality. It may be that the indicated quality is 

highly uncharacteristic of the coal, or that coal of 

the indicated quality exists, but can not be segregated 

from other coals. 

• The information is not up-to-date. Data collection 

ceased in the mid-1970's and many of the observations 

are several decades old. The mine from which the 

sample is taken may no longer be operating, or coals of 

the indicated quality may have been mined out. 

• Not all coal-producing regions in the U.S. are 

represented, which may mean that promising very low 

sulfur coal candidates may be omitted because some 

coal-producing regions, or seams within a 

coal-producing region, are not included in the data 

base. 

• There may be errors in the data, either due to 

incorrect laboratory analyses or errors in compiling 

the data base. 

FERC FORM 423 

Another data source that can help identify potential very low sulfur coal 

supplies is FERC Form 423, which indicates the amount and quality of coal 

delivered to electric utility powerplants. These reports are submitted to 

FERC monthly by electric utilities. Table 2-2 summarizes these coal shipments 

to electric utilities by sulfur content for the years 1972-1986. As shown in 

this table, the coal quality information can indicate how much very low sulfur 

coal is being consumed by electric utilities from each major low sulfur 

coal-producing region as a proportion of total production from the region. 

These very low sulfur coals can be identified by producing state, Bureau of 
P.19 

2-5 

TABLE 2-2 

FERC 423: SUMMARY OF COAL SHIPMENTS BY SULFUR CONTENT: 1972-1986 

BOM 

DISTRICT 

7 

8 

13 

16 

17 

18 

19 

20 

1972-86 

TOTAL 

SHIPMENTS 

(million tons) 

24.7 

1,438.8 

198.9 

13.3 

125.0 

327.5 

1,001.0 

88.7 

Percent of Tot 

(pounds su 

0.5 

0.00 

0.02 

0.05 

5.45 

0.37 

0.03 

0.76 

0.17 

0.6 

0.02 

0.03 

0.09 

17.98 

5.29 

0.04 

1.71 

2.07 

al Shipments Less 

lfur dioxide 

0.7 

0.06 

0.07 

0.11 

25.18 

18.20 

1.06 

5.94 

14.68 

Than Or Equ< 

i per million Btu) 

0.8 

0.23 

0.44 

0.26 

31.99 

36.76 

13.90 

23.83 

30.63 

0.9 

0.53 

1.43 

3.33 

38.38 

68.63 

23.35 

45.60 

59.76 

al to: 

1.0 

3.44 

4.39 

5.12 

44.95 

83.12 

41.20 

59.88 

78.29 
2-6 

Mines (BOM) District of origin (see Figure 2-1 for a map of these districts), 

and in some instances, by producing mine. In addition to identifying 

potential very low sulfur areas, FERC Form 423 data can also be used to 

observe historical trends in the quality of coal from each coal supply region. 

BOM WASHABILITY DATA 

In some cases, coal that might not otherwise be considered very low sulfur 

coal can be washed at a preparation plant to reduce the amount of sulfur in 

the final product. The coal industry generally washes a coal to reduce the 

amount of ash in the coal, not to reduce the sulfur. However, as a 

consequence of the coal preparation process, the pyritic (inorganic) sulfur in 

the raw coal can often be reduced as well.1J Accordingly, for this 

analysis we also analyzed the possibility that certain low sulfur coals could 

be washed to a very low sulfur coal level. 

The primary source for determining whether sulfur reduction through coal 

preparation could produce a very low sulfur coal is the washability data from 

the U.S. Bureau of Mines.2J The data demonstrate the amount of preparation 

likely to be required to clean the coal to a very low sulfur level. Table 2-3 

provides a sample of the type of washability information available. The 

1J Pyritic sulfur is one of three types of sulfur in coal. The other two 

are organic sulfur, which is chemically bound to the coal particles and 

can not be washed out, and sulfate sulfur, which can be washed out but 

typically comprises only a very small portion of the total sulfur. 

Pyritic sulfur averages from 30 to 70 percent of total sulfur in 

bituminous and subbituminous coals. 

2J See, for example, Sulfur Reduction Potential of the Coals of the 

United States, U.S. Bureau of Mines Report of Investigations 8118; 1976. 
FIGURE 2-1 

BUREAU OF MINES COAL-PRODUCING DISTRICTS 

Very Low Sulfur 

Coal Region 

ho 

I 

I 
STATE : 

COUNTY: 

PRODUCT 

FLOAT-1.30 

FLOAT-1.40 

FLOAT-1.60 

TOTAL 

VIRGINIA 

DICKENSON 

TABLE 2-3 

SAMPLE OF BOM COAL WASHABILITY DATA 

COALBED: UPPER BANNER 

RAW COAL MOISTURE: 1.0 % 

CUMULATIVE WASHABILITY DATA 

SAMPLE CRUSHED TO PASS 1-1/2 INCHES 

RECOVERY,* 

WEIGHT BTU 

61.9 

82.1 

87.7 

100.0 

68. 6 

8 9 . tl 

95.3 

100.0 

BTU/LB 

14901 

14714 

14621 

1 3454 

ASH>% 

3.5 

4.7 

5.3 

12.8 

SULFUR,* 

PYRITIC TOTAL 

.01 

.05 

. 13 

.20 

.59 

.59 

.66 

.69 

LB S02/M BTU 

.8 

.8 

.9 

1.0 

RAW COAL MEETS EPA EMISSION STANDARD OF 1.20 

PRODUCT 

FLOAT-1.30 

FLOAT-1.40 

FLOAT-1.60 

TOTAL 

RECOVERY,% 

WEIGHT BTU 

64.3 

81 .8 

8/.2 

100.0 

72.0 

90.5 

95.3 

100.0 

SAMPLE CRUSHED TO PASS 3/8 INCH 

BTU/LB ASH,* SULFUR,* 

PYRITIC TOTAL 

14963 3.1 .04 .55 

14777 4.3 .08 .58 

14606 5.4 .16 .66 

13361 13.4 .24 .70 

LB S02/M RTU 

.7 

.8 

.9 

1.0 

RAw COAL MEETS EPA EMISSION STANDARD OF 1.20 

SAMPLE CRUSHED TO PASS 14 MESH 

PRODUCT 

FLOAT-1.30 

FLOAT-1.40 

FLOAT-l.60 

TOTAL 

RECOVERY,* 

WEIGHT BTU 

62.9 

61 .7 

88.4 

00.0 

70.2 

39.9 

95. H 

100.0 

BTU/LB 

15041 

14839 

14621 

13486 

ASH, h 

2.6 

3.9 

5.3 

12.6 

SULFUR,* 

PYRITIC TOTAL 

.04 

.08 

. 13 

.22 

.63 

.66 

.70 

. 74 

LB S02/M BTU 

.8 

1 .0 

1. 1 

RAW COAL MEETS EPA EMISSION STANDARD OF 1.20 

Source: Sulfur Reduction Potential of the Coals of the United States, U.S. 

Bureau of Mines, RI8118, 1976. 
2-9 

results from cleaning are shown for three different levels of crushing (i.e., 

maximum allowable top size of 1 1/2 inches, 3/8 inch, and 14 mesh) and for 

different performance levels within the preparation plant (e.g., float-1.40). 

Based on these results, some conclusions can be made about the technical and 

economic potential of coal preparation to produce a very low sulfur coal by 

analyzing the amount of crushing required, the weight yield, and the Btu yield 

of the cleaning process. 

As with the other data sources, some care must be taken when interpreting 

the BOM washability data. Even if the data were to show that a particular 

coal could be washed to a very low sulfur level, there is no guarantee that 

this will occur. For one thing, the BOM data do not show typical preparation 

practices by the coal industry, only performance results if the coal were to 

be washed to the level indicated. In many cases the coal company producing 

the coal may not be washing the coal at all, or not to the level that 

maximizes sulfur removal. In addition, the BOM data are based on laboratory 

analyses, not full-scale commercial preparation plants. These full-scale 

commercial facilities may not achieve the level of performance indicated by 

the laboratory analyses. 

MCGRAW-HILL PUBLICATIONS 

The analysis of these types of data sources -- the BOM analytic data, FERC 

Form 423, and BOM washability data -- will highlight which coal seams in which 

region of the country may be very low sulfur. However, it will not identify 

whether coal from these coal seams is currently being mined. Since most new 

industrial coal consumers are likely to purchase coal from an existing 
P.24 

2-10 

producer rather than contracting for the development of a new mine, the next 

step involved identifying the mining companies that are currently producing 

from the very low sulfur coal seams. This list would indicate the most 

promising candidates to contact on the potential availability of very low 

sulfur coals. 

These candidates were identified using primarily two sources from 

McGraw-Hill publications, a coal industry information service: 1) U.S. Coal 

Mine Production By Seam and 2) the Keystone Coal Industry Manual. The first 

source shows which companies were mining a particular coal seam. However, 

while this source is reasonably accurate, it does not match all mines to the 

appropriate seam name. In addition, some of the information tends to be a 

little dated. To help verify which mines are still producing, the Keystone 

Coal Industry Manual was also used. This source tends to be fairly 

up-to-date, allowing us to adjust for the rapid changes in the coal industry 

recently that have caused many companies to close or sell mines. Since 

Keystone also contains information on companies not mentioned elsewhere, we 

were able to develop a concise, comprehensive list of current coal producers 

that could potentially supply very low sulfur coals to industrial consumers. 
P.25 

3-1 

CHAPTER THREE 

INTERVIEWS WITH COAL PRODUCERS 

The screening analysis of these data sources provided a list of coal 

producers and/or coal-producing areas that appeared to be promising candidates 

for supplying very low sulfur coal. This data screening analysis was followed 

by a telephone screening of potential very low sulfur coal producers to 

identify which companies not only owned very low sulfur coals, but that these 

coals could be mined (or are being mined) in sufficient quantities to supply 

industrial customers. This initial telephone screening was used to identify 

specific coal companies that were the most promising very low sulfur coal 

supply candidates. It also eliminated from further consideration those coal 

companies that would not be able to provide relevant information during the 

formal telephone interviews. That is, once the few most promising companies 

were identified, these companies could then be interviewed in greater detail 

to determine the availability of very low sulfur coals. The key items to 

discuss in these interviews were: 

• The location of the very low sulfur coals, by 

producing mine, county of origin, and the geologic seam 

from which the coal would be mined. 

• Quality specifications of the coal, including Btu 

content, ash content, and most importantly, sulfur 

content. 

• Nature of the sulfur characteristics in the coal, 

including the amount of variability, the patterns of 

variability, amount of organic sulfur, etc. 

• Type of handling requirements at the mine that would 

be necessary to supply very low sulfur coals. These 

requirements would be in addition to current procedures 

and include blending arrangements, storage 

capabilities, sampling requirements, etc. 
P.26 

3-2 

• The amount of coal preparation currently undertaken, 

including the different types of washing that may occur 

for different size coal fractions. The purpose of 

these questions is to ascertain how much sulfur 

reduction may already occur due to preparation, whether 

any specific size fraction at the mine is particularly 

amenable to sulfur reduction, and the potential for 

additional sulfur reduction to occur. 

A more complete discussion of the types of questions raised during the 

telephone interviews can be found in Appendix A, which provides a sample 

discussion outline for the interviews with potential very low sulfur coal 

producers. 

The interviews with potential very low sulfur coal producers revealed that 

the most likely areas of very low sulfur coal production in the continental 

U.S. are found in parts of the following regions: 

• In Central Appalachia, the coal fields in extreme 

southern West Virginia and western Virginia near the 

West Virginia border. 

• In Southern Appalachia, the Warrior Basin in Alabama. 

• In the Rockies, the Green River and North Park fields 

in Colorado, the Raton Mesa region in New Mexico, and 

the Wasatch Plateau in Utah. 

• The Powder River Basin in Wyoming and Montana. 

Each of these potential supply areas will be discussed in turn. 

CENTRAL APPALACHIA 

In central Appalachia the coal fields in eastern Kentucky, southern West 

Virginia, and Virginia are reknown for their low sulfur coal potential, 

particularly compliance coal below 1.2 pounds sulfur dioxide per million Btu. 
P.27 

3-3 

Within this region the lowest sulfur coals currently produced come from the 

counties near the Virginia-West Virginia border around Cedar Bluff, Virginia 

(e.g., Buchanan, Russell, and Tazewell Counties in Virginia and McDowell 

County in West Virginia). The key very low sulfur coal seams are the 

Pocahontas #3 in West Virginia and Virginia and the Tiller, Red Ash, and Lower 

Banner seams in Virginia. Based on the interviews with coal producers in this 

area, the following observations on very low sulfur coal availability can be 

made: 

The lowest sulfur content that could be supplied is 

slightly below 0.8 pounds sulfur dioxide per million 

Btu. However, it is difficult to guarantee that much 

coal will be available at this level. The Pocahontas 

#3 and Lower Banner seams may contain some mineable 

deposits, but supplies are probably limited to no more 

than a few hundred thousand tons annually from a small 

number of producers (e.g., less than ten).1J No 

company was confident of its ability to supply much 

coal at this level of quality. 

H.C. Bostic Coal Company in Virginia mines the 

Lower Banner seam. The sulfur content can be as 

low as 0.79 pounds sulfur dioxide per million Btu, 

but they will be able to mine the seam for only 

another two to three years. 

General Coal Company mines the Pocahontas #3 in 

West Virginia. The minimum sulfur content is 0.79 

pounds sulfur dioxide per million Btu (0.55% 

sulfur, 14,000 Btu per pound) when the coal is 

fully washed. However, since the lower sulfur coal 

comes out of the mine randomly, they prefer not to 

guarantee much below about 1.0 pound sulfur dioxide 

per million Btu. 

1J Any estimates presented herein on the amount of potential production or 

number of producers should be viewed as rough approximations. Since 

these statements are based on discussions with a small sample of 

potential coal producers, not an exhaustive survey, more accurate 

quantification is not possible. 
3-4 

• Coal in the 0.85 to 0.9 pound range is definitely 

available from this region, although only a few 

companies mine coals of this quality. In addition to 

the Pocahontas #3 and Lower Banner seams, the Red Ash 

and Tiller seams can also supply some coal below 0.9 

pounds sulfur dioxide per million Btu. 

The Knox Creek Coal Company mines the Tiller seam 

in Virginia out of two different mines. This coal 

averages 0.85 to 0.9 pounds sulfur dioxide per 

million Btu. Currently, this coal is typically 

blended with other coals to produce a 

metallurgical-grade product. They also mine the 

Red Ash seam, which ranges in sulfur from 0.65 

pounds to 1.0 pound. The sulfur content in the 

coal changes too quickly to expect much below 0.9 

to 1.0 pound sulfur dioxide per million Btu. 

• Several companies could supply coals with no more 

than 1.0 pound sulfur dioxide per million Btu. 

In addition to the limited availability of some of these coals, there are 

other factors that may affect the suitability of these coals for the 

industrial market. For example, most industrial coal customers usually 

purchase a stoker-type coal that has specific size specifications as well as a 

limit on the amount of fines, the powderlike portion of the mined coal. 

However, many of the very low sulfur coals mentioned here, such as coal from 

the Pocahontas #3 seam, have traditionally been mined as metallurgical coals. 

These coals tend to be lower volatile, high grind (soft), highly friable coals 

that would not burn well in conventional stoker-fired boilers. This does not 

mean these types of coals can not be burned by industrial customers. Since 

the focus in this analysis is on boilers yet to be ordered that would be 

subject to a revised NSPS, these fuel constraints can be taken into account 

when the boiler is designed. That is, from an engineering standpoint a boiler 

can be designed to burn almost any fuel as long as the quality specifications 
3-5 

t 

of the fuel are known beforehand.1-

1 Nevertheless, for some of these very 

low sulfur coals the boiler design would be different than most existing 

industrial boilers.2-

1 

In some instances, coals with sulfur contents significantly below 0.8 

pounds sulfur dioxide per million Btu can be found in Central Appalachia, but 

it may not be feasible for the coal company to segregate the very low sulfur 

coal from other coal supplies. For some companies they may not know when the 

very low sulfur coal will be mined when it is part of a larger mining 

operation, either because they have not conducted enough core sampling to know 

when it will be available or the sulfur content varies too quickly to ensure 

that the lower sulfur coal can be segregated. In other cases, the layout of 

the mine does not allow segregation of different coal supplies without 

unacceptable losses in productivity. For example, in a longwall mining 

operation the mine development plan is usually engineered to maximize 

extraction without regard to quality characteristics. It would not be 

feasible to segregate coal in this situation. Finally, for some companies the 

very low sulfur coals could not be sold separately even if physical 

segregation were not a problem because these coals are needed to blend with 

other coals to satisfy overall quality specifications on other coal 

contracts. If the very low sulfur coals were segregated from these other 

coals, the remaining product would be difficult to sell. 

1J Personal communication with Neil Johnson, Detroit Stoker Company, 

December 8, 1986. 

2J Fluidized bed combustion boilers provide one alternative method for 

burning coals with a wide range of quality characteristics. 
P.30 

3-6 

For the very low sulfur coals in this region, it is unlikely that 

additional coal preparation would offer any chance for increased sulfur 

reduction. Most of these coals are already being washed such that any sulfur 

reduction to be gained by washing has already occurred. In our discussions 

with coal companies from this area, most of the companies felt that little 

sulfur reduction occurred anyway with these coals since most of the remaining 

sulfur was organic that could not be removed with conventional washing 

techniques. 

SOUTHERN APPALACHIA 

In Southern Appalachia, very low sulfur coals can be found in the Warrior 

Basin in Alabama (near Birmingham). Most of the seams in this region tend to 

be relatively thin (e.g., two to four feet thick) and are quite deep, i.e., up 

to 2000 feet below ground. The key seams for very low sulfur coal production 

are the Blue Creek, Black Creek, Jefferson, and Mary Lee seams. In terms of 

sulfur content, these coals tend to be slightly higher quality than very low 

sulfur coals from Central Appalachia. For example: 

• Sulfur levels have been reported close to 0.7 pounds 

per million Btu, particularly from the Blue Creek and 

Mary Lee seams. Due to the organic sulfur content in 

typical Alabama coals, it is unlikely that coals below 

0.7 to 0.8 pounds sulfur dioxide per million Btu will 

be available. Even at 0.8 pounds, only a few producers 

have indicated they would be able to supply coal. 

• Several producers could supply some coal to meet a 

0.9 pound level. For example, Jim Walters Resources 

Inc. is presently supplying coal with sulfur contents 

of 0.7 to 0.9 pounds sulfur dioxide per million Btu to 

Alabama Power Company; this is to meet a 0.9 pound 

limit on a carload-by-carload basis for each rail car 

shipped to its powerplants. 
P.31 

3-7 

• Coals are more readily available at 1.0 pound sulfur 

dioxide per million Btu. Drummond Coal Company is 

presently supplying coal at this sulfur level to 

Alabama Power.

 1J 

To attain the quality levels mentioned above, Alabama coals typically 

undergo full preparation to minimize the amount of impurities in the coal that 

is marketed. This is necessary because of: 

• The thin nature of some of the coal seams usually 

means that substantial amounts of ash (non-coal 

material) are removed with the coal during the mining 

process. 

• Alabama Power Company's requirements for only low 

sulfur, high Btu coals, which can be supplied most 

easily by full preparation. 

The primary exception to this rule are some portions of the Blue Creek 

seam, which can contain 0.7 to 0.8 pounds sulfur dioxide per million Btu when 

mined. Even on the unwashed portions of the Blue Creek seam, washing would be 

unlikely to significantly reduce the sulfur content. As a result, the extent 

of washing of Alabama coals indicates that little or no additional sulfur 

reduction can be expected with conventional washing techniques. 

Some of Alabama's coal producers have some reservations about providing 

very low sulfur coal to the industrial sector, primarily because most 

companies need to blend these coals with higher sulfur coals to produce an 

acceptable product for market. In these instances, very low sulfur coals may 

be produced but will not be sold separately so that the coal company can 

insure a market for all of its coal. 

1J Personal communication with David J. Putman, Vice President at Alabama 

Power. 
P.32 

3-8 

• 

Most of the very low sulfur coals in Alabama are not typical 

stoker-quality coals. Like many of the very low sulfur coals in Central 

Appalachia, the Southern Appalachian coals tend to be very soft coals (e.g., 

grindability indices average from 80 to over 100) that quickly break down into, 

fines under normal handling and loading conditions. Some portions of the Mary 

Lee and Blue Creek seams in the northern portion of the Warrior Basin are an 

exception since they have reasonable stoker characteristics, but for most very 

low sulfur coals from Alabama the boiler design will have to take into account 

that the coal will not burn like a typical stoker product. 

THE ROCKY MOUNTAIN AREA 

The Rocky Mountain Area includes the coal-producing regions of Colorado, 

Utah, the Raton Mesa region of New Mexico, and the Green River region of 

Wyoming. Within the Rockies there are several areas where very low sulfur 

coals could be produced for the industrial sector, including: 

• In Colorado, the lowest sulfur coals come from the 

Green River region in northwest Colorado and the North 

Park region in north central Colorado. The key very 

low sulfur seams are the Sudduth seam in the North Park 

region, and the A, B, C, D, X, and Y seams from the 

Danforth Hills Formation and the I seam in the Upper 

Williams Fork Formation in the Green River region (some 

of these same very low sulfur seams extend into the 

Green River region of Wyoming as well). 

• In New Mexico, the York seam in the Raton Mesa region 

in the northeastern part of the state currently 

produces very low sulfur coal. 

• In Utah, the lowest sulfur seams are the Bear Canyon 

and Hiawatha seams in the Wasatch Plateau field. 
P.33 

3-9 

The sulfur level attainable from coals from the Rockies is lower than the 

level attainable in the East. Based on conversations with producers, it 

appears that several companies would be able to supply coals to meet 0.8 

pounds sulfur dioxide per million Btu using their current mining procedures. 

In many cases the coal actually supplied could be substantially lower than 0.1 

pounds sulfur dioxide per million Btu, but the company is not confident it 

could guarantee anything lower than 0.8 pounds due to the sulfur 

characteristics of the coal. For example: 

Black Butte Coal Company in Wyoming produces about 

500,000 tons per year that averages 0.5 pounds sulfur 

dioxide per million Btu, varying from 0.4 pounds to 0.8 

pound. The sulfur content can vary so quickly that the 

company is very reluctant to guarantee coal below 0.8 

pounds sulfur dioxide per million Btu. 

Soldier Creek Coal Company in Utah has made 

deliveries that average less than 0.7 pounds per 

million Btu on an annual average basis for its utility 

customers. Due to the stringent sulfur control 

required to guarantee coal in much smaller quantities 

(on a carload basis to industrial customers), it is 

even hesitant to guarantee it can meet the 0.8 pound 

level. 

Empire Energy produces coal from the Green River 

region in Colorado with about 0.73 pounds sulfur 

dioxide per million Btu. Since the sulfur content is 

very consistent at this level, it will not guarantee 

coal below 0.7 pounds. 

There are a few producers that could supply coal to meet a level of 0.7 

pounds sulfur dioxide per million Btu. In the case of the Kerr Coal Company, 

it can currently produce a 0.7 pound coal from the Sudduth seam in the North 

Park field in Colorado without altering its current mining procedures.1J 

1J Personal communication with Dave Gossett, mining engineer, Kerr Coal 

Company, December 30, 1986. 
P.34 

3-10 

However, in most instances the coal companies supplying these coals would not 

follow their typical mining procedures. For example: 

• At its Danforth Hills Mine in Colorado, Colowyo Coal 

Company mines the A, B, C, D, E, X, and Y seams in the 

Axial Basin in the Green River region. By segregating 

the E and F seams, which tend to be higher in sulfur 

than the other seams, Colowyo could guarantee delivery 

of a coal below 0.7 pounds sulfur dioxide per million 

Btu. 

• At its Cimarron Mine in the Raton Mesa region of New 

Mexico, Kaiser Coal Company produces two different 

types of coal from the York seam. Kaiser can meet a 

0.7 pound level by washing its normal run-of-mine coal 

to produce a deep cleaned coal it typically sells to 

metallurgical customers abroad. 

The ability of coal producers in the Rockies to supply coal to industrial 

customers to meet a sulfur content of 0.7 pounds sulfur dioxide per million 

Btu is often limited. For one thing, as was the case for some Eastern coal 

companies, the very low sulfur coals are often needed for blending to meet the 

sulfur specifications of electric utility customers. Segregating the very low 

sulfur coals could make it difficult to achieve the desired quality on the 

remaining coal, which often comprises the major portion of the company's 

business. Companies may also have a limited ability to produce very low 

sulfur coal specifically for the industrial market because their mine capacity 

may already be committed to other customers. In the majority of cases these 

other customers are electric utilities with long-term contract commitments 

with the coal company. Very low sulfur coal will be produced for the 

industrial market only to the extent these sales do not jeopardize other 

business and additional mine capacity exists to supply these coals. While it 

appears that several companies could supply a 0.7 pound coal, it is unlikely 
3-11 

that any one mine could supply more than 500,000 tons annually. (See Appendix 

B to relate this amount of production to estimated coal demand from industrial 

boilers purchased recently). 

POWDER RIVER BASIN 

The Powder River Basin is located in northeastern Wyoming and southeastern 

Montana and contains substantial reserves of subbituminous coal that is 

generally low in sulfur. Almost all operating mines have some very low sulfur 

coal. However, not all of them are willing to guarantee a very low sulfur 

product for one or more of the following reasons: 

• The seams being mined show inconsistent lateral 

variations in their sulfur content, making it difficult 

to predict when the very low sulfur portion can be 

mined and delivered. 

• The very low sulfur seams occur as pockets within 

higher sulfur coal and must be used to blend the coal 

into a marketable product. 

• A large number of the mines are located completely or 

almost completely on federal lands where regulations 

such as maximum economic recovery and diligent 

development could discourage the selective mining of 

the very low sulfur coal portions. 

Very low sulfur coals are found primarily in the Roland, Smith, Anderson, 

Canyon, and Wyodak-Anderson seams of Wyoming1^ and, in limited quantities 

from the Anderson and Dietz seams of Montana. There is some uncertainty over 

the lowest sulfur level that could be supplied, although coal is occasionally 

shipped below 0.5 or 0.6 pounds sulfur dioxide per million Btu. For example, 

the North Antelope Coal Company shipped coal from its North Antelope Mine that 

1J In some cases in Wyoming, the same seam is given different names by 

different mines. 
P.36 

3-12 

averaged 0.5 pounds sulfur dioxide per million Btu during 1986. However, the 

coal from this mine is generally unavailable since the mine is fully 

contracted. 

Several other coal producers indicated that they could supply coal with a 

sulfur content of no more than 0.7 pounds sulfur dioxide per million Btu to 

industrial customers. In some instances, the 0.7 pounds coal could be 

supplied with current mining procedures. For example: 

• Thunder Basin Coal Company's Black Thunder mine can 

occasionally deliver a 0.7 pound coal when it reaches 

lower sulfur portions of the Wyodak seam. This was the 

case in 1986. 

• NERCO's Antelopa mine, which is just starting up, is 

mining the Canyon seam. Because the seam has vertical 

rather than lateral variability in sulfur content, the 

mine is able to produce and guarantee some of its coal 

at 0.67 pounds sulfur dioxide per million BTU. 

In most cases, however, the coal producers would have to make some 

adjustments in their mining methods to produce the 0.7 pound coal. These 

adjustments usually involved additional sampling to ensure that 0.7 pound coal 

is actually shipped to the industrial customer and/or extra coal handling and 

storage equipment to keep the very low sulfur coal segregated from other coal 

supplies. Overall, several hundred thousand tons of coal annually with a 

sulfur content of 0.7 pounds sulfur dioxide per million Btu could be supplied 

to industrial users each year from existing mine capacities. (See Appendix B 

for estimated industrial coal demand from new boilers purchased recently). 

Some producers have indicated that they would have little or no difficulty 

supplying coal with a sulfur content no greater than 0.8 pounds sulfur dioxide 

per million Btu. These are: 
P.37 

3-13 

• The following four mines in the southern portion of 

Campbell County, Wyoming: 

NERCO's Antelope mine with a production capacity of 

3 million tons par year, 

Peabody's Northern Antelope mine which is a fully 

contracted mine with a production capacity of 10.5 

million tons per year, 

EXXON's Caballo mine with a production capacity of 

12 million tons per year, and 

Thunder Basin Coal Company's Black Thunder mine 

with a production capacity of 22 million tons per 

year. 

• In Montana, the Decker Coal Company's Decker mine 

with a total capacity of 18 million tons per year from 

all its units. 

Most Powder River producers indicated a reluctance to alter current mining 

practices to supply coal to industrial customers. This reluctance is due to 

their concern to avoid any negative impact on other coal business. In 

particular, mine plans in the Powder River Basin are geared to high volume 

shipments to the electric utility sector. Coal companies will not jeopardize 

overall mine productivity to sell to the industrial market. With this in 

mind, alteration in mining practices to accomodate coal sales to the 

industrial sector will occur only if long-term, high volume coal shipments to 

electric utilities are not adversely affected. 

IMPORTED COALS 

This analysis focused on the ability of coal producers in the lower-48 

states to produce very low sulfur coals. Under some circumstances, however, 

there may be opportunities for industrial coal consumers to obtain very low 

sulfur coals elsewhere. A summary of these other potential very low sulfur 

coal supply areas is shown in Table 3-1. Note that: 
P.38 

3-14 

TABLE 3-1 

POTENTIAL LOW-SULFUR COALS OUTSIDE THE CONTIGUOUS U.S. 

Mine Name 

Mine Capacity 

(million tons/yr) 

Heating value (Btu/lb) 

Sulfur (%) 

Ash (%) 

Volatile Matter (?„) 

Grindability (HGI) 

Alaska 

Usibelli 

1.7 

7900 

0.2 

8 

N.A. 

N.A. 

Australia 

Blair Athol 

8.0 ' 

10,700 

0.3 

16 

27.9 

60 

Canada 

Luscar 

2.8 

12,100 

0.18 

19 

19.0 

87 

Colombia 

Cerrejon 

30 

13,000 

0.5 

1.0 

34.9 

50 

S. Africa 

Greenside 

2.6 

12,000 

0.56 

13 

23.2 

N.A. 

lbs. S02/MMBtu 0.51 a/ 0.56 0.3 0.76 "0.46 

a/ Lower sulfur coals do exist in Alaska, but are not currently being mined. 
P.39 

3-15 

• Supplies of 0.3 pound sulfur dioxide per million Btu 

coal can be obtained from western Canada. These coals 

are generally shipped out of British Columbia. 

• Coal with a sulfur level of about 0.5 pounds sulfur 

dioxide per million Btu can be obtained from South 

Africa and Australia. 

• Colombia produces coal that averages about 0.8 pounds 

sulfur dioxide per million Btu, although some coal 

significantly below this level has been shipped. 

Colombian coals have been purchased by several U.S. 

electric utilities along the Gulf Coast and East Coast, 

although usually on a trial basis only. In one 

instance, a coal company imported Colombian coal to 

blend with a U.S. coal for resale to industrial 

customers in the southeastern United States. 

• Alaska produces subbituminous coal with a sulfur 

content of about 0.5 pounds sulfur dioxide per million 

Btu. These coals are currently consumed within Alaska, 

with.additional shipments recently beginning to Pacific 

Rim markets. 

It is not clear under what circumstances, if any, these coals might be 

supplied to the U.S. industrial market. It was beyond the scope of this 

analysis to conduct a detailed examination of these potential impacts. 

However, it may be possible for imported coals to compete in the U.S. 

industrial coal market in some cases. Further analysis would be required to 

explore the conditions under which imported coals may be consumed by 

industrial consumers. 

SUMMARY OF AVAILABILITY OF VERY LOW SULFUR COALS 

Based on the interviews with coal producers in different regions of the 

U.S., the quality of very low sulfur coals that could be made available to 

industrial coal consumers is shown in Table 3-2. This availability is shown 

for the key very low sulfur coal-producing regions that could supply coal to 
P.40 

3-16 

TABLE 3-2 

SUMMARY OF AVAILABILITY OF VERY LOW SULFUR COALS 

a/ 

Region 

Central Appalachia 

Southern Appalachia 

Colorado 

New Mexico 

Utah 

Powder River Basin 

Imports 

Lbs. S02/MMBtu 

Absolute 

Minimum 

0.78 

0.75 

0.6 

0.6 

0.65 

0.5 

0.3 

Hunt 

Sera 

0.85 

0.85 

0.7 

0.7 

0.7 

0.7 

0.5 

_ 

tch 

-0.9 

-0.9 

More Common 

Very Low 

1.0 

1.0 

0.8 

0.8 

0.8 

0.8 

0.6 

a/ Minimum sulfur level achievable on a rail car basis; one rail car is 

assumed to contain 100 tons of coal. 
P.41 

3-17 

the U.S. industrial market. As the information presented earlier in this 

chapter for each supply region indicates, coal producers can encounter varying 

levels of difficulty to supply very low sulfur coals, depending on the 

specific sulfur content demanded. To take these differences into account, the 

sulfur content of the coals that could be supplied from each region is shown 

for three different qualitative levels of availability: 

• The "absolute minimum," which is the lowest sulfur 

level at which any coal producer in the region would 

supply coal with any type of guarantee, although the 

amount of this quality of coal was usually very limited, 

• A "hunt and scratch" level, which corresponds to a 

very low sulfur coal that could be supplied from 

several coal producers in the region, although many 

coal producers in the region would not be able to 

supply coals of the indicated quality and additional 

costs would likely be incurred by those coal producers 

who could supply the coal, and 

• A more common very low sulfur coal level, which 

indicates a sulfur level that could be readily supplied 

by several producers in the region without incurring 

additional costs since they often produce coal of the 

indicated quality with their current mining operations. 

The degree of difficulty to supply very low sulfur coals implied by these 

levels is inherently subjective, but does indicate the approximate degree of 

difficulty that would be encountered by coal producers in the region to supply 

very low sulfur coals. The three different levels have been provided to 

indicate the potential range of availability, from an absolute minimum that 

producers will guarantee to more widely-available coals. 
P.42 

4-1 

CHAPTER FOUR 

INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS 

Depending on the specific sulfur content demanded, some coal producers can 

supply very low sulfur coals from their existing operations without incurring 

additional costs. For these producers the coal they sell regularly is already 

low enough in sulfur that they can sell it directly to the industrial customer 

just like any other coal transaction. However, in many cases the coal 

producer will incur additional costs in order to meet the specific needs of 

the industrial customer. This is often the case for very low sulfur coals 

that approach the lower end of the sulfur range available from a particular 

supply region. To supply these very low sulfur coals to an industrial 

customer, the coal producer may be required to undertake additional sampling, 

handling and storage, and/or more complex coal preparation techniques in order 

to guarantee that the very low sulfur coal attains the desired sulfur level. 

Any costs incurred by a coal producer to supply very low sulfur coals will 

be in addition to its normal costs of production to supply low sulfur 

coals.1-

1 These increases in mining costs represent a minimum price increase 

to be paid by the industrial customer if the very low sulfur coals are to be 

produced. From the industrial customer's standpoint, it is also possible that 

other costs will be incurred as well. For example, assume that an industrial 

coal consumer located in Chicago, ILlinois (EPA Region 5) would normally have 

purchased its low sulfur coal from Central Appalachia at a mine-mouth price of 

1J For purposes of this analysis, a low sulfur coal is assumed to emit 1.2 

pounds sulfur dioxide per million Btu. 
4-2 

$20 per ton, plus another $15 per ton to transport the coal to Chicago, for a 

total delivered cost of $35 per ton. However, let's assume that this same 

consumer must now purchase a very low sulfur coal that can only be obtained 

from Colorado. To purchase this coal, the industrial consumer discovers that 

his cost at the mine-mouth has increased $10 per ton to $30 per ton because 

the coal producer in Colorado sells low sulfur coal for $25 per ton plus his 

incremental costs for producing the very low sulfur coal of $5 per ton. 

Additionally, whereas the industrial customer paid $15 per ton to transport 

the coal from Central Appalachia, it now costs him $20 per ton to transport it 

from Colorado. This example illustrates two types of incremental costs that 

may be incurred by an industrial customer if he must switch from a low sulfur 

coal to a very low sulfur coal: 

Mine-mouth cost differences -- These are any cost 

increases incurred by' the industrial coal consumer to 

purchase very low sulfur coals. There are two types of 

costs to consider: 

Regional Mining Cost Differences -- If a coal 

consumer must change supply regions in order to 

purchase a very low sulfur coal, there may be cost 

changes associated with different mining conditions 

and techniques when comparing one supply region 

with another. These regional cost differences 

apply to the same quality of coal, e.g., the 

difference in cost to the industrial consumer to 

purchase a 1.2 pound coal from one region to 

another. In the examples above, the industrial 

coal consumer in Chicago would have paid $20 per 

ton at the mine-mouth from Central Appalachia for a 

low sulfur coal, but $25 per ton for the same 

quality coal from Colorado. The increase of $5 per 

ton is the regional mining cost difference that is 

borne by the industrial consumer because he no 

longer purchases coal from his original choice of 

suppliers. 

Very low sulfur mining costs -- These are any 

incremental costs incurred by the coal producer to 

supply the very low sulfur coal to the industrial 

coal customer. In the example above, these 

incremental mining costs were $5 per ton in 
P.44 

4-3 

addition to the $25 per ton for the basic low 

sulfur coal. 

Transportation Cost Differences -- If an industrial 

coal customer purchases very low sulfur coal from a 

supply area that is different from his original choice, 

shipment costs may change. In the example above, the 

industrial coal customer's transportation costs 

increased by $5 per ton when total transportation costs 

increased from $15 per ton from Central Appalachia to 

$20 per ton from Colorado. 

For the very low sulfur mining costs, the most likely changes will be due 

to 1) increased sampling requirements and 2) extra coal storage and handling 

facilities. Sampling costs will increase because more sampling needs to be 

done to assure the quality of the coal to industrial customers. Currently, 

most producers sample to meet the needs of their electric utility customers. 

These sampling practices do differ from one operation to the next depending on 

the utility's requirements and the expected variability in the coal's quality, 

among other factors. It is not uncommon, however, for the coal producer to 

sample every working shift at the mine and/or for each trainload shipped. 

This sampling frequency is not necessarily satisfactory for industrial 

customers. For example, consider an industrial customer with a 100 million 

Btu per hour boiler operating at a 50% utilization rate. Over a 30 day 

period, this boiler will consume 36 billion Btu, or about 1636 tons of coal 

assuming a heat content of 22 million Btu per ton. With a single unit train 

comprised of 100 cars that typically contain about 100 tons per carload, the 

industrial customer would only need about 16 cars each month. A guarantee 

from the producer that the entire trainload meets a certain sulfur 

specification may be inadequate if the sulfur variation in the coal is 

substantial. 
4-4 

t \ 

To account for this problem, we discussed with coal producers the quality 

of coal they would deliver on a carload basis. In many cases, such a 

stringent standard may not be necessary, but this assumption seemed 

conservative enough to ensure that the sulfur level cited by the producers 

could reasonably be supplied to industrial customers that consume smaller 

amounts of coal. 

Many coal producers are also likely to incur additional coal handling and 

storage costs. For many producers some portion of the coal they mine is very 

low sulfur, but the very low sulfur coal is part of a single seam with higher 

sulfur coal or one of several seams mined concurrently. To segregate the very 

low sulfur coal from other coal types, additional equipment and/or handling 

procedures may be. necessary. The magnitude of these additional costs may vary 

from one operation to the next, but will typically involve some duplication of 

equipment as the coal is removed the mine. For example, extra conveyor 

systems, dozers, storage bins, and labor may be required. 

It is assumed that coal producers will not undertake major changes in 

their mine development plans to supply very low sulfur coals. For example, a 

mine that utilizes a longwall mining system to extract coal will not alter 

this design if some portion of the coal that is very low sulfur could be 

extracted by other means. As several producers commented, sales of very low 

sulfur coals to the industrial market will occur only if such sales are an 

added benefit, not a hindrance, to the company's overall mining operations. 

For similar reasons, additional coal preparation to remove sulfur will not be 

undertaken for the industrial market. Coal companies will not typically 

invest in cleaning facilities for the industrial market. As a result, the 
P.46 

4-5 

coal must already be washed or it will be sold as mined for the industrial 

market. This limitation is not as restrictive as it might seem since 

washability data for potential very low sulfur coals indicated that little 

additional sulfur reduction is likely through coal cleaning on these coals. 

It should be emphasized that any incremental costs to supply very low 

sulfur coals to industrial consumers do not necessarily represent the market 

price that actually will be charged for the coal. The price for very low 

sulfur coals will depend on several factors in addition to these incremental 

costs, including the amount of demand for these coals and the ability of very 

low sulfur coal producers to extract economic rents by charging a premium for 

supplying very low sulfur coals. As more producers from multiple regions 

install capacity to supply these demands, competitive forces would increase 

and act to hold incremental prices closer to incremental costs. 

Prices would tend to approach these incremental cost particularly in' a 

soft coal market, i.e., when demand is less than supply, since prices are more 

likely to be at or near variable production costs. In a tighter coal market, 

prices could increase in response to market conditions. The size of the 

increase would depend on several factors, including the competitiveness of 

other fuel alternatives. For example, assume that an industrial customer has 

two choices -- burn very low sulfur coal or scrub higher-sulfur coal at an 

incremental cost of about $0.90-$1.00 per million Btu (see Appendix C for the 

derivation of this estimate). If the prices of very low sulfur coals 

increased significantly, the industrial customer could choose to scrub 

higher-sulfur coal at the incremental cost of about $0.90 - .$1.00 per million 

Btu in lieu of burning very low sulfur coal. In this case, very low sulfur 
P.47 

4-6 

cioal prices would not likely rise above the cost of scrubbing since the 

industrial customer could switch to the scrubbing option. The costs of other 

alternatives would tend to restrict the extent to which very low sulfur coal 

prices increased above the incremental costs presented in this report. 

These incremental costs do represent, however, the minimum increase in 

market prices that will occur if very low sulfur coals are to be produced. 

Without price increases of this magnitude, coal producers could not cover 

their costs to supply very low sulfur coals. Unless they could assure that 

the market price for very low sulfur coals would at least pay for their costs, 

they would be unw;illing to supply these coals since it would be more 

profitable to sell their coal as typical low sulfur coal without increasing 

their total costs of production. 

STORAGE AND HANDLING COSTS 

In order to supply very low sulfur coals, most producers will need to 

install additional storage and handling capabilities for segregation of the 

very low sulfur coal from other types of coal. The nature of these additional 

investments will depend on the type of facilities currently used by the mine, 

the mine development plan, and the amount of very low sulfur coal that could 

be supplied, among other factors. To some extent each of these factors will 

be unique to each mining operation. However, from the information obtained 

from our discussions with coal producers, there are certain storage and 

handling requirements that are common for coal producers within a particular 

coal supply region. These requirements can be divided into three categories 

by geographic location -- Appalachia, the Rockies, and the Powder River 
P.48 

4-7 

Basin. In summary, storage and handling costs would be $0.15 per million Btu 

in Appalachia, $0.12 per million Btu in the Rockies, and $0.13 per million Btu 

in the Powder River Basin. Each of these areas will be discussed in turn. 

Appalachia 

One of the key factors affecting the level of storage and handling costs 

is the amount of very low sulfur coal that needs to be segregated. In 

Appalachia this amount is unlikely to exceed a couple hundred thousand tons 

annually from any single producer, with amounts below 100,000 tons the most 

likely. The main reason the amount of very low sulfur coal available is so 

limited is because many coal mines in Appalachia with some very low sulfur 

coal potential typically produce no more than a few hundred thousand tons 

annually of all types of coal from the entire mining operation (some larger 

operations do exist). To be conservative, we will assume that the typical 

very low sulfur coal producer in Appalachia will produce about 50,000 tons of 

very low sulfur coal annually. Any incremental costs for storage and handling 

incurred by the coal producer will have to be recovered from the price he 

receives for selling the 50,000 tons. 

The specific facilities the coal producer will need must be capable of 

keeping the very low sulfur coal segregated from other coal that is mined. 

For Appalachian mines, the following requirements are assumed (all costs are 
P.49 

4-8 

in January 1986 dollars):1-

1 

Cost Storage Area -- 12,000 Ton Capacity S425,000 

Conveyor Belt to Coal Bins $300,000 

Coal Storage Bins (2) -- 1,200 ton capacity each $170,000 

Total Capital Costs $905,000 

Since each mine is assumed to produce 50,000 tons of very low sulfur coal 

annually, all costs will be estimated on an annualized basis. On an 

annualized basis, total capital costs of $905,000 amount to $135,750 (using a 

15 percent real capital charge rate).2-

1 In addition to these capital costs, 

operation and maintenance costs exclusive of labor were assumed to be five 

percent of total capital, or $45,000 annually (Five percent is an industry 

rule-of-thumb). Six man-months of additional labor at a cost of $25,000 per 

year was also assumed. As a result, total annualized costs are estimated to 

be $205,750. 

With annualized costs of $205,750, the cost per ton for the 50,000 tons of 

very low sulfur coal would be $4.10. Assuming a heat content of 27 million 

Btu per ton (i.e., these coals tend to average 13,000-14,000 Btu per pound 

as-shipped), the cost would be about $0.15 per million Btu. 

1J The specific cost elements presented herein are average costs for the 

investments indicated; these costs may differ from one mining operation 

to the next. For more detailed examples of these costs, see An 

Engineering/Economic Analysis of Coal Preparation Plant Operation and 

Cost, U.S. Environmental Protection Agency, EPA-600/7-78-124, July 1978. 

2J A capital charge rate translates all capital charges associated with a 

particular capital investment over its lifetime into a constant stream of 

annual fixed costs. The capital charges include the return of capital 

(i.e., depreciation), the return on capital (i.e., interest on debt and 

return on equity), and the ancillary charges associated with capital 

(i.e., local, state, and Federal taxes and insurance). 
P.50 

4-9 

i 

i 

These costs are intended to be a conservative (high) estimate of the costs 

that would be incurred by a coal producer to segregate very low sulfur coal 

from other coal supplies. In many instances, the producer may be able to use 

existing equipment and/or personnel, thereby incurring only minimal additional 

costs. However, since some mining operations would be required to make these 

investments and many coal producers indicated some concern that attempting to 

sell a different coal to the industrial market could jeopardize their 

remaining business, these investments were assumed to be necessary for the 

very low sulfur coals to be supplied. 

Rockies 

For the Rockies, mining operations tend to be larger compared to 

Appalachia, with several operations capable of producing two to three million 

tons per year. From the discussions with coal producers, some mines could 

supply up to 500,000 tons of very low sulfur coal annually. For this analysis 

we have, assumed that the average production level would be 300,000 tons 

annually. 

Due to the greater quantities of coal that must be handled, producers in 

the Rockies will need to invest in larger, more expensive support facilities 

than Appalachian producers. For coal producers in the Rockies, the following 

requirements were assumed: 
P.51 

4-10 

Coal Storage Area--20,000 ton capacity, 

including conveyor system $750,000 

Dozer (1) $270,00.0 

Coal Storage Silo --15,000 ton capacity $2,750,000 

Total Capital Costs $3,770,000 

On an annualized basis, capital charges would be $565,000 ($3.77 million x 

15% capital charge rate). Operation and maintenance costs (excluding labor) 

are estimated to be five percent of total capital, or about $185,000 per 

year. Labor requirements are assumed to be one additional person at $50,000 

per year. Based on these costs, total annualized costs are about $800,000. 

With annualized costs of $800,000, the cost per ton based on a production 

level of 300,000 tons of very low sulfur coal is about $2.65 per ton. The 

average heat content of these coals was assumed to be 22 million Btu per ton, 

for a total incremental cost of $0.12 per million Btu for storage and handling 

in the Rockies. 

Powder River Basin 

Coal mines in the Powder River Basin are typically designed to produce 

several million tons of coal per year. Based on conversations with coal 

producers, we have assumed that each mine capable of supplying very low sulfur 

coals could produce 500,000 tons annually. Given the large amount of coal 

that would need to be segregated, the following capital investments were 

assumed: 
4-11 

Raw Coal Storage Area (before crushing)--40,000 

ton capacity $1,000,000 

Conveyor Belt to Crusher $ 350,000 

Conveyor Belt to Silo $ 300,000 

Coal Storage Silo--20,000 ton capacity $3,300,000 

Dozer (1) $ 270,000 

' Total Capital Costs $5,220,000 

On an annualized basis, capital charges would be about $780,000. At an 

assumed five percent of total capital, annual operation and maintenance 

expenditures (excluding labor) would be about $260,000. One additional person 

is assumed to be required at an annual cost of $50,000. Total annualized 

costs, therefore, would be approximately $1.1 million. 

With total annualized costs of $1.1 million, the cost per ton based on a 

very low sulfur coal production level of 500,000 tons annually would be $2.20 

per ton. The average heat content of Powder River Basin coal is about 17 

million Btu per ton, resulting in a total incremental cost of about $0.13 per 

million Btu. 

SAMPLING REQUIREMENTS 

As discussed previously, in order to ensure that the smaller volume coal 

shipments to industrial customers are within the desired sulfur level, most 

producers will have to increase the amount of sampling they do. Most 

companies currently guarantee the sulfur level on a trainload basis, but they 

will have to sample more frequently to determine how sulfur content varies 
P.53 

4-12 

> 

throughout the trainload since industrial customers will need to know the 

sulfur level for nearly every carload (depending on the amount of coal 

consumed and expected variability of the sulfur in the coal). 

The amount of additional sampling will vary significantly from one 

operation to the next. In many instances, the coal company may mine the very 

low sulfur coal during certain periods of the year because the sulfur level 

changes every few months. For these producers increased coal sampling may 

only be required when the company expects very low sulfur coal to be 

producedso that the sulfur level can be monitored constantly during these 

periods. In other cases, a coal company may need continuous sampling on 

potential very low sulfur coals (e.g., if a multiple seam mining operation is 

segregating one seam or if the sulfur variability is too unpredictable in the 

seam to gauge when the very low sulfur coal is likely to be produced). 

To approximate the increased cost of sampling, we have assumed that large 

mining operations, e.g., in the Powder River Basin, require one additional 

sampling technician each shift for the entire year. Small mining operations, 

like many throughout Appalachia, typically send coal samples to independent 

laboratories once or twice a week currently. Assuming conservatively that 

each sample takes an entire day to complete, this amounts to about three 

months per year. To meet additional sampling requirements, we have assumed 

that small mining operations double the amount of sampling required. 
P.54 

4-13 

Average costs for sampling, including the laboratory work, amount to about 

$3000 per person per month.1-

1 For a large mining operation in the Powder 

River Basin operating two shifts, total sampling costs would be about $72,000 

per year, or about $0.14 per ton (assuming production of 500,000 tons of very 

low sulfur coal). For a small mining operation in Appalachia, total sampling 

costs for the additional three months would be about $9,000 per year, or $0.18 

per ton (assuming production of 50,000 tons). Based on these cost estimates, 

a conservative assumption for the cost of additional sampling for any 

coal-producing region would be $0.01 per million Btu. 

INCREMENTAL COSTS BY EPA FEDERAL REGIONS 

These incremental costs for sampling and storage and handling of very low 

sulfur coals represent the additional costs that will be incurred by coal 

producers in the key very low sulfur coal producing regions of the United 

States. This section discusses how these very low sulfur mining costs, 

combined with regional differences in mining cost and changes in 

transportation costs, affect the cost to deliver coal to each EPA Federal 

Region compared to the cost to obtain low sulfur (1.2 pound) coals. 

The magnitude of these incremental costs to supply very low sulfur coals 

have been estimated for each EPA Federal Region (see Figure 4-1), and for 

three different types of very low sulfur coal -- 0.7, 0.8, and 0.9 pounds 

1J Personal communication with Greg Nichol, Core Lab, Inc., January 6, 

1987. 
P.55 

4-15 

sulfur dioxide per million Btu. These three levels were chosen because 0.7 

pounds sulfur dioxide per million Btu is the lowest sulfur level that can be 

reasonably supplied to the industrial market, while incremental costs in the 

0.8 to 0.9 pound range highlight potential geographic differences between 

Eastern and Western coal supply regions. 

The additional costs to coal producers to supply very low sulfur coals, 

i.e., their additional sampling and storage and handling costs, has already 

been discussed. Industrial coal consumers will not only incur these costs, 

but also any changes in cost resulting from transportat . -.-.u shifts or 

differences in the supply region from which they obtain their coal (i.e., is 

the supply region for very low sulfur coal different than the supply region 

for 1.2 pound coal?). These incremental costs do not necessarily represent 

the price that will actually be paid by industrial consumers since market 

forces may tend to drive prices higher (See page 4-5 for further discussion of 

potential price impacts). However, these costs do indicate the minimum amount 

that prices will rise since coal producers and coal shippers will want to 

recoup their costs if very low sulfur coals are to be supplied. 

EPA Region One -- Boston, Massachusetts1-

1 

An industrial coal consumer in EPA Region 1 would have purchased a 1.2 

pound coal from Central Appalachia, in this case, western Virginia (see Table 

4-1). The following options are available to obtain very low sulfur coal: 

1J Only coals produced in the lower-48 states were considered for this 

analysis. Alaskan coals or imported coals may be competitive in some 

instances, but were not evaluated for this analysis. 
P.56 

4-16 

TABLE 4-1 

ADDITIONAL COSTS INTO EPA REGION 1: BOSTON, MA a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Regional Total 

Storage/ Mine-Mouth Transportation Additional 

Supply Region Handling Sampling Differences Costs Costs 

0.9 Pound Level 

Virginia 

Raton Mesa--NM 

Green River--C0 

0.8 Pound Level 

Virginia 

Raton Mesa--NM 

Green River--C0 

0.7 Pound Level 

Raton Mesa--NM 

Green River--C0 

0.15 

b/ 

b/ 

0.15 

b/ Icr 

0.20 d/ 

0.12 

0.01 

b/ 

b/ 

0.01 

cr Icr 

0.01 

0.01 

c/ 

(0.22) 

(0.53) 

c/ 

(0.22) 

(0.53) 

(0.22) 

(0.53) 

c/ 

0.76 

1.21 

c/ 

0.76 

1.21 

0.76 

1.21 

0.16 

0.54 

0.68 

0.16 

0.54 

0.68 

0.75 

0.81 

a/ Assumed supply source for a coal containing 1.2 pounds sulfur dioxide per 

million Btu is western Virginia in Central Appalachia. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.57 

4-17 

For 0.8 and 0.9 pound coal, Virginia can provide coal 

for an additional cost of $0.16 per million Btu, $0.15 

for storage and handling, and $0.01 for sampling. 

Since Virginia was the supplier for 1.2 pound coal, 

transportation costs do not change and there are no 

changes in regional mine-mouth costs. 

For 0.7 pound coal, the Raton Mesa area in New Mexico 

is the least cost supplier at $0.75 per million Btu. 

Since Appalachia can not supply 0.7 pound coal, it can 

not compete at this level. The Raton Mesa costs 

include $0.20 for fully washing the coal,1J $0.01 for 

sampling, a decrease of about $0.22 per million Btu 

because Raton coals sell for about $6 per ton less than 

Appalachia coals (1.2 pound coals), and an increase of 

$0.76 per million Btu in transportation costs (about 

$19 per ton) due to the additional distance the coal 

must be shipped. 

Incremental costs are shown for levels of 0.8 and 0.9 pounds sulfur 

dioxide per million Btu even though the cost estimates are the same. This was 

done because Central Appalachia has very limited supplies of 0.8 pound coal. 

Since this coal type will be very difficult to obtain, many industrial 

customers may find that Western coal is their only easily obtainable option. 

In this case, the Raton Mesa area could supply 0.8 pound coal for about $0.54 

per million Btu in additional costs -- $0.22 less for lower mining costs 

compared to Appalachia plus $0.76 more for increased transportation costs. 

There would be no additional storage and handling or sampling costs since 0.8 

pound coal could be supplied by several producers without changing current 

mining methods. 

1J One western coal company indicated it can deep clean its run-of-mine 

coal to meet a 0.7 pound level at an estimated cost of $5.00-$6.00 per 

ton. Specific citation withheld to avoid disclosing confidential 

information. 
P.58^ 

4-18 

i 

EPA Region Two: New York, New York 

The incremental costs to obtain very low sulfur coal in Region 2 are 

illustrated in Table 4-2. To purchase a 1.2 pound coal, an industrial coal 

consumer would have gone to southern West Virginia. For very low sulfur 

coals, the following options would be available: 

• For 0.8 and 0.9 pound coal, southern West Virginia 

would continue to be a promising option at an 

additional cost of $0.18 per million Btu (about $5 per 

ton). Of this amount, $0.15 would be for storage and 

handling, $0.01 for sampling, and $0.02 for higher 

transportation costs. Transportation costs increase 

even though the same supply area is preferred because 

the industrial customer would have to go farther south 

in West Virginia to purchase the very low sulfur coal 

compared to the more widely-available 1.2 pound coals. 

• For 0.7 pound coal, the least cost supply region 

would be the Raton Mesa area at a cost of $1.01 per 

million Btu (about $22 per ton). This includes $0.20 

for fully washing the coal, $0.01 for sampling, a 

decrease of $0.23 due to lower mining costs, and an 

increase of $1.03 for higher transportation costs. 

EPA Region Three: Philadelphia, Pennsylvania 

The incremental costs to supply very low sulfur coal to Region 3 are shown 

in Table 4-3. Southern West Virginia was assumed to be the preferred supply 

area for 1.2 pound coal. To purchase very low sulfur coal, an industrial coal 

consumer would have the following options: 

• For 0.8 and 0.9 pound coal, Region 3 faces the same 

incremental costs as Region 2 since industrial 

consumers in both regions would likely go to southern 

West Virginia to purchase very low sulfur coal. 

• At 0.7 pounds sulfur dioxide per million Btu, Western 

coals would be required since coals of this quality are 
P.59 

4-19 

TABLE 4-2 

ADDITIONAL COSTS INTO EPA REGION 2: NEW YORK CITY, NY a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Regional Total 

Storage/ Mine-Mouth Transportation Additional 

Supply Region Handling Sampling Differences Costs Costs 

0.9 Pound Level 

Virginia 

Raton Mesa--NM 

Green River--C0 

0.8 Pound Level 

Virginia 

Raton Mesa--NM 

Green River--CO 

0.7 Pound Level 

Raton Mesa--NM 

Green River--C0 

0.15 

b/ Icr 

0.15 

cr 

b/ 

0.20 d/ 

0.12 

0.01 

b/ icr 

0.01 

cr 

b/ 

0.01 

0.01 

c/ 

(0.23) 

(0.54) 

c/ 

(0.23) • 

(0.54) 

(0.23) 

(0.54) 

0.02 

1.03 

1.48 

0.02 

1.03 

1.48 

1.03 

1.48 

0.18 

0.80 

0.94 

0.18 

0.80 

0.94 

1.01 

1.07 

a/ Assumed supply source for a coal containing 1.2 pounds SO /MMBtu is 

southern West Virginia in Central Appalachia. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.60 

4-20 

TABLE 4-3 

ADDITIONAL COSTS INTO EPA REGION 3: PHILADELPHIA, PENNSYLVANIA a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Supply Region 

0.9 Pound Level 

Southern West 

Virginia 

Raton Mesa--NM 

Green River--C0 

0.8 Pound Level 

Southern West 

Virginia 

Raton Mesa--NM 

Green River--CO 

0.7 Pound Level 

Raton Mesa--NM 

Green River--C0 

Storage 

Handlir 

0.15 

b/ 

b/ 

0.15 XI b/ 

0.20 

0.12 

/ 

>£ 

d/ 

Sampling 

0.01 

b/ 

b/ 

0.01 

cr Icr 

0.01 

0.01 

Regional 

Mine-Mouth 

Differences 

c/ 

(0.23) 

(0.54) 

c/ 

(0.23) 

(0.54) 

(0.23) 

(0.54) 

Transportation 

Costs 

0.02 

1.02 

1.46 

0.02 

1.02 

1.46 

1.02 

1.46 

Total 

Additional 

Costs 

0.18 

0.79 

0.92 

0.18 

0.79 

0.92 

1.00 

1.05 

a/ Assumed supply source for a coal containing 1.2 pounds S02/MMBtu is 

southern West Virginia in Central Appalachia. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.61 

4-21 

unavailable in the East. In this example, the Raton 

Mesa area of New Mexico would be the supply source at 

an incremental cost of $1.00 per million Btu -- cost 

increases of $0.20 for deep cleaning, $0.01 for 

sampling, and $1.02 for transportation, plus a cost 

decrease of $0.23 due to lower mining costs. 

EPA Region Four: Atlanta, Georgia 

The incremental costs to obtain very low sulfur coal for Region 4 are 

shown in Table 4-4. It is assumed that 1.2 pound coal would be purchased from 

eastern Kentucky. For very low sulfur coals, note that: 

• At levels of 0.8 and 0.9 pounds sulfur dioxide per 

million Btu, industrial consumers would tend to 

purchase coal from Virginia. The total incremental 

cost would be $0.27 per million Btu, or about $7 per 

ton delivered. These extra costs include $0.15 for 

storage and handling, SO.01 for sampling, and $0.11 for 

transportation cost increases. 

• For very low sulfur coal at 0.7 pounds, Western coal 

would be preferred, probably from the Green River 

region in Colorado. Incremental costs are estimated to 

be $0.97 per million Btu, or about $21-$22 per ton. 

These additional costs include $0.12 for storage and 

handling, $0.01 for sampling, $1.32 for transportation, 

and a decrease of about $0.48 per million Btu (about 

$10-$11 per ton) due to lower mining costs. 

If 0.8 pound coal cannot be obtained (supplies are very limited from 

Central Appalachia), then the most likely supply region is Alabama at an 

additional cost pf $0.49 per million Btu. In general, though, Alabama coals 

tend not to be competitive very far outside of Alabama. This is due to the 

generally high costs of mining in Alabama because the seams tend to be 

relatively thin and up to 2000 feet below ground (e.g., the regional 

difference in mine-mouth prices between Alabama and Central Appalachia in 

Table 4-4 is $0.62 per million Btu, or about $16 per ton). 
P.62 . 

4-22 

TABLE 4-4 

ADDITIONAL COSTS INTO EPA REGION 4: ATLANTA, GEORGIA a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Supply Region 

0.9 Pound Level 

Virginia 

Alabama 

Raton Mesa--NM 

Green River--C0 

0.8 Pound Level 

Virginia 

Alabama 

Raton Mesa--NM 

Green River--C0 

0.7 Pound Level 

Raton Mesa--NM 

Green River--C0 

Storage/ 

Handling 

0.15 

b/ 

b/ 

b/ 

0. 15 

b/ 

b/ Icr 

0.20 

0.12 

c/ 

Sampling 

0.01 

b/ 

b/ 

b/ 

0.01 

b/ 

b/ 

b/ 

0.01 

0.01 

Regional 

Mine-Mouth 

Differences 

' 

0.62 

(0.17) 

(0.48) 

-

0.62 

(0.17) 

(0.48) 

(0.17) 

(0.48) 

Transportation 

Costs 

0.11 

(0.13) 

1.02 

1.32 

0. 11 

(0.13) 

1.02 

1.32 

1.02 

1.32 

Total 

Additional 

Costs 

0.27 

0.49 

0.85 

0.84 

0.27 

0.49 

0.85 

0.84 

1.06 

0.97 

a/ Assumed supply source for a coal containing 1.2 pounds S02/MMBtu is 

eastern Kentucky in Central Appalachia. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ Costs to provide fully washed coal compared to typical raw coal. 
P.63 

4-23 

E PA Region Five: Chicago, Illinois 

The incremental costs to purchase very low sulfur coal in Region 5 are 

shown in Table 4-5. An industrial coal consumer in Region 5 would have the 

choice of two different supply regions from which to purchase a low sulfur 

(1.2 pound) coal, depending on the rank of coal desired. For bituminous coal 

it was assumed that the most likely supply region would be eastern Kentucky, 

while the Powder River Basin would supply subbituminous coal. It is not clear 

which type of coal would be chosen since the capital costs and operation and 

maintenance costs for each type of boiler would have to be taken into account 

to determine whether bituminous or subbituminous coal would be the least cost 

alternative. Since this determination is beyond the scope of this analysis, 

the incremental costs in Table 4-5 for burning a very low sulfur bituminous 

coal are compared to the cost of burning a low sulfur bituminous coal (i.e., 

an eastern Kentucky coal), while the incremental costs of burning a very low 

sulfur subbituminous coal are compared to the cost of burning a low sulfur 

subbituminous coa] (i.e., a Powder River Basin coal). This distinction 

applies to all incremental costs developed for EPA Regions 5-10 where either 

rank of coal may be chosen. ' With this in mind, an industrial coal consumer in 

Region 5 would have the following options: 

• For 0.8 and 0.9 pound coal, bituminous coal would be 

purchased from the Raton Mesa region of New Mexico at 

an incremental cost of $0.19 per million Btu, or about 

$4.50 per ton. This is due to a combination of lower 

mine-mouth costs of about $0.17 per million Btu, but 

higher transportation costs of $0.36 per million Btu 

compared to eastern Kentucky coal. For subbituminous 

coal, no additional costs would be incurred since the 

Powder River Basin would still supply the coal and coal 

can be currently produced at these levels from several 

producers without incurring additional costs. 
P.64 

4-24 

TABLE 4-5 

ADDITIONAL COSTS INTO EPA REGION 5: CHICAGO, ILLINOIS a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Regional Tota l 

Storage / Mine-Mouth Transportatio n Additiona l 

Supply Region Handling Sampling Difference s Costs Costs 

0.9 Pound Level 

Southern West 

Virginia 0.15 0.01 0.05 0.01 0.22 

Raton Mesa--NM b/ b/ (0.17) 0.36 0.19 

Green River--C0 b/ b/ (0.48) 0.80 0.32 

Powder River--WY b/ b/ c/ c/ 

0.8 Pound Level 

0.22 

0.19 

0.32 

Southern West 

Virginia 

Raton Mesa--NM 

Green River--C0 

Powder River--WY 

0.7 Pound Level 

0.15 

cr cr Icr 

0.01 

b/ 

cr 

b/ 

0.05 

(0.17) 

(0.48) 

£/ 

0.01 

0.36 

0.80 

c/ 

Raton Mesa--NM 0.20 d/ 0.01 (0.17) 0.36 0.40 

Green River--C0 0.12 0.01 (0.48) 0.80 0.45 

Powder River--WY 0.13 0.01 c/ c/ 0.14 

a/ Assumed supply source for a coal containing 1.2 pounds SO /MMBtu is 

eastern Kentucky in Central Appalachia for bituminous coal and the Powder 

River Basin in Wyoming for subbituminous coal. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.65 

4-25 

• For 0.7 pound coal, the Raton Mesa remains the 

preferred supply region for bituminous coal at an 

incremental cost of $0.40 per million Btu -- $0.20 for 

fully washing the coal, $0.01 for sampling, $0.36 for 

higher transportation costs, and a decrease of $0.17 

due to lower mining costs. For subbituminous coal, the 

Powder River Basin would supply the coal at an 

additional cost of $0.14 per million Btu -- $0.13 for 

storage and handling and $0.01 for sampling. 

EPA Region Six: Dallas, Texas 

Table 4-6 displays the additional costs for consuming very low sulfur coal 

in Region 6. To purchase low sulfur coal, it was assumed an industrial 

consumer would likely go to the Raton Mesa region of Colorado for bituminous 

coal and the Powder River Basin for subbituminous coal. Note that: 

For 0.8 and 0.9 pound coal, bituminous coal would be 

purchased from the Green River region at an additional 

cost of $0.15 per million Btu, or about $3.50 per ton 

-- a decrease of $0.36 per million Btu in mining costs 

combined with an increase of $0.51 per million Btu in 

transportation costs. No additional costs would be 

incurred to purchase subbituminous coal at these levels 

since these coals can be currently obtained from the 

same supply region that would supply 1.2 pound coal, 

i.e., the Powder River Basin. 

For 0.7 pound coal, the Green River region of 

Colorado would be the supply source at an incremental 

cost of $0.28 per million Btu, or about $6 per ton --

costs would increase $0.12 per million Btu for handling 

and storage, $0.01 for sampling, and $0.51 for 

transportation, plus a cost decrease of $0.36 per 

million Btu for lower mining costs. Subbituminous coal 

could be obtained from the Powder River Basin at an 

additional cost of $0.14 per million Btu, or about 

$2.50 per ton -- $0.13 for storage and handling and 

$0.01 for sampling. 
P.66 

4-26 

TABLE 4-6 

ADDITIONAL COSTS INTO EPA REGION 6: DALLAS, TX a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Regional Tota l 

Storage / Mine-Mouth Transportatio n Additiona l 

Supply Region Handling Sampling Differences Costs Costs 

0.9 Pound Level 

Raton Mesa--NM 

Green River--C0 

Powder River--WY 

0.8 Pound Level 

Raton Mesa--NM 

Green River--CO 

Powder River--WY 

0.7 Pound Level 

Raton Mesa--NM 

Green River--C0 

Powder River--WY 

b/ 

b/ Icr cr cr 

b/ 

0.20 d/ 

0.12 

0.13 

b/ 

cr 

b/ 

b/ 

b/ Icr 

0.01 

0.01 

0.01 

(0.05) 

(0.36) 

S.I 

(0.05) 

(0.36) 

_l 

(0.05) 

(0.36) 

c/ 

0.30 

0.51 

_l 

0.30 

0.51 

_l 

0.30 

0.51 

c/ 

0.2 5 

0.1 5 

0.2 5 

0.1 5 

0.4 6 

0.2 8 

0.1 4 

a/ Assumed supply source for a coal containing 1.2 pounds SO / MMBtu is the 

Raton Mesa area in Colorado for bituminous coal and the Powder River Basin 

in Wyoming for subbituminous coal. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.67^ 

4-27 

'EPA Region Seven: Kansas City , Missouri 

The incremental costs for Region 7 are shown in Table 4-7. For typical 

1.2 pound coal, an industrial coal consumer would purchase bituminous coal 

from the Raton Mesa region of Colorado and subbituminous coal from the Powder 

River Basin in Wyoming. Note that: 

• An industrial coal consumer wanting to purchase a 0.8 

or 0.9 pound coal would go to New Mexico for bituminous 

coal and the Powder River Basin for subbituminous 

coal. Incremental costs for bituminous coal would be 

$0.01 per million Btu, or about $0.25 per ton --

mine-mouth costs would be lower by $0.05 per million 

Btu but transportation costs would be $0.06 higher. No 

additional costs would be incurred for subbituminous 

coal. 

• 0.7 pound bituminous coal would be purchased from New 

Mexico at an additional cost of $0.22 per million Btu, 

or about $5 per ton -- increases of $0.20 per million 

Btu for fully washing the coal, $0.01 for sampling, and 

$0.06 for transportation, plus a decrease of $0.05 for 

lower mining costs. Subbituminous coal at this level 

would have incremental costs of $0.14 per million Btu, 

or about $2.50 per ton -- $0.13 for storage and 

handling and $0.01 for sampling. 

EPA Region Eight: Denver, Colorado 

Table 4-8 shows the incremental costs to supply very low sulfur coal to 

Region 8. To purchase a 1.2 pound coal, it was assumed that bituminous coal 

would be obtained from the Green River region of Colorado and subbituminous 

coal from the Powder River Basin in Wyoming. Note that: 

• At 0.8 and 0.9 pound very low sulfur coal levels, 

there are no additional costs for an industrial 

customer to purchase either a bituminous or 
P.68 

4-28 

TABLE 4-7 

ADDITIONAL COSTS INTO EPA REGION 7: KANSAS CITY, MO a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Regional Tota l 

Storage / Mine-Mouth Transportatio n Additiona l 

Supply Region Handling Sampling Differences Costs Costs 

0.9 Pound Level 

Raton Mesa--NM b/ b/ (0.05) 0.06 0.01 

Green River--C0 b/ b/ (0.36) 0.48 0.12 

Powder River--WY b/ b/ c/ c/ 

0.8 Pound Level 

(0.05) 0.06 0.01 

(0.36) 0.48 0.12 

c/ c/ 

Raton Mesa--NM 

Green River--C0 

Powder River--WY 

0.7 Pound Level 

Raton Mesa--NM 

Green River--CO 

Powder River--WY 

cr 

b/ 

_/ 

0.20 

0.12 

0.13 

d/ 

b/ 

b/ 

b/ 

0.01 

0.01 

0.01 

(0.05) 0.06 0.22 

(0.36) 0.48 0.25 

c/ c/ 0.14 

a/ Assumed supply source for a coal containing 1.2 pounds SO / MMBtu is the 

Raton Mesa area in Colorado for bituminous coal and the Powder River Basin 

in Wyoming for subbituminous coal. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.69 

4-29 

TABLE 4-8 

ADDITIONAL COSTS INTO EPA REGION 8: DENVER, CO a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Regional Tota l 

Storage / Mine-Mouth Transportatio n Additiona l 

Supply Region Handling Sampling Difference s Costs Costs 

0.9 Pound Level 

Green River--C0 b/ 

Raton Mesa--NM b/ 

Powder River--WY b/ 

Icr 

b/ 

b/ 

c/ 

0.40 

c/ 

(0.12) 

c/ 

0.28 

0.8 Pound Level 

Green River--C0 

Raton Mesa--NM 

Powder River--WY 

0.7 Pound Level 

b/ 

b/ 

b/ 

b/ 

b/ icr 

c/ 

0.40 

£/ 

£/ 

(0.12) 

c/ 

0.28 

Green River--C0 0.12 

Raton Mesa--NM 0.20 d/ 

Powder River--WY 0.13 

0.01 

0.01 

0.01 

c/ 

0.40 

c/ 

£/ 

(0.12) 

c/ 

0.13 

0.49 

0.14 

a/ Assumed supply source for a coal containing 1.2 pounds SO2/ MMBtu is the 

Green River region of Colorado for bituminous coal and the Powder River 

Basin in Wyoming for subbituminous coal. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Costs to provide fully washed coal compared to typical raw coal. 
P.70 

• 

4-30 

subbituminous coal. These coals can already be 

obtained from the same regions that would have supplied 

the 1.2 pound coal from producers currently mining in 

these regions (the Green River region of Colorado for 

bituminous coal and the Powder River Basin for 

subbituminous coal). 

At 0.7 pounds, bituminous coal would cost an 

additional $0.13 per million Btu to supply from the 

Green River region of Colorado, or about $3 per ton --

$0.12 per million Btu for storage and handling and 

$0.01 for sampling. Subbituminous coal can be produced 

from the Powder River Basin for an additional cost of 

$0.14 per million Btu, or about $2.50 per ton -- $0.13 

for storage and handling and $0.01 for sampling. 

EPA Region Nine: San Francisco, California 

The incremental costs for producing very low sulfur coal for Region 9 are 

shown in Table 4-9. To obtain a 1.2 pound coal, it was assumed that an 

industrial coal consumer would choose bituminous coal from central Utah and 

subbituminous coal from the Green River region of Wyoming (the Green River 

region is located in Colorado and Wyoming). Note that: 

At 0.8 and 0.9 pounds sulfur dioxide per million Btu, 

bituminous coal can be obtained from the same supply 

region -- central Utah -- for no increase in costs. 

For subbituminous coal, the supply region would be the 

Powder River Basin at an increased cost of $0.34 per 

million Btu, or about $6 per ton -- mining costs would 

be lower by $0.24 per million Btu but transportation 

costs would be higher by $0.58 per million Btu. 

At 0.7 pounds, the incremental costs for bituminous 

coal from central Utah increase by $0.21 per million 

Btu, or about $5 per ton -- $0.20 per million Btu to 

fully wash coal normally sold unwashed and $0.01 for 

sampling. Subbituminous coal would be supplied from 

the Powder River Basin for an incremental cost of $0.48 

per million Btu, or about $8 per ton -- costs would 

increase by $0.13 per million Btu for storage and 

handling, $0.01 for sampling, and $0.58 for 

transportation, but decline by $0.24 per million Btu 

due to lower mining costs. 
P.71 

4- 31 

TABLE 4-9 

ADDITIONAL COSTS INTO EPA REGION 9: SAN FRANCISCO, CA a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

Storage/ 

Supply Region H 

0.9 Pound Level 

Central Utah 

Green River--C0 

Powder River--MT 

0.8 Pound Level 

Central Utah 

Green River--C0 

Powder River--MT 

0.7 Pound Level 

Central Utah 

Green River--C0 

Powder River--MT 

andling 

b/ 

b/ 

b/ 

b/ 

- b/ 

b/ 

0.20 

0.12 

0.13 

d/ 

Sampling 

cr 

b/ 

b/ 

b/ 

cr 

b/ 

0.01 

0.01 

0.01 

Regional 

Mine-Mouth 

Differences 

c/ 

(0.17) 

(0.24) 

c/ 

(0.17) 

(0.24) 

c/ 

(0.36) 

(0.24) 

Transportation 

Costs 

c/ 

0.27 

0.58 

c/ 

0.27 

0.58 

c/ 

0.27 

0.58 

Total 

Additional 

Costs 

0.00 

0.10 

0.34 

0.00 

0.10 

0.34 

0.21 

0.23 

0.48 

a/ Assumed supply source for a coal containing 1.2 pounds SO2/ MMBtu is 

central Utah for bituminous coal and the Green River region of Wyoming for 

subbituminous coal. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Includes costs to provide fully washed coal compared to typical raw coal. 
P.72 

4-32 

EPA Region Ten: Seattle, Washington 

Table 4-10 shows the incremental costs to supply very low sulfur coals to 

Region 10. To obtain a 1.2 pound coal, an industrial coal consumer would have 

gone to central Utah for bituminous coal and the Powder River Basin in Montana 

for subbituminous coal. To obtain very low sulfur coal, note that: 

• At 0.8 and 0.9 pounds, there would be no incremental 

costs for either bituminous or subbituminous coals 

since these coals can currently be obtained from the 

same supply regions. 

• At 0.7 pounds, bituminous coal can be obtained from 

central Utah at an additional cost of $0.21 per million 

Btu, or about $5 per ton -- an additional $0.20 per 

million Btu for deep cleaning coal typically marketed 

unwashed and $0.01 for sampling. Subbituminous coal 

can be obtained from the Powder River Basin in Montana 

for incremental costs of $0.14 per million Btu, or 

about $2.50 per ton -- $0.13 per million Btu for 

storage and handling and $0.01 for sampling. 

SUMMARY OF INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS 

A summary of the incremental costs to supply very low sulfur coals for 

each EPA region is shown in Table 4-11. Cost estimates are provided for both 

bituminous and subbituminous coals. Note that: 

At 0.8 pounds sulfur dioxide per million Btu for 

bituminous coals in EPA Regions 1-4, two costs are 

provided. The lower cost estimates refer to the 

incremental costs to obtain Central Appalachian coal; 

the higher cost estimates refer to the incremental 

costs to obtain Western coals in Regions 1-3 and 

Alabama coal in Region 4. This was done because the 

ability of Central Appalachian producers to supply 0.8 

pound coal is very limited. It is likely that only a 

few producers would be able to supply any of this coal, 

and then, only in small quantities (e.g., about 50,000 
P.73 

4-33 

TABLE 4-10 

ADDITIONAL COSTS INTO EPA REGION 10: SEATTLE, WA a/ 

(January 1986 dollars per MMBtu) 

Mining Costs 

St 

Supply Region Ha 

0.9 Pound Level 

Central Utah 

Green River--C0 

Powder River--MT 

0.8 Pound Level 

orage/ 

ndling 

cr 

b/ IDSampling 

b/ 

b/ 

b/ 

Regional 

Mine-Mouth 

Differences 

c/ 

(0.25) 

c/ 

Transportation 

Costs 

c/ 

0.65 

c/ 

Total 

Additional 

Costs 

-

0.40 

-

cr 

b/ 

b/ 

c/ 

(0.25) 

c/ 

c/ 

0.65 

£/ 

Central Utah 

Green River--C0 

Powder River--MT 

0.20 d/ 

0.12 

0.13 

0.01 

0.01 

0.01 

c/ 

(0.25) 

c/ 

c/ 

0.65 

c/ 

Central Utah b/ 

Green River--C0 b/ b/ (0.25) 0.65 0.40 

Powder River--MT ' b/ 

0.7 Pound Level 

0.21 

0.53 

0.14 

a/ Assumed supply source for a coal containing 1.2 pounds SO / MMBtu is 

central Utah for bituminous coal and the Powder River Basin in Montana for 

subbituminous coal. 

b/ No additional costs likely since coal can already be supplied at this 

level using current mining methods. 

c/ No change since the supply region likely to be chosen by the industrial 

consumer is the same for 1.2 pound and very low sulfur coals. 

d/ Includes costs to provide fully washed coal compared to typical raw coal. 
4-34 

P.74 

a/ 

TABLE 4-11 

SUMMARY OF INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS 

(January 1986 dollars per MMBtu) 

EPA 

Region 0.9 Pounds S02/MMBtu 0.8 Pounds S02/MMBtu 0.7 Pounds S02/MMBtu 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

Bituminous 

0.16 

0.18 

0.18 

0.27 

0.19 

0.15 

0.01 

0.00 

0.00 

0.00 

Subbituminous 

N.A.b/ 

N.A. 

N.A. 

N.A. 

0.00 

0.00 

0.00 

0.00 

0.34 

0.00 

Bituminous 

0.16/0.54 

0.18/0.80 

0.18/0.79 

0.27/0.49 

0.19 

0.15 

0.01 

0.00 

0.00 

0.00 

Subbituminous 

c/ 

c/ 

c/ 

c/ 

N.A. 

N.A. 

N.A. 

N.A. 

0.00 

0.00 

0.00 

0.00 

0.34 

0.00 

Bituminous 

0.75 

1.01 

1.00 

0.97 

0.40 

0.28 

0.22 

0.13 

0.21 

0.21 

Subbituminous 

N.A. 

N.A 

N.A. 

N.A. 

0.14 

0.14 

0.14 

0.14 

0.48 

0.14 

a/ These are incremental costs compared to the cost to produce compliance 

coals that meet a standard of 1.2 pounds sulfur dioxide per million Btu. 

These incremental costs apply only to coals supplied by U.S. producers in 

the lower-48 states. The potential competitiveness of imported coals has 

not been included in these cost estimates. 

b/ N.A. means "Not Analyzed" because subbituminous coals were not assumed to 

be competitive with bituminous coals in the eastern United States (Regions 

1-4). 

c/ Two cost estimates are provided. The lower cost estimate refers to 

Central Appalachian coals; the higher cost estimates refer to Western 

coals in Regions 1-3 and Alabama coal in Region 4. Both estimates are 

provided because the ability of Central Appalachian producers to supply 

0.8 pound coals is very limited. 
P.75 

4-35 

tons annually per producer). The coal producers who 

possess these coals did indicate it would be difficult 

to meet the 0.8 pound limit. The higher cost estimate 

may be more relevant for most industrial coal consumers. 

• Subbituminous coals were assumed to be very 

uncompetitive in Regions 1-4. As a result, incremental 

costs were not determined for this coal type in these 

regions. 

• These incremental costs assume that only coals from 

U.S. producers in the lower-48 states will be made 

available to industrial coal consumers. It is not 

clear this is the case. Very low sulfur coals from 

Alaska, Canada, or other coal-producing nations may be 

competitive in some instances, but have not been 

considered in this analysis. 

It should also be emphasized that the incremental costs in Table 4-11 

represent the costs incurred by coal producers and coal carriers to supply 

very low sulfur coals to the industrial market. They do not represent the 

additional price that would be paid by industrial coal consumers to purchase 

very low sulfur coals. These prices would be established by competitive 

market forces that take into account the level of demand and the supply 

quantity, among other factors. In a market where supply is greater than 

demand (such as indicated by recent market conditions), prices would tend to 

approach the variable costs of production. In a tighter market, though, 

prices could increase above costs if increased demand for very low sulfur coal 

allows coal producers to earn economic rents above the incremental costs 

developed in this report. These incremental costs do represent, however, the 

minimum increase in price that would occur because coal producers would at 

least want to cover their costs to provide very low sulfur coals. 
P.76 

I 

1 

APPENDIX A 
P.77 

ICF INCORPORATED International Square, 1850 K Street, Northwest, Washington, D. C. 20006 (202) 862 -1100 

November 24, 1986 

MEMORANDUM 

TO: Fred Porter, EPA/ESED 

Walt Stevenson, EPA/ESED 

FROM: Craig D. Ebert, ICF/ r ~ ^ 

Daniel E. Klein ' " 

SUBJECT: Interview Outline for Very Low Sulfur Coal Interviews 

This memorandum presents the basic outline we intend to use for 

determining the potential availability of very low sulfur coals to the 

industrial sector. Our purpose here is to outline the key questions that will 

need to be addressed; it is not intended to be a verbatim transcript of the 

interview questions. It has been our experience that each telephone interview 

will be unique to the company and the personality of the interviewee. As a 

result, these questions are intended to be a guideline only. 

We will be using senior personnel to conduct these interviews since they 

will have the experience and knowledge necessary to obtain the required 

information without feeling constrained by a specific format. Please review 

this outline, however, to make sure you are comfortable with the types of 

questions we are asking. 

SAMPLE INTRODUCTION 

My name is . I work for ICF Incorporated in Washington, D.C. 

We are a energy and environmental consulting firm currently working for the 

U.S. Environmental Protection Agency on a project to determine the ability of 

the coal industry to provide very low sulfur coals to industrial customers. 

(We define very low sulfur coals as those coals with an approximate sulfur 

content of no more than 0.5-0.6%, or less than 1.0 pound sulfur dioxide per 

million Btu when burned). 

EPA has proposed new emission regulations for industrial coal customers, 

and one alternative approach under review is to allow these customers to burn 

very low sulfur coals. The reason we are contacting you is that our 

information indicates that your company's mines are now or could produce a 

very low sulfur coal. (PROVIDE BRIEF OVERVIEW OF THE INFORMATION). 
P.78 

-2-

We wanted to talk to you to verify whether this is the case and to 

understand your ability to provide coal to industrial customers who may demand 

a much lower sulfur coal than is currently required. You could help us by 

improving our understanding of the geologic characteristics and mining 

conditions that affect your coal's sulfur content. 

(AT THIS POINT STOP TO ANSWER QUESTIONS. YOU WILL PROBABLY HAVE TO REPEAT 

OR CLARIFY MANY OF THE POINTS YOU JUST MADE. THE IMPORTANT CONSIDERATION HERE 

IS TO ALLAY ANY FEARS THE PERSON YOU ARE TALKING TO MAY HAVE. ASSURE HIM (OR 

HER) THAT HIS HELP MAY ACTUALLY BE TO HIS BENEFIT SINCE THE OBJECTIVE OF OUR 

STUDY IS TO IDENTIFY VERY LOW SULFUR COALS THAT THE COAL INDUSTRY, THROUGH 

COMPANIES LIKE HIS OWN, COULD ACTUALLY SUPPLY TO INDUSTRIAL CUSTOMERS.) 

COAL QUALITY INFORMATION 

Once his initial questions have been answered, mention again the specific 

reasons his company was contacted. We need to get confirmation of the basic 

coal supply information: 

• Be explicit about the source(s) used to identify 

potential producers of very low sulfur coals, i.e., 

BOM reserve data, FERC data on coal deliveries to 

electric utilities, etc. There is no need to go into 

boring detail, only enough information to convince the 

interviewee his selection was based on publiclyavailable information. 

• Verify which seam(s) is being mined and the location 

of the mine (i.e., state and county). In some cases 

the company may own the coal reserves but has not 

developed them yet. Find out the circumstances under 

which the coal would be developed. Is such 

development likely for the industrial market only? 

• Verify coal quality, particularly Btu content, ash 

content, and sulfur content. Sulfur will probably be 

provided on a percentage basis, so try to find out if 

he knows what the value is in terms of pounds sulfur 

dioxide per million Btu (to be accurate, this requires 

assumptions on sulfur retention in ash and the 

averaging time used, but the interviewee is unlikely 

to have addressed these issues). 
P.79 

-3-

Are there any special characteristics, such 

as low volatile content or excessive caking 

properties, that may make this coal 

unsuitable for some industrial consumers? 

Be sure to distinguish between in-situ and 

run-of-mine quality. To which one does the 

information we are receiving apply? Are there any 

notable differences on sulfur content between in-situ 

and run-of-mine quality (especially on a pounds per 

million Btu basis)? 

NATURE OF THE SULFUR 

After the basic information on coal quality has been verified, focus on 

the nature of the sulfur in the coal: 

• Is the sulfur content of the coal constant 

throughout the coal seam, or does it vary? (If it 

does not vary, go to section on "Handling 

Requirements") If it varies: 

• What is the range of sulfur variability in the 

seam? That is, what are the low sulfur values and 

what are the high values? What percent of the coal is 

at the lowest level? Next lowest? etc. 

• How does the coal vary? Does it vary horizontally 

as you move through the seam, or does it vary 

vertically from top to bottom? Is there any pattern 

to the variability? 

For example, if it varies horizontally, are 

the changes abrupt or gradual? Can you 

predict with any degree of confidence when 

these changes will occur? Similarly, if the 

sulfur content of the coal varies vertically, 

do you expect, for example, that the lower 

one-third of the seam will be higher in 

sulfur than the upper two-thirds? (There 

may be both horizontal and vertical 

fluctuations). 

Given this variability, what is the lowest 

sulfur level you would commit to if each 

carload had to meet specs? Would this 

change if you had trainload limits? Monthly 

limits? 
P.80 

-4-

gf ' . If you wanted to mine just the lower sulfur coal in 

the seam(s), would it be possible to separate the 

lower sulfur coal from the other coal? What type of 

equipment and/or mining operation would be necessary? 

How does this compare to your current operations (if 

it is currently being mined)? What changes would you 

have to make in these operations? (The objective is 

to identify the type of operation currently in place, 

such as dragline, front end loader, bulldozer, shovel, 

etc. if it is a surface operation or continuous miner, 

longwall operation, augers, etc. for underground or 

drift mines, and to contrast this with the mining 

techniques that would be required to target very low 

sulfur coal supplies). 

• What volume of very low sulfur coal shipments could 

be extracted if these changes were made, as measured 

on a weekly basis? What share of the mine's total 

weekly output does this represent? Over how many 

years could you promise coal of this quality and 

volume? How about at slightly higher sulfur levels? 

• Since the number of customers wanting these lower 

sulfur coals is likely to be fairly small, with their 

coal needs also likely to be small compared to utility 

customers, do you think your company would be willing 

to make the necessary changes to market this coal if 

some demand existed? 

Are these lower sulfur coals needed to blend 

with the rest of the coal in order to meet 

quality specifications for other customers? 

Since industrial customers also tend to buy 

on a spot or short-term basis, would your 

company need some assurance of longer term 

demand for very low sulfur coals you may be 

able to produce? 

HANDLING REQUIREMENTS 

These questions are intended to focus on specific handling issues before 

the coal is transported that may affect the company's ability to produce the 

very low sulfur coals. 

• How do you remove the coal from the mine? Would it 

be difficult to segregate coal for very low sulfur 

industrial customers from coal for other customers? 

What steps would be required to alter your coal 

handling system to achieve this type of segregation? 
P.81 

-5-

If on^jf-small amounts of very low sulfur 

coals are available (be sure to define 

"small"), could you stockpile the coal to 

collect a larger quantity? 

Can you ship coal by rail, truck, and/or barge? 

What type of loading facilities do you have? How 

would you keep track of shipments destined for very 

low sulfur industrial customers? 

PREPARATION REQUIREMENTS 

• Is the run-of-mine coal cleaned? 

If the coal is only crushed and screened (or 

perhaps just crushed), is it only for 

top-size control? If a customer were to 

specify both a minimum and maximum coal 

size, could you provide such a coal? What 

if there was a maximum limit on the 

percentage of fines allowed? What steps 

would you have to take to be able to provide 

these types of coals? 

If the coal undergoes more advanced preparation (i.e., some form of 

washing): 

• What type of washing operation is used, for example, 

water or some type of dense medium process, and what 

type of equipment, e.g., jigs, cyclones, dense medium 

vessels, concentrating tables, froth flotation 

circuits, etc. 

• What is the purpose of the cleaning process -- ash 

reduction, sulfur reduction, or both? 

• Are there different size fractions at your plant, 

e.g., plus one-half inch, one-half inch by one-quarter 

inch, minus one-quarter inch? Are all size fractions 

cleaned? Which cleaning process is used for each 

fraction? 

• What is the difference in sulfur content between the 

raw coal and the washed coal? 

• To your knowledge does one of the cleaned fractions 

tend to have a lower sulfur content than the rest of 

the coal? If so, what is the sulfur content? 
P.82 

• 6 -

Does your wash plant remove most of the^pyrit.ic 

sulfur? To your knowledge could the equipment be 

upgraded to remove more sulfur? Could you lower the 

specific gravity of separation to lower the sulfur 

content (on a pounds per million Btu basis)? What 

sulfur level do you feel is the lowest level you could 

attain? What would be the Btu and weight yields if 

you did so? What other costs would you incur? 

Would separation of your lowest sulfur coal from the 

other coal for purposes of selling to the industrial 

market adversely affect your ability to sell the rest 

of the coal? For example, would the sulfur content of 

the remaining coal increase so much such that certain 

customers you now have (or could have) would be 

reluctant to purchase your coal? 

cc: Michael Shelby, EPA/OPPE 

Clint Burklin, Radian 

David White, Radian 
P.83 

APPENDIX B 
P.84 

Potential Coal Demand From Industrial Boilers 

Throughout this study some perspective has been provided on the amount of 

very low sulfur coal that could be supplied by coal producers in different 

regions of the United States. To understand how these very low sulfur coal 

supply estimates relate to the amount of coal likely to be demanded, this 

appendix discusses recent trends in industrial boiler sales. The objective is 

to indicate the possible magnitude of coal demand from new industrial boilers 

over the next several years. It is beyond the scope of this analysis to 

conduct a detailed forecast of future industrial fuel demands; however, recent 

market trends can provide some perspective on the likely size of future 

industrial boiler coal demand compared to other market segments (such as 

electric utilities). 

According to the American Boiler Manufacturers Association (ABMA), sales 

to industrial customers of coal-fired boilers has averaged about 3.7 million 

pounds of steam per year from 1978-1986, ranging from a low of 1.2 million 

pounds of steam capacity in 1979 to a high of 6.3 million pounds of steam 

capacity in 1984.1J For purposes of illustration, assume that future 

industrial demand for coal-fired boilers may range from three to six million 

pounds of steam capacity per year. To determine the level of coal demand 

implied by these boiler sales estimates, the following assumptions were made: 

1J See Comments of the American Boiler Manufacturers Association, EPA 

Docket No. A-83-27, Comment No. IV-D-22. These numbers refer only to 

boilers larger than 100 million Btu per hour. 
B2 

Coal has 20 million Btu per ton. 

All new coal-fired boilers are operated at a 60 percent 

utilization rate. 

Boiler efficiency is about 80 percent. 

Using the higher estimate of six million pounds of steam capacity per 

year, the amount of coal demanded would be determined as follows: 

6 million pounds of s team/hour x - 100 million Btu/hour input

 2J 

180,000 pounds of steam/hour output 

=7.5 billion Btu/hour heat input capacity x 8,760 hours/year x 

60 percent capacity factor 

= 39.42 trillion Btu heat input/year / (20 million Btu/ton) 

= 1.971 million tons of coal consumed per year. 

In this example, industrial demand for coal in new boilers would range 

from one million tons (assuming three million pounds of new steam capacity per 

year) to two million tons per year (assuming six million pounds of steam 

capacity per year). In comparison, total industrial coal demand in 1985 was 

approximately 75 million tons and electric utility demand was nearly 700 

million tons. 

2J Assumed boiler efficiency. For further discussion, see Fuel Fired 

Industrial Boilers -- Background Information Document, Volume 1, prepared 

for U.S. Environmental Protection Agency, EPA-450/3-82-006a, page 6-12, 

6-13.0 
P.86 

APPENDIX C 
P.87 

Example of Incremental Cost To Use Flue Gas Desulfurization Equipment 

The price that coal producers could charge to supply very low sulfur coal 

could be limited by the cost of other alternatives available to the industrial 

customer, e.g., the cost to install and operate flue gas desulfurization (FGD) 

equipment in lieu of consuming very low sulfur coals. In response to a 

request from EPA, this appendix provides one estimate of the costs associated 

with scrubbing. 

For example, assume a coal-fired boiler in EPA Region Five with a heat 

input of 150 million Btu per hour. If this boiler is operated at a 60 percent 

annual capacity factor, it will consume about 0.79 trillion Btu per year (150 

million Btu/hour x 8,760 hours/year x 60. percent capacity factor). To install 

and operate a FGD system to remove 90 percent of the sulfur in the flue gases, 

it will cost about $740,000 per year.1J This is equivalent to a cost of 

about $0.94 per million Btu ($740,000 divided by 0.79 trillion Btu). 

In this hypothetical example, the incremental price that industrial 

customers would have to pay to purchase very low sulfur coal would probably 

not exceed $0.94 per million Btu since the industrial customer could decide to 

scrub in lieu of purchasing a very low sulfur coal if the incremental very low 

sulfur coal price rose higher than $0.94 per million Btu. 

1J Radian Corporation, Industrial Boiler Sulfur Dioxide Cost Report, 

prepared for U.S. Environmental Protection Agency,' EPA-450/3-85-011, 

November 1984. 
P.88 

C2 

. In actuality the price paid would depend on several factors, including 

the amount of very low sulfur coal available, the amount demanded, other fuel 

options, etc. Evaluation of the potential impact of all of these factors is 

beyond the scope of this analysis.