United States. Coal Resource Development and Overseas Supply Potential

Transcription

1 United States Coal Resource Development and Overseas Supply Potential

2 Current Import Levels from the U.S. are Insignificant 2

3 Increasing Challenges to Demand & Supply Demand Coal will remain base load for electricity generation. Coal demand is continuing to grow albeit at lower rates - coal was the largest source of energy growth over past 25 years. Coal will still represent 25% of the world s primary energy in Supply Over 200Mtpa of existing Indonesian and Australian production will cease by 2025 as economic reserves are depleted. 3

4 Indonesian & Australian Challenges Indonesian domestic demand is forecast to increase 80Mtpa by Indonesian exports are expected to decrease. Indonesia s better grades of coal are depleting a greater proportion of lower grade subbituminous coals (4,000kcal/kg NAR, 35% total moisture) will be available for export. Australian production costs are expected to increase, and new coal basins are further from rail and port. 4

5 Asset Ownership is Increasingly Concentrated Australia: Indonesia: South Africa: Columbia: 8 largest producers account for 90% of exports 10 largest producers account for +60% of production 5 producers control 80% of Richards Bay Coal Terminal 3 producers account for 90% of exports 5

6 Advantages of Diversification with Western U.S. Coal The Western U.S. holds nearly 1/3 of all the remaining economical coal reserves in the world. It is affordable, secure, consistent, and abundant. Access to this continuous and stable supply of thermal coal is needed to help Japan meet its long-term energy policy goals. Capital investment in new coal-fired power generation in Asian countries could exceed $100+ billion over the next 10 years. An integrated Western U.S. supply chain from coal reserves to a deep water port will de-risk the Asian energy portfolio, provide the lowest cost per KWH, and guarantee the return on capital for the life of new coal-fired power generation assets. 6

7 Western U.S. Coal Resources are Abundant Reserves In million tonnes Recoverable Demonstrated Montana 67, ,618 Wyoming 32,572 52,726 Colorado 8,598 14,231 Utah 2,281 4,506 7

8 Powder River Basin Coal Will Remain Low-Cost Powder River Basin coal is not only abundant, but will remain economic for many years. The cumulative cost curve for the Powder River Basin shows tens of billions of short tons available at between $10 - $25 per short ton Source: United States Geological Survey Professional Paper

9 Western U.S. Coal Quality Hunter Utah & Wyoming Wyoming Brand Valley Colorado Adaro Montana Mulia Decker Country Australia USA Indonesia USA USA USA Indonesia USA Calorific Value Basis (kcal/kg NAR CV) 6,080 6,130 4,900 4,850 4,550 4,330 3,950 4,950 Total Moisture% (ARB) Volatile Mattere% (ADB) Ash% (ADB) Total Sulphur% (ADB) Productioni (million tonnes) Current Production Capacity * Utilization 67.0% 59.0% 68.0% 46.0% 40.0% * Further low -cost expansion potential 9

10 Extensive Rail Infrastructure Connects Mines to Ports BNSF and Union Pacific combined move over 425 million tons of coal annually and have invested over $70 billion in their combined rail networks in the past 10 years. The two railroads combined operate over 60,000 miles of network in 28 states and 3 Canadian provinces 10

11 Competitive Shipping Distances to Japan 11

12 Powder River Basin Coal Is Desirable for IGCC Plants Western U.S. coal from the Powder River Basin is not only consistent in quality, its unique specifications make it superior for use in IGCC plants. Source of graphic: Presentation by METI,

13 Western U.S. Coal Exports Are Projected to Offer Global Greenhouse Gas Benefits Global GHG emissions are expected to decrease with increased U.S. exports to Asia because emissions from U.S. mining conditions are favorable to emissions from other suppliers. Source: Millennium Bulk Terminals-Longview, SEPA Greenhouse Gas Emissions Technical Report 13

14 Western U.S. Coal is the Right Choice The U.S. is a favorable and strategic trading partner. The Trump Administration has identified energy exports as a key policy initiative. Increased energy imports improves trade imbalances with the U.S. Competitive shipping routes. Cost effective, whole value chain coupled with low extraction cost. Huge reserves. Consistent quality and economically stable long-term supply. Projected environmental benefit. 14

15 Lighthouse Resources integrates upstream, midstream and downstream businesses Lighthouse business units deliver low-cost Western U.S. thermal coal to Asian markets via the U.S. Pacific Northwest Lighthouse Infrastructure Lighthouse Resources, Inc. Lighthouse Products Lighthouse Mining Lighthouse Infrastructure - Export Design, build, and operate the Millennium Bulk Terminal in Washington State Utilize existing port capacity at Westshore Terminals Lighthouse Products - Coal marketing and trading Source, market, and sell high quality US thermal coal to domestic customers and foreign buyers in Asia-Pacific Lighthouse Mining - Coal production Operate the Decker and Black Butte surface coal mines in the USA 15

16 Decker Coal Mine In operation +40 years Highest grade PRB coal quality: 4,950 kcal/kg NAR 2018 planned production 5.5 million tonnes 20 meter seams, 3 seam operation, excellent geology 2 x 12.0 mtpa ton rail loadouts Domestic and international customers 2015 $12M capex for 1570 Dragline rehabilitation 2017 $30M capex new Komatsu Truck Shovel Fleet ~1900 km to Millennium Bulk Terminals on BNSF. 1 st coal exported through Millennium. 16

17 Millennium Bulk Terminals Longview Former alumina smelter zoned heavy industrial 400+ acre site 80 year land lease with Alcoa executed January % owned by Lighthouse Resources Columbia River channel dredged to serve panamax vessels Rail serviced by BNSF and Union Pacific railroads Proposed 44mtpa capacity, Stage 1=25mtpa; Stage 2= 44mtpa 17

18 Millennium Port Proposed Facility Construction Cost of $650 million less than $15 per annualized tonne 18

19 Millennium Bulk Terminals Opens a New Alternative 19

20 Millennium Bulk Terminal Permitting Applications lodged for the coal terminal in February 2012 Environmental Impact Statement (EIS) published in April 2017 First Permit Issued in 2017; other permit denials Now: Legal challenge is part of the permitting process 20

21 Lighthouse Resources Litigation Activity Federal Lawsuit Filed on January 3, 2018 Lighthouse sued Washington State Governor Jay Inslee and members of his administration for blocking coal mined in Wyoming, Montana and other western states from being exported through a terminal in Washington state, in violation of the U.S. Constitution s Commerce Clause and other federal statutes. The complaint outlines how the defendants violated the dormant foreign commerce clause by unilaterally imposing an embargo on new coal exports and by discriminating against Lighthouse s efforts to transport coal mined in Montana and Wyoming and other western states. Legal efforts are supported by BNSF Railroad; the states of Montana, Wyoming, Utah, South Dakota, Nebraska, and Kansas; the National Mining Association, National Association of Manufacturers, American Farm Bureau, The Association of American Railroads, American Fuel & Petrochemical Manufacturers, and Western States Petroleum Association; and Cowlitz County, Washington. Federal Court Federal Court of Appeals Supreme Court 21

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