James McCaffrey Sr. VP Material and Supply Chain Mgmt. and CNX Land Resources Coal and the Campaign : Why the Candidates Are Talking About Us October

Transcription

1 James McCaffrey Sr. VP Material and Supply Chain Mgmt. and CNX Land Resources Coal and the Campaign : Why the Candidates Are Talking About Us October 2, 2008

2 McCAIN S ENERGY PLATFORM "John McCain will commit $2 billion annually to advancing clean coal technologies. Some believe that marketing viable clean coal technologies could be over 15 years away. John McCain believes that this is too long to wait, and we need to commit significant federal resources to the science, research and development that advance this critical technology. Once commercialized, the U.S. can then export these technologies to countries like China that are committed to using their coal - creating new American jobs and allowing the U.S. to play a greater role in the international green economy." Source: 2

3 2008 REPUBLICAN NATIONAL CONVENTION We will produce more energy at home. We will drill new wells offshore, and we'll drill them now. We'll build more nuclear power plants. We'll develop clean coal technology. We'll increase the use of wind, tide, solar and natural gas 3

4 2008 DEMOCRATIC NATIONAL CONVENTION As President, I will tap our natural gas reserves, invest in clean coal technology, and find ways to safely harness nuclear power America, now is not the time for small plans. 4

5 Global Long-Term Demand for Energy Energy Demand Today 101 QBtu/Year 85% Fossil Energy +24% United States Energy Demand QBtu/Year 84% Fossil Energy 453 QBtu / Year 81% Fossil Energy 703 QBtu / Year 82% Fossil Energy +55% World Source: DOE NETL U.S. data from EIA, Annual Energy Outlook 2008 Early Release, years 2006 and 2030; world data from IEA, World Energy Outlook 2007, years 2005 and

6 China, India and Others are Growing 6

7 Forecast: Coal Exports Up 27 million tons in 2 years Coal Exports 120, ,000 80,000 60,000 40, , e 2009e (Tons in 000 s) Sources: EIA, PIRA. Estimates include steam and metallurgical coal.

8 US Long-Term Demand for Energy To Grow As Well Energy Demand Today 101 QBtu/Year 85% Fossil Energy +24% United States Energy Demand QBtu/Year 84% Fossil Energy 453 QBtu / Year 81% Fossil Energy 703 QBtu / Year 82% Fossil Energy +55% World Source: DOE NETL U.S. data from EIA, Annual Energy Outlook 2008 Early Release, years 2006 and 2030; world data from IEA, World Energy Outlook 2007, years 2005 and

9 Coal is Leader in Power Generation Market 2007 Electric Power Generation Natural Gas, 22% Nuclear, 19% Petroleum, 1.6% Hydro, 6.1% Wood, 0.93% Waste, 0.41% Geothermal, 0.36% Solar/PV, 0.016% Coal, 49% Wind, 0.77% Source: Energy Information Administration, Annual Energy Outlook

10 Coal s Share Is Expected to Grow AEO 08 (early release) Billion kwh 3,500 3,000 2,500 2,000 1,500 1, Source: DOE NETL 48.6% Natural gas Renewables Petroleum Coal Nuclear % 17.5% 14.0% 11.6% 1.2% 10

11 Infrastructure Needs Fuel Growth 11

12 Infrastructure Needs Drive Coking Coal Demand Up 22 12

13 $25 $20 $15 $10 $5 $0 Result: Rising Energy Prices Oil, Natural Gas & Coal Daily Prompt Month Prices Sources: NYMEX (Oil/Gas) & United Power (Coal) 13 $/MM Btu (Nominal) 1/4/99 7/4/99 1/4/00 7/4/00 1/4/01 7/4/01 1/4/02 7/4/02 1/4/03 7/4/03 1/4/04 7/4/04 1/4/05 7/4/05 1/4/06 7/4/06 1/4/07 7/4/07 1/4/08 NYMEX Light-Sweet Crude NYMEX Henry Hub Gas NYMEX Look-a-Like Coal

14 West Virginia Coal Prices Have Risen Source: EIA 14

15 So What Remains for the Decade? Demand Growth; Supply Constraints; Carbon Bias 15

16 US Faces Two Challenges Producing Adequate, Reliable Supplies of Energy To Meet Growing Demand Current Bias Against Use of Fossil Fuels 16

17 Reserve Constraints RESERVE ISSUES 22 17

18 Labor Constraints LABOR AVALABILITY 22 18

19 Permitting Constraints PERMI 22 19

20 THE SAFETY CHALLENGE 20

21 The Carbon Bias 21

22 Coal Would Be Difficult to Totally Displace 2007 Electric Power Generation Natural Gas, 22% Nuclear, 19% Petroleum, 1.6% Hydro, 6.1% Wood, 0.93% Waste, 0.41% Geothermal, 0.36% Solar/PV, 0.016% Coal, 49% Wind, 0.77% Source: Energy Information Administration, Annual Energy Outlook

23 Natural Gas 23

24 North American Natural Gas Demand for Power Generation Bcf per Day Bcf/d +3.3 Tcf/year Spring North American Gas Demand for Power Generation Source: Cambridge Energy Research Associates Source: CERA North American Natural Gas Executive Roundtable Presentation - 11/27/07 24

25 Total Natural Gas Supply to US (Including LNG) Source: Annual Energy Outlook 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008 early release reference cases AEO 01 AEO 02 AEO 03 AEO 04 AEO 05 Tcf/Year AEO 06 AEO 07 AEO 08er Gradual Decline to 20 Tcf without LNG Increased Use of Natural Gas in Electricity Will Require LNG; N. American Natural Gas Supply for U.S. Trending Down AEO 08er no LNG 25

26 US LNG Imports 26

27 US LNG Imports 05 Tcf/Year Tcf (-53%) er

28 The T Stands for Turbines 28

29 860,000 Windmills? 29

30 13,000 Miles of New Lines? 30

31 300 Million Solar Roofs? 31

32 300x1000MW Plants? $1 Trillion Construction Costs 32

33 CONSERVATION CANNOT SOLVE THE PROBLEM EITHER 33

34 CONSERVATION CANNOT SOLVE THE PROBLEM 80% reduction in CO2 by 2050 results in reducing US CO2 To 1910 levels, when US population was only 90 million and Taft was President 34

35 CONSERVATION CANNOT SOLVE THE PROBLEM 80% reduction requires US to be at 2.5 tons CO2/capita - The only countries currently at that level are Belize, Mauritius, Jordan, Haiti and Somalia Even Switzerland and France (hydro & nuke) are only at 6.5 tons/capita. 35

36 CONSERVATION CANNOT SOLVE THE PROBLEM US gasoline consumption would have to drop from 180 billion gallons/yr to 31 billion gallons/yr less than we need even if all current cars were hybrids 36

37 THERE IS A SOLUTION 37

38 INVEST IN TECHNOLOGY NOW 38

39 Pete Lilly President Coal Group Bluefield Coal Symposium August 26, 2008