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
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: www.johnmccain.com 2
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
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
Global Long-Term Demand for Energy Energy Demand Today 101 QBtu/Year 85% Fossil Energy +24% United States Energy Demand 2030 124 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 2030 5
China, India and Others are Growing 6
Forecast: Coal Exports Up 27 million tons in 2 years Coal Exports 120,000 100,000 80,000 60,000 40,000 84.0 75.0 57.6 20,000 0 7 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008e 2009e (Tons in 000 s) Sources: EIA, PIRA. Estimates include steam and metallurgical coal.
US Long-Term Demand for Energy To Grow As Well Energy Demand Today 101 QBtu/Year 85% Fossil Energy +24% United States Energy Demand 2030 124 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 2030 8
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 2008 9
Coal s Share Is Expected to Grow AEO 08 (early release) Billion kwh 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Source: DOE NETL 48.6% Natural gas Renewables Petroleum Coal Nuclear 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 55.4% 17.5% 14.0% 11.6% 1.2% 10
Infrastructure Needs Fuel Growth 11
Infrastructure Needs Drive Coking Coal Demand Up 22 12
$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
West Virginia Coal Prices Have Risen Source: EIA 14
So What Remains for the Decade? Demand Growth; Supply Constraints; Carbon Bias 15
US Faces Two Challenges Producing Adequate, Reliable Supplies of Energy To Meet Growing Demand Current Bias Against Use of Fossil Fuels 16
Reserve Constraints RESERVE ISSUES 22 17
Labor Constraints LABOR AVALABILITY 22 18
Permitting Constraints PERMI 22 19
THE SAFETY CHALLENGE 20
The Carbon Bias 21
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 2008 22
Natural Gas 23
North American Natural Gas Demand for Power Generation 28 26 Bcf per Day 24 22 20 18 +9 Bcf/d +3.3 Tcf/year Spring 2007 16 14 12 North American Gas Demand for Power Generation 10 2003 2005 2007 2009 2011 2013 2015 Source: Cambridge Energy Research Associates Source: CERA North American Natural Gas Executive Roundtable Presentation - 11/27/07 24
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
US LNG Imports 26
US LNG Imports 05 Tcf/Year 04-3.4 Tcf (-53%) 03 07 06 08er 02 01 27
The T Stands for Turbines 28
860,000 Windmills? 29
13,000 Miles of New Lines? 30
300 Million Solar Roofs? 31
300x1000MW Plants? $1 Trillion Construction Costs 32
CONSERVATION CANNOT SOLVE THE PROBLEM EITHER 33
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
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
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
THERE IS A SOLUTION 37
INVEST IN TECHNOLOGY NOW 38
Pete Lilly President Coal Group Bluefield Coal Symposium August 26, 2008