Potential Markets for Coal New Growth Alliance Advanced Carbon - PowerPoint PPT Presentation

Potential Markets for Coal New Growth Alliance Advanced Carbon Products Conference April 7, 2017

Outline 1. Wyoming Coal – Production History – Impact 2. Market Outlook – existing markets – Short Term – Longer term 3. New Markets – Thermal coal – Upgrading – CCUS – New Products

History • Coal has been a part of Wyoming’s economy since the arrival of the Union Pacific.

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 (1868) Mines open Pacific Union Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 (1910s) Rail Era Peak of the Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 (1918) World War 1 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 (1930s) Great Depression 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 World War 2 (1942-45) 1922 1925 1928 1931 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 Rail Era (1953) End of the Steam 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 (1959 onward) Wyoming Power Era 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Millions short tons 10,000,000 12,000,000 2,000,000 4,000,000 6,000,000 8,000,000 0 1865 1868 1871 1874 Boom and Bust 1877 Wyoming Annual Coal Production 1865-1970 1880 1883 1886 1889 1892 1895 1898 1901 1904 1907 1910 1913 1916 1919 1922 1925 1928 1931 (1970 onward) Wyoming Export Era 1934 1937 1940 1943 1946 1949 1952 1955 1958 1961 1964 1967 1970

Wyoming: “King Coal” Historical Wyoming Coal Production 450,000 45% 400,000 40% 350,000 35% Millions short tons 300,000 30% National Share 250,000 25% 200,000 20% 150,000 15% 100,000 10% 50,000 5% 0 0% 1865-1886 1887-1920 1921-1953 1954-1969 1970-79 1980-89 1990-99 2000-2009 2010-2016 Production Avg ('000 tons) % of National Total

Wyoming: “King Coal” Historical Wyoming Coal Production 450,000 45% 400,000 40% 350,000 35% Millions short tons 300,000 30% Timeframe of National Share 250,000 25% previous slide… 200,000 20% 150,000 15% 100,000 10% 50,000 5% 0 0% 1865-1886 1887-1920 1921-1953 1954-1969 1970-79 1980-89 1990-99 2000-2009 2010-2016 Production Avg ('000 tons) % of National Total

Wyoming: “King Coal” Historical Wyoming Coal Production 450,000 45% National share now 40%, 400,000 40% Wyoming produced 350,000 35% 297.5 million short tons in 2016. Millions short tons 300,000 30% Timeframe of National Share 250,000 25% previous slide… 200,000 20% 150,000 15% 100,000 10% 50,000 5% 0 0% 1865-1886 1887-1920 1921-1953 1954-1969 1970-79 1980-89 1990-99 2000-2009 2010-2016 Production Avg ('000 tons) % of National Total

Past 50 Years: New Markets, New Demand • Prior to 1970: production historically underground in Western and central Wyoming through the 1960s. • 1970s: Clean Air Act (CAA) and amendments, opening of Powder River Basin (PRB) – Energy crisis also drives production • 1980s: Rail deregulation, CAA SO 2 (1990) amendments drive continued PRB expansion. – Mid- 1980s: Wyoming becomes nation’s largest coal producer.

PRB vs Uinta Basin PRB Share of 2016 Total Production Rest of Wyoming, 3.4%, (10.3 million tons) Powder River Basin (WY) Production, 96.6%, (287.2 million tons)

Scale Economies Top 10 Producing Coal Mines by Tonnage in the U.S. (2015) North Antelope Rochelle Black Thunder Antelope Cordero Rojo Eagle Butte Belle Ayr Wyoming Spring Creek (MT) Other States Rawhide Freedom (ND) Buckskin 0 20 40 60 80 100 120 Millions Short Tons

Scale Economies Top 10 Producing Coal Mines by Tonnage in the U.S. (2015) Two largest mines in Wyoming accounted North Antelope Rochelle for over 23% of US Black Thunder coal production. Antelope Cordero Rojo Eagle Butte Belle Ayr Wyoming Spring Creek (MT) Other States Rawhide Freedom (ND) Buckskin 0 20 40 60 80 100 120 Millions Short Tons

Domestic Markets Indiana, 0.6% Other States: Arizona, 1.9% Oregon, 0.4% Nevada: 0.3% Tennessee, 0.9% Washington: Louisiana, 1.9% South Dakota, 0.4% 0.2% Mississippi: 0.2% Kentucky, 2.3% Texas, 14.7% New York: 0.1% N. Dakota: 0.1% Minnesota, 2.8% Maryland: 0.1% Montana, Idaho, Alabama, 2.9% Utah, Ohio all less than 0.1% Colorado, 2.9% Georgia, 3.0% Arkansas, 3.9% Illinois, 12.1% Nebraska, 4.2% Michigan, 4.7% Missouri, 10.8% Kansas, 4.7% Oklahoma, 4.8% Wyoming, 7.5% Source: EIA, 2015 Wisconsin, 5.8% Iowa, 6.0%

Value Added Export Wyoming Electricity Disposition as a share of Total Generation (2015) Other (incl. losses), 5.4% Wyoming Electricity Sales, 34.6% Wyoming Electricity Exports, 60.1% Source: EIA, 2015 Total Wyoming Generation from all sources: 48,966,519 MWh.

Value Added Export Wyoming Electricity Disposition as a share of Total Generation (2015) Other (incl. 88% of total Wyoming losses), 5.4% Electricity produced using coal – implying if 60% is Wyoming exported, on average, over Electricity Sales, 34.6% 4.5% of Wyoming coal is exported as higher value electricity (equivalent of 17 Wyoming million tons in 2016). Electricity Exports, 60.1% Source: EIA, 2015 Total Wyoming Generation from all sources: 48,966,519 MWh.

Coal Impact Today Addition to State Product • The Wyoming Coal Economy accounts Total Impact for 14% of Gross Generation State Product Railroad • Coal production Coal Mining alone, including $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 indirect and induced 2012 Dollars (millions) effects accounts for Direct Indirect Induced 11.3% of GSP.

Coal Impact Today • Coal-related Employment (2012) The Wyoming Coal Economy accounted for over 23,000 jobs Total Impact (5.8%) in the state annually in 2012. Generation • Coal mine employment Railroad accounted for 1.8% of Coal Mining Wyoming jobs in 2012. – 2012: 6,890 0 5000 10000 15000 20000 25000 Jobs – 2013: 6,485 (-5.9%) – 2014: 6,671 (-2.9%) Direct Indirect Induced – 2015: 6,578 (-1.4%) – 2016: 5,627 (-14.5%)

State Revenues: • Total 2012 Wyoming Revenue was $11.3 billion. • Coal production state revenues alone were valued at $1.26 billion (11.2%). • Coal economy state revenues estimated to be $1.33 billion (11.8%).

Outline 1. Wyoming Coal – Production History – Impact 2. Market Outlook – existing markets – Short Term – Longer term 3. New Markets – Thermal coal – Upgrading – CCUS – New Products

Recent Production Wyoming Coal Production Changes Since 2011 5.0% 2.2% 0.0% -0.9% -5.0% -3.3% -5.0% -10.0% -8.5% -15.0% -20.0% -21.1% -25.0% 2011 2012 2013 2014 2015 2016