wvcabuyersguide1

Good afternoon.  Thank you Bill for that kind introduction and thank you for the invitation to address the Bluefield Coal Show.  It’s a pleasure to be here among so many friends and colleagues.  On behalf of the WV Coal Association and our members, we appreciate the job you do and look forward to this annual event.

I’m filling in for Bill Raney today who couldn’t be here due to an injury he sustained at the Coal Bowl over the weekend.  That first half was brutal for Bill, Coach Nehlen and all the faithful gold and blue.  Actually, Bill slipped Friday afternoon and banged up his leg.  He really wanted to be here, sends his regards & like all of us at the Association – he acknowledges the “Bluefield Coal Show” as the premier mining show in the country. Good afternoon.  Thank you Bill for that kind introduction and thank you for the invitation to address the Bluefield Coal Show.  It’s a pleasure to be here among so many friends and colleagues.  On behalf of the WV Coal Association and our members, we appreciate the job you do and look forward to this annual event.

I’m filling in for Bill Raney today who couldn’t be here due to an injury he sustained at the Coal Bowl over the weekend.  That first half was brutal for Bill, Coach Nehlen and all the faithful gold and blue.  Actually, Bill slipped Friday afternoon and banged up his leg.  He really wanted to be here, sends his regards & like all of us at the Association – he acknowledges the “Bluefield Coal Show” as the premier mining show in the country.

As evidenced by the program, Bill was originally asked to talk about coal’s contribution to our economy, which I’ll cover today along with some other items of interest! 

Allow me to say at the outset that it is a pleasure to represent an industry that means so much to our state and our nation.  I’m particularly pleased to represent this region of the state which is vitally important to our state’s mining portfolio.

You guys do in right!  And you do it against tremendous odds, in some of the toughest geological conditions and within one of the toughest regulatory frameworks found anywhere in the country!

You represent the best of the best and it is a pleasure to represent you in Chas/Washington.

Coal has long been one of West Virginia’s leading industries -- providing thousands of good paying jobs, infusing millions of dollars into local and state economies and providing low cost electricity for state residents. Today our challenges are greater than ever before and our role is nothing short of critical importance to our nation’s quest to become energy independent and break that unholy grip of Saudi Arabia and its foreign oil.

We, as a state, have the potential to become one of the world’s leading marketers of one of the world’s leading products.  We have it here, if we can effectively compete. That enviable position can only be achieved and can only be meaningful if we are willing to consider this resource for what it is – an industry.  Matters of stability, safety and an environment for growth are shared responsibilities – of all of us.  The object properly should be to create a safe, sound, productive industry that can provide a fair and stable return for miners, investors and citizens alike.  We have that opportunity now – if we approach it correctly – with reason, intelligence and common sense.  No industry is more deserving today than the coal and energy related industries in West Virginia.

Here’s a few facts:
West Virginia has 62 separate named seams of coal-
located in 43 of our 55 counties.
In other words – almost 80% of our state has coal reserves under it.
Since we became a state (1863) 144 years
we’ve mined about 14 billion tons - we have 50 billion remaining.
Last year we mined more than 158 million tons in 26 counties
with more than 20,000 direct coal miners (20,533) &
more than 28,000 coal handlers and specialty contractors (28,187)
who depend on a mine operating every day.  We have consistently averaged 160 mm tons of annual coal production throughout the past decade -- and when you add the multipliers with the direct mining jobs you account for nearly 20% of the state’s total employment.

We’re the 2nd leading coal-producing state in the nation (behind Wy.)
We’re the leading producer of bituminous coal in the nation and the leading coal export state.
We have more underground coal production than any other state and about one third of all underground mines in the country.
We have more Coalbed Methane recovery infrastructure than any other state.

All told, these miners and mining operations account for over 2 billion dollars of annual payroll and approximately 13 percent of the state’s overall gross product, and over $17 million dollars of overall economic activity.  Record levels of severance taxes have been reported the past 5 yrs and a relatively large portion of those dollars are distributed to all 55 counties to support basic infrastructure and needed educational and gov’t programs for the less fortunate and seniors.  Coal and the electric utility industry collectively account for 60% of all business taxes.  (It’s fair to say – that no other industry has quite the same statewide impact.

We also have 13 power plants with a capacity of 14.200 MW
that use 36 million tons of our production annually
to make 99% of our electricity.  And, that household power is generated at
an average retail price of 4.5 cents/KWH

Incidentally, just this past year we licensed the first new coal burning power plant in 30 years.  It took 10 years to get all the permits and get through all the suits. That is unacceptable.
Because - We should be the energy center of this country – the Saudi Arabia of the US.
We’re within ½ day’s drive of 60% of America’s population.
We should be hanging power lines all over the state.
So we can make the electricity here at home - close to the coal seams
And wheel it to those who need it in the SE, NE and Midwest.

You see - the electrification of America in the 19th and 20th centuries
was one of the most amazing engineering accomplishments in our history.
It allowed us to win wars-industrialize our country - advance our standard of living.
It put us ahead - it keeps us ahead.

And coal was the key to that electrification -
And it still is.
Coal makes 52% of this nation’s electricity.
There is no alternative. the fact is – they cannot turn us off if they wanted to (and a lot do)…There is no feasible alternative.  The issue is not whether we’ll continue mining or using coal – the real issue is – where will it come from? West, the Illinois basis, or from some foreign destination….It makes little sense to restrict production here and use greater amounts of western production.  It makes no sense to replace foreign oil with foreign coal!


If you notice - the opponents or those who criticize fossil fuels
never offer any realistic alternative.
Oh sure - they talk about windmills - solar panels - renewables
But there’s no way they can ever make enough electricity
to feed this country’s appetite.

They talk about Ethanol - but there’s not enough corn or switchgrass.
And I read (the other day) - that ethanol was worse than regular gasoline (air quality).
Plus - the rush to make so much ethanol has raised the price of corn so dramatically that it’s raising the price of food – everywhere.

Coal to Liquids is a popular topic today.
And I hope we get one of those plants -
We need it for energy independence and energy security.

But when the largest consumer of electricity is
the Internet and its associated computer equipment,
what we really need to be doing - is building power plants .
Coal-fired - baseload power plants - close to the mines
to supply electricity to the people who need it and want it.

So we can have a quiet confidence about our coal and are proud of our business…
Because we’re getting better everyday --
At mining it - shipping it - using it – we do it safer everyday and with greater attention to environmental quality.

I think one of the unstated objectives of our opponents is to raise the cost
of coal fired electricity - so it doesn’t have an advantage over other fuels.
So we have court decisions, editorials, ad campaigns, movies
Documentaries and many detractors trying to raise the 4.5 cents/KWH cost to something more like what New Yorkers are paying --- that is about 13 cents/KWH.
We must do everything possible to maintain our advantage
as we pursue the no-emissions power plant .

On balance, the industry has great capacity, committed and extraordinarily competent management and labor, aggressive business plans and a strong will to succeed. 

Consequently, from a big picture or macro view, the industry is well situated to meet the demands of tomorrow but not without overcoming major challenges.  Our challenges today are as great as our opportunities.  Global climate change, national energy policy and the coal-to-liquids program are at the forefront of these challenges. These are shared challenges (east/west). Coal’s future depends largely on the manner in which these major policies are addressed.

From a regional standpoint, here in the east, where overall market share has already fallen in recent years, (from 55% to 40% past 10 years)  we have additional, unique challenges -- some technological, some political -- which must also be appropriately addressed if we are to remain viable and retain our place in domestic and world energy markets.

The eastern region is particularly confronted with labor shortages, ongoing environmental lawsuits, a diminishing reserve base and overall tougher geology. Geology that requires deeper, more difficult and more expensive mining with thinner seams and lower recovery ratios.  Again, the long-term viability or future of the coal industry in the states east of the Mississippi River will be determined in large measure on how these issues are addressed. 

I would be remiss if I didn’t mention mine safety within my remarks today.  First, let me say kudos to you for the endless hours and countless resources you dedicate every day in order to make mining safer.  Unfortunately, the tragic events last year overshadowed decades of improvements and have not accurately portrayed how technologically advanced or how safe mining has become.

The industry has taken great pride in its safety record in modern times and for good reason.  In fact, most experienced miners throughout the industry maintain that mining has become much safer today than what was realistically believed possible a few short years ago.

Overall safety performance of the coal industry, which was brought into question as the result of tragic accidents last year, was the culmination of many years of gradual but continual improvement. New technological advancements in mine extractive techniques together with a wide variety of state-of-the-art, environmental control plans combined with extraordinarily skilled and experienced workforce has led to safer conditions and fewer accidents.

Mining deaths year-to-date (2007) are more reflective of recent years, i.e., 4 mining deaths in West Virginia versus 18 for the same period last year.  Nationally, there have been 24 deaths recorded compared to 47 in 2006.
But one mining death is one too many, and despite all the progress charted over the years, the events of last year left us with the understanding that much work remained, particularly in the post-accident phase so that the effect of an accident can be minimized or mitigated. Hence, additional improvements have been made in these important areas over the past year.

Since January 2006, there have been three major mine safety reform efforts; one on the federal level with the passage of what is known as the MINER Act and two major reforms in our state mine safety act in 2006 and 2007. These major acts, coupled with an array of administrative rules, have resulted in new requirements for needed improvements:
These include:

Statewide Immediate Accident Notification System;
Wireless Communication Systems;
Additional Self Contained Self Rescuers (SCSRs);
Underground Safety Shelters;
Revised Mine Emergency Preparedness Plans;
Approximately 30 new mine rescue teams
2 new state teams (north & south)
Individual Tracking Devices;
Additional Lifelines;
New Mine Seal Design, Construction & Examination Criteria;
Mine Seal Remediation Plans;
Mine Seal Atmospheric Testing Requirements;
Additional Belt Ventilation Measures
Mine Foreman Continuing Education Programs; and,
Miner Training & Retraining Programs

We are now dealing with MINER Act II advanced by House Members from California.  The provisions found in MINER Act II have little if any correlation with the accidents last year.  The events in Utah will bring about a flurry of regulatory and administrative actions including increased scrutiny and possible restrictions placed on retreat mining practices.  Undoubtedly, there will be calls for more inspectors, more inspections and higher fines. This activity will no doubt serve to perpetuate an unfavorable view of the industry.

On the environmental front, like our safety professionals,
Our people are clearly the best practicing environmentalists in the world
They do it everyday with great pride and sophistication.

That’s the difference…
They’re doing it - building ponds - planting trees - controlling water.
Not talking about it or marching about it
They’re doing it.
 
As an industry, we’re protecting the environment - better than ever – and we are seeing more and more legal actions designed to slow or halt mining.
We’re coordinating our mountain top operations with
Highway construction - commercial developments - public facilities
Reclaiming properties for higher utility and development
We’re limiting our footprint with sophisticated planning and accelerated reclamation.

But the lawsuits continue and the permitting process becomes more costly and convoluted and investment opportunities in our state and our people become hampered.

Mining difficulties that threaten eastern production

Today’s Appalachian coal seams are more difficult to access, require more sophisticated preparation and are further from the transportation points of rail and barge.  Developing infrastructure, i.e., shafts, slopes, rail sidings and loading facilities, today will help the coal “flow” tomorrow.
Mining costs, i.e., fuel, engineering, permitting and reclamation, personnel, equipment and supplies have all turned sharply upward. As always, the costs increase when prices increase, but the costs do not decrease when the prices drop! . 
The entire industry is  facing the problems of an aging workforce and an overall shortage of workers. It is, however, most critical for our region since 79.2% of the miners are working in the eastern and mid-western coal industry. Human infrastructure must be developed today.
Legal challenges and continuing unpredictability in the permitting process have further inhibited the ability of the industry to maximize its production opportunities.  Acknowledgement of advancements in applied technology and environmental expertise are immediately needed.

Operating in today’s highly competitive global markets, where the tightest of margins exist, additional cost burdens are a tremendous obstacle to overcome.  West Virginia and Appalachian basin are blessed with the highest quality coal in the world, mined by the world’s best coal miners, with technology second to none.  The region has nearly one-half (47.7%) of this nation’s mineable reserves remaining with all the ingredients to succeed for the next 200 years!

The state of WV and other eastern state governments must do everything within their power to support the industry through the enactment of fair and sensible legislation and policies which will foster and facilitate a more viable industry coupled with a higher level of safety and environmental quality -- and, they should also join with industry to reject or refuse to entertain those initiatives designed to restrict growth and development.
 
Frankly, without this level of commitment and support from our own state government, we’ll be greatly disadvantaged as we attempt hold our own domestically, not alone compete on the international front.

National energy demand is on the rise.  Increasing oil prices and a national desire to decrease American dependence on foreign oil have brought coal to the forefront of energy production. We hope the strong market will continue, but history and world turmoil brings a sense of unpredictability.
The Coal Industry is well poised to capitalize on these high growth opportunities as the country pursues energy independence and economic wealth from a strong domestic energy industry but we must pull together and effectively deal the challenges ahead.

We need your help - You have a lot to offer that process --you have a tremendous amount of technical and operational expertise.

We need help in addressing these challenges and uncertainty.  We must take full advantage of today’s “optimistic atmosphere.”  It is an “once-in-a-lifetime” opportunity! 

We need West Virginia to be the energy state
With an environment that attracts investment - advances stewardship
And protects our people - our families - our way of life - 

We need you to be a Friend of Coal (decals available)


Thank you.

West Virginia Coal Association - PO Box 3923 - Charleston, WV 25339 | 304-342-4153 | website developed by brickswithoutstraw