NCTA Issue 1, 2010 by National Coal Transportation Association

ISSUE 1 | 2010

West Coast Terminals

Gearing up for Asian Markets Featured Member:

Peabody Energy - Bring the World Back to Black

Technology:

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Yoke Stress Analysis and Fatigue Life

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• Main valve element is based on our rugged “sliding shoe” construction – the same trouble-free design that has been used in our railcar valves for over two decades. • A sequenced mechanical lock maintains the valve in the “door close” position regardless of outside forces or vibration. • The locking feature is released only when an electrical or manual signal to shift has been received. • A visual indicator is operated via the lock mechanism that clearly shows whether the valve is in the “door close” position with the valve element locked in place or if the valve is in the unlocked or “door open” position. • Because they are mechanically locked in the “door close” position, the valves may be mounted in any position or orientation - the valve element does not have to be perpendicular to the rails. • The units can easily be modified so that they can be linked to ECP Brake Systems in the future for communication of valve position status. • The modular design allows the main valve unit to be removed/replaced in minutes without disturbing the electrical connection or plumbing when repair due to age or service conditions becomes necessary. • Self closing solenoid cover/junction box can be locked to prevent unauthorized access to manual overrides. • Our patented “Safety Check” technology (U.S. Patents 7,093,455 and 7,328,661) is available as a “no-charge” option. • Innovative lock/indicator features latest Lexair, Inc. technology (Patent Pending).

Typical Before Installation Photos

Typical After Installation Photos

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Contents

ISSUE 1 | 2010

62 NCTA Annual Visit to Washington

Report on Car Jacking Testing

Peabody’s Worldwide Reach

FEATURES

DEPARTMENTS

Meet Your Board: Kevin Larkin

Message from the NCTA President – Bob Neff

Member Profile: Peabody Energy

Management of Railcar Fleets in the Changing Economy

Message from the NCTA Executive Director – Tom Canter

Report on Railcar Jacking Stress Analysis

NCTA Membership Benefits

NCTA Welcomes New Members

Technology: Yoke Stress Analysis

NCTA Committee Updates

Colorado Studies Rail Relocation

Editor: Pat Scherzinger Phone: 303-993-7172 scherzinger@ nationalcoaltransportation.org

Calendar of Events

Tenaska Prepares for Next Generation of Coal Plants

Members Sound Off

West Coast Coal Terminals

60 Statistics

Field Editor & Photographer: Lee M. Buchsbaum lee@lmbphotography.com www.lmbphotography.com

New Faces at the STB and FRA

View from the Caboose

Board of Directors Visit Capital Hill

Membership List

Production By: Suckerpunch Creative Inc. info@suckerpunch.ca www.suckerpunch.ca

2009 NCTA Scholarship Recipients

Index to Advertisers

Reflections: Jon Kelly

2010 O & M Conference Announcement

PUBLISHED BY: National Coal Transportation Association 4 W. Meadow Lark Lane Suite 100 Littleton, CO 80127-5718 Phone: 303-979-2798 Fax: 303-973-1848 www.nationalcoaltransportation.org

CONFERENCES 20

2009 Fall Meeting & Conference Recap Denver, Colorado, September 14-16, 2009

Coeur d’Alene, Idaho, June 14-16, 2010

NCTA Spring General Conference Preview San Antonio, Texas, April 11-14, 2010

The opinions expressed by the authors of the articles contained in Coal Transporter are those of the respective authors and do not necessarily represent the opinion of the NCTA or its member companies. COAL TRANSPORTER | 1

President’s Report / Bob Neff

President’s Report A Message from NCTA’s President, Bob Neff.

Peak Coal and the New Normal

s the new year begins, inevitably a rash of new predictions are made. Of great interest to many, of course, are predictions about the economy because of its overall effect on our industry. Will the economy recover in 2010? If so, at what rate? If not in 2010, will the economy recover in 2011? Or will it recover at all? Some forecasters say that the economy has merely moved to a different level, adjusting to changed amounts of industrial production and economic activity brought on by global economic forces and changed financial markets. These forecasters call the current economic condition the “new normal”. With coal production and power generation, a similar conflict of opinion is occurring. When will U.S coal production recover to or surpass 2008 levels? If power production recovers in the future, what will be the source of fuel? Will coal retain its traditional share of electrical production, or will natural gas and renewables increase their portion of electrical generation at coal’s expense? There is a concept in petroleum production called “peak oil”. Peak oil is the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters a continuing decline. The point in time

2 | COAL TRANSPORTER

that peak oil will occur has been a subject of debate among energy forecasters. Now a similar debate has started about coal. At least one major industry forecaster is predicting that the U.S. has already reached “peak coal”, and coal production is headed for a continuing decline, never to reach 2008 levels again.

provide education and facilitate the resolution of coal transportation issues. Through the work of our subcommittees, the NCTA will continue to facilitate inter-industry cooperation to solve real world problems faced by coal producers, transporters, and coal consumers. The NCTA will also continue

The point in time that peak oil will occur has been a subject of debate among energy forecasters. Now a similar debate has started about coal. However some sources are predicting a return to growth in coal production and coal generation, although at lower rates from prior predictions. The Energy Information Administration (EIA), in its Annual Energy Outlook 2010 (Early Release) forecasts coal consumption increases from 1.12 billion tons in 2008 to 1.32 billion tons in 2035. Others predict that “peak coal” will occur in the future, perhaps in 2015. While it is an interesting and intellectually challenging debate, the only sure thing is that these forecasts will be wrong. What I can tell you with certainty is that at the NCTA, the new normal is the same as the old normal. The NCTA remains committed to its mission to

to actively promote education through our three annual conferences. This year the spring conference will be in San Antonio in April and the Fall Conference and Business Meeting will be held in September in Denver. The O&M committee meeting will be held in June in Coeur d’Alene, Idaho. All of these NCTA conferences provide opportunities to learn from a variety of speakers as well as fellow attendees. As NCTA moves forward, the contributions of its members are what keep the organization thriving and moving in new directions. Thanks to our members and everyone who participates on committees or contributes in other ways to further the NCTA mission. See you in San Antonio! s

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Executive Director’s Message / Tom Canter

REALITY CHECK A Message from NCTA’s Executive Director, Tom Canter.

n a column for the first issue of a new year, the Executive Director normally projects business conditions for the upcoming year or reflects on the business challenges of the preceding year. I am compelled to depart from tradition as I cannot help but ponder a unique year as expressed by the novel “1984”. George Orwell would probably be shocked to see his fundamental predictions of social and political behavior and dictatorial policies being fulfilled with exactness. Let’s examine reality against today’s “political correctness”: Doublethink - The capability to hold two opposing beliefs and believe that both are true. Example: The global warming alarmists claim that global cooling is actually proof of global warming. That is, the great story of fear is that the expected damage and rising sea levels will be caused by rising temperatures. It isn’t happening. However, Doublethink is not rigorous and the true believer can assert that actual temperature decreases do not matter, we are surely having global warming. All of the IPCC (UN) models say so. The Arctic Cold Snap and the cooler temperatures in the Northern Hemisphere over the last decade are acknowledged, but anthropogenic global warming is still a “crisis” to be addressed with draconian measures. Reality Check - At the time of this writing, new low temperature records and snowfall records are being set throughout the northern hemisphere. Newspeak - Constructing a word definition to limit or narrow the range of thought.

4 | COAL TRANSPORTER

Example: Energy sustainability in Oldspeak allows for a sustainable energy source like coal which has about 250 years of available reserves in the U.S. In Newspeak, coal is not sustainable while alternative energy sources such as solar and wind with 30% capacity factors for electricity generation are “sustainable”. Reality Check - Vestas, the Danish company that is the largest producer and installer of wind turbines is shutting down production of windmill components during the first quarter of 2010 at its brand new Windsor, Colorado manufacturing facility. Reason - no current demand. However, state subsidies that total $6 million will allow Vestas to not furlough employees who will be retrained and perform facility maintenance. Vestas claims this is only a temporary setback and will open more plants in Colorado to produce “sustainable” energy. Further, while subsidizing wind generation, the state government is complaining that mineral revenue from severance taxes (mostly from coal mining) to support schools in the state, is down by $21 million in 2009. The “new energy economy” is not living up to its promises. It has been reported that during the record cold weather in the U.K., the wind generation fleet operated at 4% of capacity. Surely, the “new energy economy” should not be predicated on demanding precious capital funding to produce electricity at about twice the price of the existing energy economy with a small percentage of the stability and reliability of coal-fired generation. It appears that “CoalTar the Magnificent” does have a clear crystal ball as society attempts to defy reality. Have a safe day providing energy to the good people of North America. s

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Meet Your Board / Kevin Larkin

MEET YOUR BOARD Kevin Larkin By Lee Buchsbaum

B Kevin Larkin

Vice President, Market Services & Transportation Alliance Coal, LLC

“Involvement with the NCTA has really helped me understand the entirety of the coal transportation sector and its significance to the overall coal industry.” - Kevin Larkin

6 | COAL TRANSPORTER

oard Member Kevin J. Larkin’s involvement with the NCTA goes back to before it was born, when he and other coal executives from the east were part of a group called the Property Owners Committee nearly 30 years ago. This group evolved into the Eastern Coal Transportation Conference, and in 1999 became the Eastern Coal Transportation Association. The ECTA ultimately merged with the much larger Western Coal Transportation Association in 2002 to become today’s National Coal Transportation Association. Larkin was the president of the ECTA when the merger occurred. And he has served as a board member of the NCTA for majority of its existence. Being a member of these various groups, including the NCTA, has “helped Larkin out immensely” in his career. “Networking is key. These organizations have provided me with a vast amount of contacts throughout the industry, from throughout the mining, industrial and electric generation community to barge lines, truckers, railroads, vessel companies, agents and anyone involved in the movement of coal domestically and internationally. Involvement with the NCTA has really helped me understand the entirety of the coal transportation sector and its significance to the overall coal industry.” Currently vice president of Market Services and Transportation for Tulsa, Oklahoma based Alliance Resources LP, Larkin oversees all aspects of market services, logistics, distribution and transportation for Alliance’s ten mining complexes and river terminal operation spread throughout Appalachia and the Illinois Basin. He has been with Alliance or its predecessor Mapco Coal for a total of fourteen years. He has also spent time on the electric generation side of the business where he was General Manager of Fuel Services and Transportation for FirstEnergy Corp. He is also a member

of the Transportation Committee for the National Mining Association, a former Director of the Waterways Council, and also holds memberships in various other coal and transportation organizations. Larkin really appreciates that the NCTA stays focused on dealing with national as well as regional transportation issues “whether its something that affects us today or down the road,” he said. But most importantly, the NCTA is dedicated to matters of coal transportation. “No other organization involved in the movement of coal does this on a national scale to the same degree as we do,” Larkin said. Hailing from Connecticut and a graduate of Robert Morris University, Larkin’s entry into the coal industry was at the urging of his wife, Jackie, who was studying at Virginia Tech when they met. As fate would have it, he was hired as the Transportation Manager for Roanoke based ANR Coal (which at the time was a subsidiary of American Natural Resources, later acquired by Coastal Corporation). With almost 30 years in the industry, Larkin has seen many changes in the way coal is transported. “As an easterner, when I started there were very few fourhour flood load unit train operations. In many cases we were dealing with 24-hour trainload shipments of 70-80 cars, and lots of single car shipments. The consolidation of the coal and transportation industry has lead to many efficiencies and technologies that didn’t exist or were not mandated back in 1980,” said Larkin. On a personal note, Larkin has been married for 28 years and has three daughters, all of whom are currently in either graduate school or college. Larkin is also active in the Tulsa community. Amongst the charities, he’s a Board member of New Hope, an organization dedicated to helping children whose parents have been incarcerated. “Its designed to help give these kids a second chance, while making sure they aren’t forgotten,” said Larkin. s

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NCTA Membership Profile / Peabody Energy

Peabody Energy Powers Energy, Economic and Environmental Progress

Bringing the World By Richard A. Navarre, President, Peabody Energy

8 | COAL TRANSPORTER

yoming Governor Fenimore Chatterton wrote more than a century ago that his home state had enough coal to “weld every tie that binds and drive every wheel.” The prospects for coal… and for Peabody Energy (NYSE: BTU)… are brighter in the 21st Century than ever before. Perhaps the most compelling proof can be found in the heart of Wyoming’s coal-rich Powder River Basin at Peabody’s North Antelope Rochelle Mine. North Antelope Rochelle is the most productive mine in the world, loading an average of 18 coal trains daily in America’s highest tonnage rail corridor. That’s enough to encircle the globe three times each year. Since mining began, the operation has shipped more than 1 billion tons of low-cost, ultra low sulfur coal to fuel the homes and businesses of millions of Americans. The mine also provides fuel to customers in Asia and Europe and is poised to increase its exports as worldwide demand for coal soars.

Perhaps most important, North Antelope Rochelle showcases Peabody’s strategic focus on large-scale, cost-efficient surface operations. Peabody is headquartered in St. Louis, Mo., but its reach is global. It is the world’s largest private-sector coal company and an international leader in clean coal solutions. Coal is the resource behind half of all U.S. electric generation, and Peabody fuels 10 percent of that electricity and 2 percent of global power. Coal has been the fastest growing fuel globally for each of the past six years, increasing 37 percent over that period. Peabody will ship nearly a quarter billion tons of coal to customers in 23 countries on six continents this year… nearly 75 pounds of coal for every man, woman and child in the world. Peabody currently serves nations representing more than half the world’s population, and it’s clear that the international energy markets have never been more dynamic, nor the potential for supply shortfalls so serious. In recent years, the world has lurched from the worst energy crisis any of us have seen… to the most

Back to Black:

COAL TRANSPORTER | 9

Coal is the resource behind half of all U.S. electric generation. Peabody Energy fuels 10 percent of that electricity and 2 percent of global power. The company’s Powder River Basin operations produce enough secure and low-cost fuel to power more than 16 million American households. severe economic crisis in several generations, all against a backdrop of ever-increasing environmental expectations. For these reasons and many more, I have often heard coal called a “bridge to the future.” To this, we say: Coal is the future. Coal alone has the scale and cost advantages to deliver what we call the “Three Es” – energy security; economic stimulus; and environmental solutions.

Why Coal: Bringing Electricity to Emerging Nations, Lifting Billions to Better Lives Citizens of developed nations enjoy a standard of living the rest of the world can only dream about. More than half the global population – 3.6 billion people – still lack adequate access to electricity, according to the International Energy Agency (IEA) and the World Coal Institute. The good news is that in recent decades hundreds of millions of people around the world have gained access to electric heat and light, refrigerated food, medicine and other necessities. This is in a large part thanks to coal, the world’s most accessible and affordable fuel. Yet, there are billions more who deserve the same high standard of living we enjoy. Global energy demand will grow 40 percent in the next quarter century, according to IEA’s recently released World Energy Outlook. Let me put these numbers in perspective: The world will demand the electricity equivalent of approximately 150 Californias in just two decades. Coal plays an essential role in meeting this enormous need. International coal use is projected to increase 53 percent by 2030, an amount greater than the increase in natural gas, nuclear, hydro, and biomass consumption combined.

Why Coal: Coal is the World’s Best Engine for Economic Growth and Energy Security The recent downturn in the economy has only masked fundamental shifts in global energy markets. The causes of the energy crises of recent years are still with us: Alternatives to coal are still harder to find, more difficult to drill or more expensive to produce. The resurgence of resource nationalism and protectionism 10 | COAL TRANSPORTER

contributes to the challenge. Major oil and natural gas supplies are now concentrated in unstable nations that are increasingly willing to use energy supplies for political gain. For example, more than 60 percent of the world’s natural gas is held in Russia, Iran and Venezuela. These are the same nations making headlines for pursuing an OPEC-like natural gas cartel to control supply and price. When it comes to energy, it is also instructive to remember the old adage: “Those who cannot remember the past are condemned to repeat it.” Natural gas is a good example. The delivered cost of natural gas in the United States was 311 percent higher on average than the cost of coal over the past decade, and the price of natural gas is projected to be five times higher than the price of coal in 2030. More renewable power is needed, but solar and wind cannot be stored and require backup from conventional generation when the sun is clouded over or the wind doesn’t blow. Perhaps that’s why, after 50 years and more than $50 billion in investment, both comprise just 1 percent of today’s U.S. energy mix. Even with the rapid growth of renewables, more than 80 percent of global energy consumed in 2030 will still come from conventional fuels. Massive scale… long lead times… tight spare capacity… growing demand… these are the realities we face. A temporary decline in demand hasn’t resolved these problems. Our energy challenges have only become more apparent as the recession eases… from $70-80 per barrel oil to rising coal prices to a forward curve on natural gas that is fairly high by historical standards. As we chart the course for a sustainable energy future, our most powerful answer… clearly… is coal. The benefit of coal can be summed up by geology and economics. America’s more than 400 coal-fueled plants are the tireless workhorses of our nation’s electric generation fleet, producing the most reliable, most costcompetitive baseload power in a world of energy shortfalls. As overwhelming energy demand looms, we count 75 nations who are planning ahead. About 235 gigawatts of coal-fueled generation are under construction, representing more than 900 million tons per year of incremental coal demand. This is the largest build-out of new coal-fueled electricity in a generation; 85 percent of these new operations are in Asia, but 28 new coalbased generating units are under construction in America and will

require 65 million tons of new coal annually. Nearly two-thirds of this new U.S. supply will come from regions where Peabody is the No. 1 producer: the Powder River Basin in Wyoming and the Illinois Basin in the Midwest. These new plants will be key to building low-carbon, high-growth economies around the world.

How Coal: Our Path to Clean, Green, Low-Cost Energy The energy, economic and environmental challenges we face are complex and global. And as is so often the case, solutions will be achieved in steps. I see a clear, four-phase path to a green energy future. First, we’ll need to build advanced supercritical combustion plants with improved efficiencies to stabilize our baseload electric reliability for the next 15 years. These plants typically dramatically reduce regulated emissions and have carbon dioxide (CO2) emissions that are 15 percent below the existing fleet. Peabody’s Prairie State Energy Campus near Lively Grove, Ill., is a powerful example of the environmental progress that can be achieved if we invest in clean coal technology today. Second, we’ll need to commercialize integrated gasification combined cycle technology and carbon capture and storage (CCS). Enormous progress is being made to advance CCS projects, and initiatives are advancing to a critical mass around the world, from American Electric Power’s Mountaineer Plant in the United States to the GreenGen plant in China. Peabody is an equity partner in GreenGen, China’s signature climate initiative and one of the world’s most significant commercial-scale, near-zero emissions CCS projects today. Third, we must develop coal-to-gas and coal-to-liquids technologies with CCS. And finally, we can retrofit existing coal-based plants with CCS technologies. Coal-fueled generating plants are here to stay. Developing the technologies to remove the carbon from these plants, as has been done for many other emissions, is important to accomplish any meaningful climate goals here and around the world. Innovation is the answer, just as it was when the U.S. addressed particulates, sulfur dioxide, nitrogen oxide and mercury decades ago. U.S. coal consumption for electricity generation has

more than tripled since 1970, when the first major Clean Air Act was written. Yet these regulated emissions have declined by 84 percent per megawatt hour. So, don’t be fooled by false claims that we can’t reduce CO2 through technology. We can. And we can succeed at less cost and far more rapidly than we could ever replace the global coalfueled fleet. Let me add that growing numbers of experts agree that coal with CCS is the low-cost, low-carbon solution. For example, the European Commission states that the cost of achieving climate goals could be up to 40 percent higher without CCS, and the IEA says the cost of meeting CO2 targets could be $1.3 trillion higher without CCS. Global efforts are essential for securing our energy supplies and achieving our climate goals, which is why Peabody is advancing signature green coal projects and partnerships across three continents. Still, much more must be done. U.S. Energy Secretary Steven Chu has called for broad deployment of CCS technologies in as little as eight to 10 years, and the IEA is urging nations to develop 100 large-scale CCS plants around the world in the next decade.

Shining a Bright Light Forward Even as we continue to deal with an economic downturn, whole nations are shaking off ages of poverty and moving toward prosperity. This great progress for billions of people hinges on advancing clean and green coal technology right now. With focused action today, a near-zero emissions future is within reach. Perhaps President Obama summarized the need for coal best when he said, “Clean coal technology is something that can make America energy independent. This is America. We figured out how to put a man on the moon in 10 years. You can’t tell me we can’t figure out how to burn coal that we find right here in the United States of America and make it work.” It is time we recognize the strength of our international economy is linked to our energy choices… and that we have the power to make change. Together, we can harness the greatest power on earth – our own willpower – to achieve our energy, economic and environmental goals through greater use of clean coal. s

Peabody Energy’s North Antelope Rochelle Mine in the Powder River Basin loads more than 6,000 trains annually. The company will ship nearly a quarter billion tons of coal to customers in 23 countries on six continents this year… nearly 75 pounds of coal for every man, woman and child in the world.

12 | COAL TRANSPORTER

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Membership Criteria Membership in the association shall be open to entities that are producers or consumers of coal produced in North America and other entities which are interested in its transportation and related issues. Entities or their affiliates whose primary business is providing transportation of coal by rail, barge, truck, pipeline slurry, or any other mode shall not be eligible for membership. One individual from each member company is designated to act as its representative. However, any individual employed by the member may participate in association activities.

Classes of Membership Regular Members:

Actual or potential producers or consumers of coal shall be entitled to apply to become voting members of the association in accordance with provisions in the bylaws and policies adopted by the Board of Directors.

Associate Members:

Individuals or entities who are interested in the transportation of coal or related issues, but who do not otherwise qualify for admission as voting members, may seek admission as a non-voting member. Associate members may serve and be empowered by the committee chair to vote on committees, but shall not have the right to vote in general or special meetings of NCTA.

Honorary Individual Members:

For good cause shown including but not limited to exemplary and outstanding service to the NCTA, a former Designated Representative of a Voting Member may be appointed an Honorary Individual Member of the National Coal Transportation Association. Honorary members may serve and be empowered to vote by the committee chair on committees, but do not have the right to vote in general or special meetings of NCTA. Membership dues and registration fees and other assessments of NCTA may be waived for Honorary Individual Members.

Membership Benefits

Your company may belong to more industry associations than just NCTA, but no other association provides the unique combination of education and real world results that come from NCTA membership. The financial impact associated with the procurement and delivery of coal demands this focus. NCTA maintains a high level of national prominence and credibility by participating in hearings, workshops, and symposiums, coordinating with ad hoc coalitions, providing resource material for governmental agencies, negotiating and educating on issues of general membership concern with carriers. 14 | COAL TRANSPORTER

Conferences with Character

For three days in the spring and fall of each year, NCTA provides coal industry professionals with an exclusive opportunity to share their outlook and knowledge and to exchange ideas. NCTA conferences provide its members the opportunity to learn from the experiences of others with similar responsibilities and from outside experts in an open and noncompetitive environment. Think of the ideas you can borrow, the pitfalls you can avoid and the valuable insight you can give and receive. Members attend all conference at a preferential rate.

Logistics and Planning Subcommittees

The Eastern and Western Logistics & Planning Subcommittees do much of the heavy lifting to solve problems with respect to the efficient operation of the coal delivery process. An important source of strength is the NCTA working committee system that is made possible by the dedication and expertise of our member representatives and the cooperation of the rail carriers. Each Logistics & Planning group meets at least twice annually. These working group meetings are open meetings and are free to attend.

Operations & Maintenance Subcommittee

For companies that do not have the resources, or have diminished resources to support company representation on industry and consensus-based technical panels, the O&M subcommittee helps to fill this gap. The annual conference program provides excellent information on new technologies and best practices for coal car design, maintenance, and repair.

Access to Railcar Leasing Exchange Board

NCTA members have exclusive access to a railcar leasing exchange board where excess train capacity can be posted for lease and where members can post railcar needs. With 86,000 private cars owned and operated by NCTA members, this is a good place to start when you need to adjust your capacity requirements.

Commitment to Education

Education is a hallmark of NCTA. NCTA educates its members through its annual conferences and publications.

NCTA also supports education through its scholarship program that awards scholarships to students in transportation at several major universities as well as to the dependent sons and daughters of employees of member companies.

Policy Insights

The Board of Directors continues to meet in Washington, D.C. each year to visit governmental agencies and other trade associations. Maintaining a presence in Washington enables NCTA to have input into federal policymaking and to better represent member concerns on federal issues. NCTA fosters relationships with key personnel and departments within the Department of Energy, the Department of Transportation, the Surface Transportation Board, the Federal Railroad Administration, and with various elected representatives. NCTA is an educational entity and does not officially lobby for or against legislation. However, we do actively participate in hearings and rulemaking proceedings of interest to our membership.

Membership in NCTA is a sound business decision with a solid return on investment

Communications

Through its ever growing web presence, NCTA communicates with the world about the coal industry and with NCTA member companies - linking potential customers to its members and linking its members to other useful Web sites throughout the Internet. A “Members Only” section provides detailed member contact information, valuable updates on current subcommittee initiatives, a railcar leasing marketplace and other items of interest exclusively to NCTA members. The conference archives date back to 2004, creating a virtual library of information on energy and transportation issues. The semi-annual Coal Transporter magazine focuses on getting to know people in the industry, as well as informing NCTA members and the coal industry as a whole of new and relevant events occurring within the organization. Membership in NCTA is a sound business decision with a solid return on investment and we look forward to serving you. A member company of the National Coal Transportation Association is not just another utility, coal supplier, rail equipment supplier, or coal related services organization. It is part of a tradition of excellence that through affiliation with NCTA, it signals exceptional commitment and obligation to the market, its customers and to the public.

Annual Dues

The annual dues for membership in NCTA are $1,250.00 payable in January of each year.

Application for Membership

All entities or persons desiring membership in the association should apply using the online application or contacting the NCTA for a membership application. The application will include the name, principal business activity and business address of the applicant and the full contact information for the applicant’s proposed Designated Representative. Application forms, along with payment of the annual dues, should be returned to the Executive Director of the Association. The Board of Directors shall approve or disapprove all applications for membership and shall make a determination as to the class of membership into which the applicant shall be admitted. s COAL TRANSPORTER | 15

Fleet Management / Tips and Strategies

Management

of Railcar Fleet in

Changing Economy

16 | COAL TRANSPORTER

hroughout history, transportation fleet managers understand that the focus of their responsibilities is to optimize the utilization of their fleets. The priority is to keep the cars moving to achieve the highest level of capacity from the equipment as possible through continually monitoring activities along the route and working closely with the carriers. In order to effectively accomplish this goal it is essential that the equipment be monitored continually By Ted Barker to avoid delays, minimize the time involved in repairs, monitor and minimize delays at interchange points and keep the trains moving at the highest velocity possible. It is also very important to assure the equipment is well maintained to avoid excessive bad orders and delays in bringing equipment back into the fleet. For years fleet managers have worked hard to make sure they have enough fleet capacity to meet their freight needs while avoiding the need to carry surplus equipment to accommodate inefficient fleet management in covering unexpected delays. Optimizing the railcar fleet meant improving service standards and running faster, longer trains. Just when fleet managers felt that they had right sized their fleets to meet their needs and accommodate the carrierâ&#x20AC;&#x2122;s operating parameters, things changed drastically. Governmental administration changed and the perceptions of the impacts of coal on the environment have had a major impact. Gas prices plummeted making it very economical to replace the coal burning units with gas fired units. Wind farms started appearing everywhere significantly impacting the wholesale energy market. Tough economic conditions, plant closings and a mild summer all contributed to reduced loads and energy needs across the nation. As a result of these and other changes in our economy, many utilities found themselves in a highly unpredictable situation whereby their coal burns were significantly reduced. Although needs reduced drastically, coal shippers have in place agreements to assure their typical long term needs would be met. Stockpiles began to grow and grow and grow to unprecedented levels. Spot purchases were no longer available to many utilities as the spot prices began to drop significantly when available capacity started to soften. Trains began to be pulled out of service improving train velocity. Who could have ever predicted so many issues would impact the industry all at once. Suddenly some utility fuel managers found themselves in a position of wanting to slow up shipments, trying to determine what to do with surplus equipment, contractual agreements above market levels, and stockpiles that continue to grow because utilities can buy energy to meet their needs off the wholesale market cheaper than they can generate from their own units. This also has a huge financial impact on utilities because they continue to have to buy fuel even though they are not utilizing it in their operations â&#x20AC;&#x201C; instead they are buying far more energy than they have in the past. In order to minimize the financial impacts of this many utilities have been forced to dump contractual tonnages into the OTC market at a loss which continues to have an impact on those prices.

These are unprecedented times – so what do we do? The entire industry has changed in many areas but this article will focus on how fleet managers are changing their goals. How do we slow up the trains, find places to store equipment that is not needed and switch from optimization to optimum utilization of our assets by effective and economic management of our trains. As they switch their focus, it is imperative that decisions made also include consideration and plans for a time when things start to ramp up again so that shippers do not create a condition of excessive congestion and chaos with everyone trying to get their trains back into service at the same time. Some utilities may have laid off some of their fleet management staff and those who remain are normally experienced with skills to handle what had been the “typical” operations of fleet management with little experience in today’s environment of changing goals. Now may very well be the time to incorporate fleet management service providers into your operations. This type of service provider can be a tremendous

addition to your operations for a number of reasons. They can save you time and money and reduce the stress of these changing times by assisting your staff with decision making through utilization of their extensive experience in the utility and rail industries. They provide a full service 24/7, 365 day a year that monitors all of their client’s assets. With so many trains parked, it is important to make sure that equipment be monitored even though it is presumed to be parked. Sometimes cars get moved and put into other service and it can be difficult to locate and get them back where they belong when this happens. In addition it is imperative that your service provider is fully aware of contractual issues that impact your overall costs. As an

example, when searching for a place to store your surplus equipment additional charges for out of route movements will typically come into play. These can be extremely high and must become a part of any decisions when moving cars around. It may also be a great time to perform maintenance on your equipment but finding available shop time could become an issue. And, at times when train velocity is not a top priority for shippers, service standards begin to slip drastically 310 which may even have a financial impact. Full service fleet management services have the experience and staff available to assist their clients with all their fleet issues. Now is the perfect time to give them a call to see how they might assist you with your needs. And as stated previously, it will be critical to the industry to manage the ramping up of fleet operations as the economy returns to previous levels. It took months to get to where we are at today, the ramp up will also require some time and a fleet management service provider can certainly assist with a smooth transition during this time. s

54 | COAL TRANSPORTER

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he board of directors of the National Coal Transportation Association is pleased to announce that the applications for membership in NCTA of the following coal industry participants were approved. They join NCTA’s existing member companies working every day through NCTA to foster the cooperation needed to resolve issues faced by coal consumers, coal producers, transporters, rail equipment manufacturers. and services companies. A complete list of NCTA member companies can be found on NCTA Web site: www.nationalcoaltransportation.org/membership/members.html

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NCTA 2009 Fall Conference / Denver, Colorado

NCTA 2009 Fall Conference

Kathy Brown

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September 14-16, 2009

Judy Canter

Mike DeBo

Ron and M

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Rusty and Darrell Dial Darrell Dial d an Rusty

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ompson

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he NCTA continued to offer “Conferences with Character” as it staged its 35th annual Business Meeting and General Conference, September 14-16, 2009 at the Westin Tabor Center in Denver, Colorado. This year’s theme was “Coal: Looking at a Cloudy Crystal Ball”, a reflection of the uncertain road ahead for the most cost effective and reliable source of energy in North America. The meeting opened with a special visit from famous psychic CoalTar the Magnificent, who successfully divined the answers to a host of questions which had been hermetically sealed and stored in Mark Adkin’s desk drawer since noon the previous day. The remainder of the program took a decidedly more serious note as our panel of experts updated us on the political front in Congress, at the EPA, and from the White House. On the regulatory

Steve McCullough

front, speakers were on hand to address RETAC and the Christensen Associates’ Rail Industry Studies. Technology was also front and center with new technologies for generation, transportation, and dust mitigation covered over the course of the two day conference. Wednesday morning featured an interactive discussion between producers, utilities, and chemical suppliers, utilizing the NCTA audience response system for the first time at one of the major NCTA events. At the afternoon break on Tuesday, the NCTA celebrated its 35th anniversary with special cake for its members and guests. And as the clouds disappeared from the crystal ball at the NCTA Fall Conference, the answers became amazingly clear to all – funny, money, and sunny. Oh, the question in the final sealed envelope, you ask? What did the 2009 attendees think of CoalTar, put in Laffere Scholarship Endowment envelopes, and hope the weather will be like at the Spring Conference in San Antonio? s

Chris Blaz

2009 Fall Sponsors Fall Reception American Railcar Industries Aero Transportation Products Energy Publishing, Inc. Global One Transport, Inc. Greenbrier Rail Services Lexair, Inc. Midwest Industrial Supply MinTech Miner Enterprises New York Air Brake Rail Link, Inc. Signal Peak Energy TrinityRail Westmoreland Coal Sales

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Report on Railcar Jacking Stress Analysis By James D. Hart - Vice President Global Technology, FreightCar America

istorically, freight cars that required wheels to be changed were removed from a train and moved to a repair area. In this repair area the cars would be lifted utilizing â&#x20AC;&#x153;jacksâ&#x20AC;? that lifted the car at the jacking pads. The jacking pads are installed on every car generally at the center of bolster outboard of the side frame. Car builders reinforce the jacking pads, per AAR requirements, to enable the cars to be lifted empty or when loaded to the maximum gross rail load. In an effort to improve efficiency and utilization, an alternative solution was developed by the railroads to jack the cars while empty and coupled together to allow sufficient clearance to change out a wheel pair. This method keeps the car in the unit train and avoids the inefficiencies of removing a car and inserting a replacement. This procedure is a fairly new concept. The AAR does not address this method of raising a car in this manner in its design requirements. Car builders and car owners were concerned about potential damage to the cars and car components, particularly cars equipped for rotary dumping with F style couplers. The coupler pin support generated the most concerns about the impact of jacking at the couplers. As such, a consortium of companies participated in a comprehensive test involving this new procedure. The jacking tests were performed at the Progress Rail facility in Northport, Nebraska during the week of July 13, 2009. Cars equipped with both E and F couplers were provided by Ameren Energy Services. The instrumentation and collection of testing results were conducted by Amsted Rail. The E coupler cars were the first cars that were raised by the couplers. Four cars were coupled in a string with the handbrake applied to the last car in the string. The trucks were chained to the body of the car to allow them to be raised with the car body. A jack was then placed under the couplers between cars two and three and the couplers were raised sufficiently to allow the inside wheel set to be rolled out from underneath the car. s 22 | COAL TRANSPORTER

E coupler cars summary Coupler shanks did not contact the strikers Knuckles at the jack end were tight Knuckles at the unjacked ends were loose. Stresses on E coupler cars UCEX 22603 jacked @ A end UCEX 25138 jacked @ A end Maximum stresses recorded on UCEX 22603: Draft gear carrier (A end) 3396 psi Draft gear carrier (B end) 925 psi Maximum stresses recorded on UCEX 25138: Draft gear carrier 1577 psi Draft sill casting 5545 psi Jacking of the F coupler cars was performed using the same equipment and procedures as the E coupler cars.

F coupler cars summary Coupler shanks did not contact strikers on jacked end Coupler shank touched the striker on A end (rotary) Jacked end knuckles were tight Unjacked end - coupler knuckles were loose Stresses on F coupler cars CAEG 25276 jacked @ A end CAEG 25750 jacked @ B end Maximum stresses recorded on CAEG 25276 were: A end coupler pin support 4098 psi A end outboard draft gear carrier 1680 psi B end coupler pin support 270 psi B end draft sill casting 148 psi Maximum stresses recorded on CAEG 25750 were: Coupler pin support 191 psi

Initial positioning of jack.

Couplers jacked to full height.

Testing involved a four car string.

The companies represented at test:

Conclusion Based on the results of the above jacking tests, it was determined that these cars will not be damaged using the equipment and procedures tested.

AEP AllTransTek Amsted BNSF Columbus Steel FreightCar America McConway & Torley Mitsui Rail Capital OPPD Progress Rail Trinity Rail Union Pacific Xcel

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NCTA 2010 Spring Conference Preview / San Antonio, Texas

NCTA 2010

Spring Conference Omni La Mansión del Rio San Antonio, Texas April 11-14, 2010

RESERVATIONS: Telephone: 1-800-THE-OMNI

ROOM RATES PER DAY: $189.00/day Single/Double Room

he Omni La Mansión del Rio in San Antonio, Texas is the venue for the NCTA 2010 Spring Conference. Unlike the Gaylord Opryland, you will not need to leave a trail of breadcrumbs (or tortilla chips as the case may be) to find your room. With 338 guest rooms and suites, the hallways and lobbies will be filled with people you know. Ideally situated along the historic River Walk on the banks of the Paseo del Rio in downtown San Antonio, it is perfect base of operations for exploring all of San Antonio’s attractions. Blending Spanish colonial architecture and European style, the fourdiamond Omni La Mansión del Rio offers the romance, grace and charm of a grand hacienda. Some rooms feature private balconies with sweeping views of the River Walk while others offer views of the lush courtyard, reminiscent of a European garden with native foliage and dancing water fountains.In its celebrated multi-level restaurant Las Canarias, you can choose to sit on high under the graceful palms, watching the flow of the river, or down in the action with a “festival” of people strolling by. April is a wonderful time of year to visit what Mark Twain described as it as one of only four unique cities in

the United States. With an average high temperature near 80 degrees, you could stay put in Superior, Gillette or Chicago where the average April highs are 47, 55, and 59 degrees respectively, but we can assure you that you will accomplish more for your company by attending this ever more popular NCTA event. The Spring Conference has an outstanding program covering the state of the coal supply, electric utility, rail carrier, and barge industries as viewed by top management. Other topics addressed include energy supply and demand, fuel risk management, emerging legislation, fuel surcharges, and viewpoints on global climate change. The conference will open with a poolside reception Sunday for early arrivals. The NCTA is pleased to host its traditional dinner on Monday evening in the Iberian Ballroom on the hotel grounds following the afternoon golf tournament, our 14th annual. Tuesday and Wednesday mornings will be plenary sessions with special breakout sessions on Tuesday afternoon.

REGISTRATION

Registration is required for each attendee at the NCTA Spring Meeting. The fee is $480.00 for attendees representing a member company and $635.00 for all other attendees when registering prior

Sunday, April 11

Tuesday, April 13

5:30pm – 6:30 pm Welcoming Reception – El Capistrano

7:00am – 7:30am Continental Breakfast – Iberian Foyer 7:30am – Noon General Session – Iberian Ballroom Lunch by Individual Arrangement

Monday, April 12 8:00am – 11:00am 12:30pm – 6:00pm 7:00pm – 9:30pm 24 | COAL TRANSPORTER

NCTA Board of Directors Meeting – Omni Boardroom Golf Tournament – The Quarry Golf Club Dinner – Iberian Ballroom

1:30pm – 4:30pm Breakout Sessions – Iberian A and C

Wednesday, April 14 7:00am – 7:30am 7:30am – Noon Noon

Continental Breakfast – Iberian Foyer General Session – Iberian Ballroom Conference Adjournment

to March 19th, 2010. Beginning March 20th an additional $50 fee will apply for all late registrants. All registrations by a nonmember company for more than three individuals will be registered at the member rate. There will be an additional fee of $75.00 for spouses and guests attending the dinner on Monday evening. There is no fee for spouses/guests attending the receptions. A name badge will be provided and it is requested that it be worn for all scheduled functions. Online Registration for the conference is available through the Spring 2010 Conference page on the NCTA website.

ACCOMMODATIONS

The venue for the 2010 NCTA Spring Conference is the Omni La Mansión del Rio in San Antonio, Texas. This year’s insider tip for the La Mansión is “location, location, location!” This four star property is the perfect base of operations for exploring all of San Antonio’s attractions. The fabled Alamo, the El Mercado marketplace, the La Villita Arts District, the Spanish Governors Palace, and other well-known landmarks are within easy walking distance of the Omni. The 14th annual NCTA golf tournament will tee off at the Quarry Golf Club in San Antonio. Designed by nationally recognized golf course designer Keith Foster, the Quarry is recognized around the country for it’s unique setting and design. The front nine plays in a links style format and features rolling hills, native grasses, and immaculate greens. The back nine lays out in an 100 year old quarry pit. The biggest challenge may be to keep the miners in the crowd focused on the tee and not on the pit! The Omni La Mansión del Rio is located at 112 College Street, San Antonio, Texas 78205. s

Blending Spanish colonial architecture and European style, the four-diamond Omni La Mansión del Rio offers the romance, grace and charm of a grand hacienda. COAL TRANSPORTER | 25

Determination of the Stress State Developed Within a Non-Cushioned Rail Yoke and the Prediction Of The Theoretical Fatigue Life By Andrew Smyth, Jason Reiling, and Sean Ely

uring service, freight railroad coupling systems experience heavy loading due to various train actions. For non-cushioned railcars, the primary tensile component utilized to transfer these forces to the draft system is the yoke. The stress state developed within a yoke was analyzed using both strain gage data and nonlinear finite element methods for both static maximal loads and pseudo-static cyclic loads accounting for the nonlinear material behavior, including plasticity and strain hardening. From the stress profile developed within a yoke the critical locations were determined and the theoretical fatigue life was calculated using various Strain Life fatigue analysis methods considering both the uniaxial and biaxial stress conditions that exist. Using this data, a possible failure mode is presented.

Introduction And Problem Description The coupling and draft system on a freight train consists of an automatic coupler, a yoke, a draft gear system, buff and draft stops, and an interconnecting pin or key. The layout of the coupling and draft system results in the yoke witnessing all of the pulling forces between cars. Because of this, the yoke of any given car in the front of the train will experience the pulling force caused by the weight of the entire train behind it. Over the years the weight per railcar, as well as the overall length of the average train, have continually increased. As the gross vehicle weight and train length increase, the tensile forces on the yoke have increased. These increased forces have amplified the frequency of cracking and failure of the yoke. 26 | COAL TRANSPORTER

the graphs shown have an abscissa of an The standard design for a draftgear yoke has remained unchanged for arbitrary time. For the comparison, the decades and was originally designed with time is non-dimensional as the static far less forces in mind. Due to these FEA analysis only uses time as a loading factors, a stress analysis of a yoke was placeholder; for this type of analysis no performed to determine where the critiinertial effects needed to be considered. cal zones are located. In addition, the In addition to the strain gage data obstress profiles developed were utilized to tained, two displacements were meadevelop a method for predicting the posured: longitudinal and lateral, as shown tential fatigue life of these critical areas in Figure 1. for a given loading spectrum. The longitudinal displacements To perform the stress analysis, the were measured in the axial direction finite element analysis (FEA) software coinciding with the direction of the load. ANSYS was utilized. This software Since the loading is exclusively tensile it Figure 1: Test Set-Up provides the capabilities to analyze a will cause the yoke to stretch, thus prostructural material beyond its elastic ducing the positive longitudinal displacelimit, modeling nonlinear behavior such as plasticity and strain ment values. This extension of the yoke will cause the straps to hardening. The modeling of these material behaviors allows for deflect inward creating a negative displacement measurement. the use of more sophisticated fatigue life analysis methods. To illustrate the concave nature of the strap under a load, a 10x After performing the analysis, a possible failure mode for scaled contour plot of the displacement is shown in Figure 2. a yoke is presented This plot displays where the final failure the nature of deformaoccurs in a multiple tion that a yoke will step process, initiating experience under a with a crack in the tail tensile load in an exagregion, and ending gerated fashion (only with the propagation a Âź of the yoke was of a crack through modeled in our simuthe strap leading to lations as the yoke is Figure 2: Deformation â&#x20AC;&#x201C; 10x Scale symmetric about two fracture. planes). Figure 3 plots both displacements Static Stress Analysis versus time for the duration of the entire test including both the measured and the theoretical values. To determine the critical locations on a yoke, a theoretical stress To easily compare the strain gage rosette data to the analysis was performed in conjunction with a strain gage analysis. results obtained from the FEA simulation a conversion was The static loading conditions used for the analyses were based on performed to represent the rosette strains as an equivalent the M-205 testing described in the AAR manual [1], including strain. In our analysis, 45 degree rosettes were installed. The the ultimate tensile test and the permanent set test. For the ulticonversion procedure, shown in [2], [3], and [4], converts mate tensile test, each yoke must be able to withstand a maximum tensile load of 900 kips without failure. Before the yoke is loaded the rosette strains, first into the in-plane strains, then into the to 900 kips, the permanent set principal strains, and finally test is performed by first loading into an equivalent strain. the yoke to 750 kips and then After the transformaunloading to 5 kips (original tion, the output from each strain gage rosette was plotted datum value). After unloading, against the equivalent strain the yoke must have a permanent obtained from the FEA results. set no greater than 0.03 inches. From Figure 4 and Figure 5 it While performing these tests can be seen that there is very in the lab (test set-up shown good correlation between the in Figure 1), three strain gage theoretical results and the rosettes were attached to locameasured results. To remain tions that were deemed critical concise, only the tail and fillet based on our preliminary FEA rosette locations are shown. simulations. To validate our FEA stress From knowledge of failed or condemned yokes within the results we proceeded to correfield, and from our proceeding late the actual strain gage data stress analysis it can be seen with the theoretical FEA results. Figure 3: Displacement Correlation that the fillet region (strap Since the testing is continuous, COAL TRANSPORTER | 27

Figure 4: Fillet Rosette Correlation

Figure 5: Tail Rosette Correlation

Figure 6: Strap Transition: Maximum Principal Stress 28 | COAL TRANSPORTER

transition) and the tail section are the two critical locations for failure within a yoke. In the fillet region where the strap transitions into the butt end the stress can approach critical values exceeding the yield strength of the material and, in some localized areas, the true ultimate strength. Since the yoke experiences heavy loading in the field that can cause localized yielding within the material, exceeding the yield strength should not be considered the criterion for failure. To design a yoke to remain elastic for all possible loads would not be practical. Even exceeding the ultimate strength of a material does not necessarily indicate the entire part has fractured, only that a localized crack may occur in the nodal location where the ultimate strength was exceeded. Although a localized crack does not preclude fracture, exceeding the ultimate tensile strength (UTS) even in a relatively small region of the fillet can lead to complete fracture. Since this region has a relatively small cross-sectional area, the propagation distance to failure of an initiated crack is small. Assuming that the yoke is manufactured perfectly (no defects, voids, etc.), it takes a considerable load to exceed this limit. Figure 6 shows the fillet regionâ&#x20AC;&#x2122;s Maximum Principal Stress at 1000 kips. Near this value of tensile load, complete fracture of a yoke can be considered probable. Viewing the subsequent decrease of the Safety Factor (SF), described in [4], across the cross sectional area of the strap transition region for an increasing tensile load displays the portion of the area approaching the yield limit. Figure 7 displays this progression, from left to right, as the yoke is loaded to 750 kips. The SF for the cross-sectional area is displayed for loads of 100, 300, 600 and 750 kips. If a SF greater than 3 is considered ideal, then a load of 600 Kips will create a stress state where approximately half of the strap cross-sectional area has a SF below this value. A subsequent increase in the load further increases the percentage of cross-sectional area below this value. For the tail portion of the yoke, the material is subject to a large amount of strain. As the load is progressively applied, the tail material is extended around the butt end toward the strap region. This stretching can be illustrated by a plot displaying the maximum principal stress vectors. Figure 9 displays these tensile vectors (in red) under an applied load. As the material is stretched beyond its elastic limit it undergoes permanent nonlinear deformation. This deformation can be represented by a plot of the equivalent plastic strain within the material. Figure 8 displays a contour plot of the yielded material, with a dark blue color indicating elastic material. This high level of yielding can lead to a weakening of the material in the tail end. After substantial plastic deformation the material can no longer behave in a ductile manner and it is likely that a crack will initiate within the tail end degrading the yokeâ&#x20AC;&#x2122;s ability to withstand the loading. This degradation of the tailâ&#x20AC;&#x2122;s load carrying capacity can preclude to a fracture in the strap transition region due to the reduced stiffness provided by the cracked tail region. In addition, this excessive deformation of the tail necessitates the deflecting inward of the straps thus introducing a situation where binding of the draft gear is possible.

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Figure 7: Safety Factor Progression

Fatigue Life Assessment

After developing an understanding of the stress state developed within a yoke during typical loading conditions, further analysis was performed to gain an insight into the potential fatigue life. To develop a realistic loading spectrum for the analysis, the AAR specification M-216 [5] was modified to allow for theoretically larger loads experienced by a yoke. Since the loading in that specification is designed for a knuckle (a theoretically weaker component), the stresses developed will remain elastic when considering a yoke. Specification M-216 only considers loading up to 300 kips, where the REPOS data shown in [7] displays loads in excess of 300 kips. Another consideration is that freight car mass has been continually increasing over the last 20 years since the original REPOS data was gathered. Using this information, a potential loading spectrum for a yoke was developed using a regression analysis. To keep this spectrum consistent with M-216, thirteen loading cycles were also considered. Figure 10 displays the general characteristics of the modified loading spectrum where the number of cycles per

load range decreases as the load magnitude increases. Assuming that the loading magnitude decreases linearly as the cycles are increased, the regression equation shown in Figure 10 was utilized to calculate the number of cycles for each loading range. When analyzing loading cycles where the stress values are exceeding the yield limit, consideration should be made to account for the possible strain hardening or softening of the material during the loading. This material effect is called the Bauschinger Effect [9], and can be incorporated into the pseudo-static FEA analysis by utilizing a cyclic stress-strain curve for the first loading cycle and a hysteresis stress-strain curve for all the subsequent loading cycles [6]. When a material strain hardens, an identical strain value will be caused by an increased stress value. The convention for defining the cyclic and the hysteresis curve is similar to that of the Ramberg-Osgood equation shown by Draper [6]. Utilizing these material laws allows for the modeling of strain-hardening within the Grade E material. A typical hysteresis loop is shown in Figure 11 representing a plot of stress versus strain for an arbitrary block of Grade E material.

Figure 8: Yielded Material

Figure 9: Tail Region Stress Vectors

30 | COAL TRANSPORTER

Figure 10: Regression Plot (Loading Spectrum)

Figure 11: Strain Hardening (Hysteresis)

For the Strain Life fatigue analysis, the material parameters Utilizing the FEA results obtained from analyzing the utilized were identical to those used in the static stress analysis entire loading spectrum described in Figure 10, the fatigue life along with four additional fatigue properties. was calculated for the tail region. When considering a Strain Life fatigue analysis, the state of The full paper has a table that displays the strain and stress in a particular region determines the method utilized to acstress range for each loading segment along with the correcount for the mean stress effects sponding life for each cycle. of a loading cycle. For a purely This table also displays the uniaxial state of stress, the Smithcumulative life calculated Watson-Topper (SWT) method using Miner’s Rule. For the was utilized [6]. When a surface particular loading spectrum behaves in a biaxial manner the used, the total number of Brown-Morrow (BM) method cycles for the tail region would was used. A tri-axial stress state be approximately 1.2 million, is typically not considered as the or 854 repeats of the 1396 surface will have no out-of-plane cycle loading block. stress value and most cracks The fillet region experiinitiate on the surface. To deterences a more biaxial stress mine the particular stress state of state, and the BM method was Figure 12: Fillet Region Stress Vectors a nodal location, the biaxiality utilized to calculate the fatigue indicator (BI) [4] was calculated. life. This method uses the shear The BI is a ratio of the principal stresses with a value of 0 indicatstrain range (∆γ)/2 normal strain range (∆εΝ)/2 the maximum ing uniaxial stress, a value of -1 as pure shear, and a value of 1 shear stress (τmax □), the maximum normal stress (σN,max), indicating a purely biaxial stress state. The tail section of the yoke and the five material constants described in the SWT method. experiences purely tensile stresses approaching a nearly uniaxial The BM equation is shown in equation (2). state of stress with a BI of approximately zero. From the vector (2) plot shown in Figure 10 it can be seen that the tensile stress vectors have no contribution from the other principal stresses. Within the fillet radius and strap transition region a more bi-axial stress state is developed. Figure 12 displays the stress vectors that calculate a biaxiality of 0.22 indicating a partially biaxial stress state. Since the tail region was determined to have a uniaxial state of stress, the SWT method was utilized to calculate the potential fatigue life. The SWT method uses the strain range In a manner similar to that for the tail region, the fatigue life was calculated for the fillet region. A table in the (∆ε)/2 the maximum stress (σmax □) the elastic modulus (E) and the four fatigue material constants: fatigue strength coeffull paper summarizes the calculated fatigue life for each ficient (σf′), fatigue strength exponent (b), fatigue ductility coloading segment and the corresponding life. Using Miner’s efficient (ε ′), fatigue ductility exponent (c). The SWT fatigue Rule to accumulate the fatigue life, the total life is approxif equation is shown in equation (1). mately 10^9 cycles, or 1.1 million repeats of the loading (1) block. For this particular application, this value can be considered an infinite life. Based on the two previous analyses, some assumptions can be made regarding the area that will fail first due to fatigue. COAL TRANSPORTER | 31

In a Strain Life fatigue analysis, the fatigue life indicates the initiation of fatigue cracks, not the complete failure of a component. With this understanding, it could be possible for a component to initiate a crack (fatigue life reached) and yet not experience a failure in the field. Assuming that this situation does occur and that the fatigue crack will not rapidly propagate to fracture, it can be shown that the tail portion of the yoke will crack first. This underlies the previous static stress analysis indicating that the first failure will occur in the tail, thus reducing the load carrying capability of the butt end by decreasing the stiffness. With a decreased stiffness in the tail end, the strap transition and the fillet region will experience strains that exceed the maximum values causing a secondary crack to emerge in this area. Since there is very little distance until the complete fracture of a strap, the fillet region crack propagates to failure first even though the tail experiences the initial fatigue cracks.

Conclusions

Based on test data collected and the stress analysis done, it was demonstrated that it is possible to accurately determine the stresses and strains in a yoke using FEA software. Having confidence in the correlation between the quasi-static test data and the computer simulations has given the ability to accurately analyze the ultimate strength characteristics of the yoke. The knowledge of the yokeâ&#x20AC;&#x2122;s material response to representative loads allows for the determination of the critical regions. Based on the stress profile developed, it can be determined that the strap transition region (fillet) and the tail region are the

32 | COAL TRANSPORTER

most critical. These locations experience high levels of plastic deformation and have maximum stress values that approach the UTS of the material. Since a yoke undergoes cyclic loading in the field, fatigue damage must be accounted for in the failure mode of the material. After determining the critical locations within the yoke geometry and calculating their stress profiles, Strain Life fatigue methodologies were used to predict the potential life of the fillet region and the tail region. An important factor in accurately determining the fatigue life of a yoke is to evaluate what loading spectrum will accurately represent the loads experienced while itâ&#x20AC;&#x2122;s in service. There is useful empirical data available for analyzing knuckles, but yokes are purposefully designed to be stronger and to have a longer fatigue life so this data cannot be used without modification. In order to develop a more suitable loading spectrum for the fatigue analysis of a yoke, a regression analysis of the M-216 knuckle loading spectrum was used to develop a heavier loading spectrum that better represents the loads a yoke will experience in service. For the critical regions (nodes) in the yoke, a determination of the stress state was needed before performing the Strain Life fatigue analysis. The BI was used to describe whether the stress state was uniaxial, biaxial, shear or some combination of these states. Depending on the stress state, a different fatigue analysis technique must be employed to determine an accurate component life. Using a principal stress vector analysis in the FEA simulation, the tail end of the yoke was determined to be in a purely tensile (uniaxial)

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stress state with a BI of 0. For uniaxial stress states, the SWT method was decided to give the most accurate determination of fatigue damage. In contrast, the relief fillets of the yoke were partially biaxial with a BI of 0.22. This biaxiality determines the use of the BM method for analyzing the fatigue life. Using each of the aforementioned fatigue calculation methods for the respective nodal locations, in combination with Miner’s Rule, the cumulative fatigue life for each of the critical areas on the yoke was determined. For the fillet region, the total life expectancy of the yoke is 109 cycles, or 1.1 million repeats of the loading block. For this particular analysis, that can be considered infinite life. In contrast, the tail region has a life expectancy of 1.2 millions cycles, or 854 repeats of the loading block. Based on this fatigue analysis it is apparent that the most critical area of the yoke is the tail region. For a Strain Life analysis, the number of cycles to failure indicates only the initiation of fatigue cracks and not the total fracture of a component. A yoke could develop fatigue cracks and still be serviceable before fracture occurs or before excessive plastic deformation causes the binding of the draft gear. Based on this information, it can be assumed that the tail region will experience the first fatigue cracks causing a reduction in the load carrying capacity of the tail region. With this reduction in stiffness of the tail region, the strap and fillet will experience strains in excess of the material limit, thus causing secondary cracks to form in this region. Since the distance for these cracks to propagate is minimal, the fillet cracks will propagate to fracture of the yoke. s

References

[1] Association of American Railroads. M-205: Yoke, Coupler - Test Requirements . AAR Manual of Standards and Recommended Practices. 2003. [2] eFunda, Inc. Strain Rosette for Strain Measurement. eFunda . [Online] eFunda, Inc. http://www.efunda.com/ formulae/solid_mechanics/mat_mechanics/strain_gage_ rosette.cfm. [3] Gere, James M. Mechanics of Materials. s.l. : Brooks/ Cole, 2001. [4] ANSYS, Inc. Theory Reference for ANSYS and ANSYS Workbench. [Documentation] s.l. : ANSYS, Inc., 2007. [5] Association of American Railroads. M-216: Knuckle, Types E and F - Fatigue Test. AAR Manual of Standards and Recommended Practices. 2009. [6] Draper, John. Modern Metal Fatigue Analysis. s.l. : Safe Technology Limited, 2004. [7] Association of American Railroads. M-1001, Chapter 7: Fatigue Design of New Freight Cars. AAR Manual of Standards and Recommended Practices. [8] Association of American Railroads. M-201: Castings, Steel. AAR Manual of Standards and Recommended Practices. 2005. [9] ASM. Atlas of Stress-Strain Curves. 2002. Acknowledgements: Tensile testing performed at CTL Labs in Skokie, Illinois. Note: This is an edited version. The complete paper is available at www.StratoInc.com

w e s t m o r e l a n d c o a l c o m pa n y A Tr u s t e d Na m e i n C o a l S i n c e 1 8 5 4

Seattle to St. Paul COAL TRANSPORTER | 33

Rail Relocation Study / Denver, Colorado

From the Front Range to the Eastern Plains Colorado Studies Rail Relocation By K.C. Mason

ompletion this year of two major studies on rail transportation brought Colorado no closer to deciding whether to pursue a 200-mile rail bypass that would move coal trains outside the Denver metroplex and onto the eastern plains – an idea that has been discussed for at least 30 years. And the only thing on the horizon is still more studies, much to the chagrin of eastern Colorado farmers and ranchers who face uncertain land values and fear the prospect of condemnation through eminent domain exercised by either the Class 1 railroads or the state. “Even the potential relocation of railroad lines has already negatively impacted our property values,” said Kenny Yoder of Karval, one of several citizens who took their case to the Colorado Legislature early in 2009. The Colorado Department of Transportation in February released a 133-report on its 2-year rail relocation study, which looked at two potential – but hypothetical – realignments of the Union Pacific and Burlington Northern Santa Fe tracks. The study, dubbed “R2C2” for Rail Relocation for Colorado Communities, considered the implications of moving up to 18 122-car coal trains a day out of the increasingly populated cities of Denver, Colorado Springs and Pueblo.

34 | COAL TRANSPORTER

Trains have premium parking at Denver’s Invesco Field at Mile High Stadium. Alignment A (see map) would use more of the existing UP track east of Denver while Alignment B, though shorter, would require all new track and thus be more expensive. (see chart). Moving coal to Texas from the prolific mines of Wyoming’s Powder River Basin requires a slow north/south crawl through the congested cities, resulting in lengthy delays for both motorists and local freight. It also leaves little room for

pursuing dreams of high-speed passenger rail service through Colorado in the same right of way. “The potential for diverting the majority of heavy freight traffic from the Front Range communities and thereby possibly opening up the Joint Line for intercity passenger rail service results in a strong recommendation for further study,” the R2C2 study concluded. The next step, according to CDOT project director Tammy Lang, is melding

“The potential for diverting the majority of heavy freight traffic from the Front Range communities and thereby possibly opening up the Joint Line for intercity passenger rail service results in a strong recommendation for further study.” Conclusion of state study on coal train relocation

Trains preferring basketball or hockey have front row tracks at the Pepsi Center. the $1.75 million R2C2 with another $1.5 million study conducted by the quasi-governmental Rocky Mountain Rail Authority. Its original purpose was to determine whether high speed passenger rail would be feasible along some of the same Interstate-25 corridor now heavily used by the freight trains, with the ultimate goal of seeking high speed rail designation from the Federal Railroad Administration and eventual federal funding to pay for construction. The RMRA, which is not a rail authority and has no ability to issue revenue bonds, also studied the feasibility of an east-west high speed train along the Interstate 70 corridor from Denver to the Western Slope to accommodate snow riders and other travelers to the year-round mountain resorts.

High-speed transit advocates eschew joint right-of-way The more RMRA got into its study, however, the more its focus moved

away from the existing tracks operated jointly by Union Pacific and Burlington Northern Santa Fe. An analysis of alternatives to sharing right of way with the freight trains pushed the completion of the high speed passenger rail study back to at least late October. “The entire basis for doing that was flawed from day one,” said Harry Dale, a Clear Creek County Commissioner who chairs the RMRA’s board of directors. “It’s ironic because we are applying to the FRA to make ourselves eligible for high speed rail that could never be run on those (Joint Line) tracks. For speeds in excess of 100 mph, you need a straight alignment and pristine rail conditions. Nothing can be shared with a freight railroad.” Dale instead has set his sights for a north-south guideway from Fort Collins to Pueblo, capable of carrying trains traveling at 150 mph, on a route roughly following the path of E-470. The tolled highway sweeps around the eastern edge of metropolitan Denver

and feeds traffic into Denver International Airport. He doesn’t believe building the rail bypass would increase the chances of constructing high-speed rail, but it could free up right of way for the expansion of local freight deliveries and pickups. He said more rail capacity will be needed through Denver no matter what. “I’m 100 percent positive it will happen because the growth projections in Colorado are just off the charts,” he said. “Whether it will happen in 10, 20 or 50 years, at some point we will have high speed commuter trains in Colorado. Having a more energy-efficient means of moving people is just a matter of time.” Lang insists the two studies still need to be merged. “They still complement each other,” she said. “We wouldn’t be able to use the same track but we are not prohibited from using the same right of way. The less freight traffic in the right of way, the less conflict there is with other traffic.”

COAL TRANSPORTER | 35

Landowners fear eminent domain The longer it takes Colorado to decide if and when to support a bypass, the more frustrated farmers and ranchers on the eastern plains become. While implementation of any plan is still years away, “even the prospect of lower property values can hurt farm and ranch families, especially if they are considering a sale,” said Travis Taylor, a Lincoln County farmer and rancher and chairman of Citizens Against Railroad Relocation. Vocal CARR members packed public hearings after the R2C2 study was released and produced dozens of questions that will be answered in the next study that CDOT is planning. Said Taylor: “We don’t want to be horrific neighbors and if it benefits the state and us at the same time, we wouldn’t be opposed. The costs and benefits to eastern Colorado, either positive or negative, have not been studied.”

The group early this year asked their state senator, Republican Greg Brophy, himself a northeastern Colorado vegetable farmer, to sponsor a bill prohibiting the railroads from using condemnation to obtain the right of way for new tracks. “They are not opposed to a new alignment, just to eminent domain,” Brophy said. “If they are going to get steamrolled, there is an incredibly well-organized group that will oppose it with all their might and I will be right there with them.” Despite their impassioned pleas for some certainty in the process, majority Democrats on the Senate Transportation Committee killed Brophy’s SB09-063, on a straight party-line, 4-3, vote. Representatives of the railroads argued the measure was unnecessary because their ability to condemn property is rarely used and then only as a last resort. Lobbyist Blaine Bilderback testified that BNSF “invariably” has paid over market value if it does have

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to condemn property. Dick Harman said UP has only used condemnation 10 times in more than 1,000 property acquisitions in the history of the company. The railroads have participated in previous studies but prefer to take a back seat to CDOT when it comes to public comment about them. Questions about a prospective coal train bypass were referred back to the state. “The railroads want to participate; want to be involved. They are an important part of the process,” Lang said. The UP, however, did inject some guidelines into the RMRA study on high speed commuter rail. They were as follows: 1) passenger service should complement, not conflict, with freight; 2) passenger service must have adequate liability protection; 3) passenger rail must fully compensate freight railroads for use of property; 4) high-speed rail can not force commuter access to freight property; and 5) freight railroads should not be expected to subsidize passenger service. The next study is supposed to take care of that. “We have federal funding for the eastern plains benefits and impact analysis, and we are forming a citizen’s advisory committee that will investigate the issues and concerns for both the eastern plains and Front Range , Lang said. “This is all very expensive and will take a long time.” She added that the Obama Administration’s push for high speed commuter rail is helping fuel efforts to move the ball forward on the coal train bypass.

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The 2009 Colorado Legislature created a new Division of Transit and Rail with CDOT, which eventually will be the point agency for any future decisions about either freight or passenger rail in Colorado. Its purpose is to integrate transit and rail into a statewide transportation system. However, even its implementation is only in the planning stages and is being slowed by the worst state budget crisis since the Great Depression. “There’s been one meeting of the interim transit and rail advisory committee and more are scheduled this fall,” Lang said. “It will establish a strategic plan for the first few years and determine the skills of a new director.”

No timetable for what’s next

The idea of clearing some of the coal freight out of Front Range cities has been on the radar screens since 1979, when the state examined the potential of public/

private partnerships that could result in moving the track to the east. The concept was revived in 2002, about the same construction began on a 19-mile light rail along I-25 through Denver, when the Class 1 railroads themselves come up with a plan to consolidate operations to improve passenger and freight mobility along the Front Range. A year later, CDOT conducted a Public Benefits and Costs Study on a bypass alignment similar to Alignment A in the R2C2 study. It concluded “Colorado’s citizens would accrue more than sufficient benefits to warrant the investment of public dollars in the proposed relocation project.” CDOT executive director Russ George refused to set a timeline for any kind of final decision on a coal train bypass. “There is nothing pending other than fulfilling a promise made during that (R2C2) process that we would be

“We’re not nearly far enough along to say let’s go survey and decide where it out to be. There’s no money in the pipeline for this.” Russ George, executive director Colorado Department of Transportation

institutional in bringing everyone together to talk about the whole thing,” he said. “We’re not nearly far enough along to say let’s go survey and decide where it out to be. There’s no money in the pipeline for this. The NEPA (National Environmental Protection Act) process has not even been thought about yet.” Dale predicted there would be at least 10 more years of studies before anyone breaks ground on either a passenger or freight project. “The feasibility study is a gate to determine whether you take the next step, which is more studies,” he said. “The NEPA process alone is 3-5 years.” Taylor hopes decisions will be made sooner rather than later. “The studies are starting to come closer together because of a great need for it,” Taylor said, adding the CARR wants a permanent seat at the stakeholders’ table. “As pressure grows, R2C2 (the bypass) could stand alone just to alleviate congestion. We don’t want to come off as being anti-change and stop progress, but we don’t want them to put us out of business out here just to benefit the Front Range either.” s

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NCTA 2010 Operations and Maintenance Conference / Preview

2010 Operations and The Coeur d’Alene Resort, Coeur d’Alene, Idaho June 14-16, 2010

CTA Operations & Maintenance Committee is pleased to announce that the Committee will conduct its annual conference June 14-16, 2010 at the Coeur D’Alene Resort in Coeur D’Alene, Idaho. Like the O&M Committee itself, the Coeur D’Alene Resort is “world famous… for a reason.”. The resort is located on beautiful blue Lake Coeur D’Alene with over 100 miles of shoreline for the adventurous to explore and enjoy. The conference will have nearly 10 hours of plenary sessions dedicated to covering the technology, design, maintenance, operations, and repair of railcars in unit train service. We will continue our longstanding tradition of hosting a private car owner roundtable discussion. The conference will feature all the usual events including an opening night reception, continental breakfast, dinner cruise for attendees and guests on Tuesday evening, and will conclude with the annual golf event.

38 | COAL TRANSPORTER

REGISTRATION

Registration is required for each attendee at the O&M conference. The conference is open to all NCTA members regardless of whether you have participated actively in the ongoing work of the O&M committee. The conference fee is $350.00 for members and $500.00 for nonmembers. After May 21st an additional fee of $50 will be accessed for late registrants. The registration fee covers the registration packet of information, admission to all meeting proceedings, the welcoming reception on Monday evening, continental breakfast on Tuesday and Wednesday, the dinner cruise on Tuesday night, and all refreshment breaks. There is a charge for each guest of a registrant that participates in the Tuesday dinner or golf.

SPONSORSHIPS

Conference sponsorship opportunities are available at three levels of support - Platinum $2,500, Gold $1,500, and Silver $1,000. Please contact Tom Canter at 303-979-2798 or by email to tom@nationalcoaltransportation.org for additional details on sponsorships and company recognition.

Maintenance Conference ACCOMMODATIONS

Located on Lake Coeur d’Alene, the four-diamond Coeur d’Alene Resort is approximately 40 miles from Spokane International Airport. The Resort offers lakefront and lakeview rooms and suites, designed from the ground up with guest comfort in mind. The Coeur d’Alene Resort Golf Course and its famed floating green have annually been rated among the best resort courses in America by Golf Digest, Golf Magazine, and others. This waterfront setting offers a diverse menu of aquatic activities ranging from lake cruises to sailing to jet skis to parasailing. Come early or stay late to take in the resort’s ultimate comprehensive two-day fly-fishing course. Downtown Coeur d’Alene offers a vibrant dining scene, boutique shopping and dozens of events, from an annual classic car show, the Car d’Lane, to weekday farmer’s markets in the summer.

Mon., June 14 7:30 a.m. - 10:00 a.m.

Executive Committee Meeting 10:30 a.m. - 11:30 a.m. Private Car Owners Roundtable 11:30 a.m. - 1:00 p.m. Lunch by Individual Arrangement 1:00 p.m. - 5:00 p.m. Private Car Owners Roundtable

5:30 p.m. - 7:00 p.m.

Tue., June 15

Welcoming Reception

7:30 p.m. - 8:00 a.m. 8:00 a.m. - Noon Noon - 1:15 p.m. 1:15 p.m. - 5:00 p.m. 6:00 p.m. - 9:30 p.m.

Continental Breakfast General Conference Lunch by Individual Arrangement General Conference Dinner Cruise on Lake Coeur d’Alene

Wed., June 16 7:30 a.m. - 8:00 a.m.

Continental Breakfast General Conference Optional Golf Tournament

8:00 a.m. - Noon 12:30 p.m. - 5:30 p.m.

RESERVATIONS:

(800) 688-5253

ROOM RATES PER DAY: $195.00 Single/Double The cutoff date for the NCTA room block is May 11, 2010. The guaranteed check-in time is 4:00 PM and check-out time is 12:00 noon. The Coeur d’Alene Resort is located at 115 S. 2nd St., Coeur d’Alene, ID 83814. s

The resort is located on beautiful blue Lake Coeur D’Alene with over 100 miles of shoreline for the adventurous to explore and enjoy.

COAL TRANSPORTER | 39

Next Generation of Coal Plants / Tenaska

Tenaska Prepares for Next Generation of Coal Plants Clean Coal Technology Will Keep Americans Working

n a bulletin of good news for the American coal industry, the U.S. Department of Energy (DOE) reports that carbon capture and storage (CCS) projects are on the increase worldwide.1 Nearly 200 proposed and active CCS projects are under way in 20 countries across five continents to either capture or store carbon dioxide (CO2); 108 of these would accomplish both. In an industry that has seen almost 100 proposed coalfueled generating plants cancelled since 20012, largely because of environmental concerns, such progress is a welcome sign that coal has a sound future as an energy resource. Among the leading companies pointing the way to a renaissance for the coal industry is Tenaska, a member company of the National Coal Transportation Association.

Tenaska at the Technology Cutting Edge

Tenaska, based in Omaha, Nebraska, and founded in 1987, is ranked by Forbes Magazine as the 16th largest privately-held company in the United States. The company believes coal has— and must have—a place in America’s future energy generation fuel mix. Nationally recognized for its environmental performance, Tenaska was listed in 2008 benchmarking studies by the Natural Resources Defense Council as having one of the best records in the U.S. for fleet-wide average emissions of CO2, nitrogen oxides (NOx) and sulfur dioxide (SO2). Ron Tanner, Tenaska vice president of Business Development, says Tenaska believes the benefits of clean coal, as solutions for how best to clean up our air and keep Americans in well-paying jobs, are almost limitless: • reliable, low-cost, domestically secure electric energy; • a clean environment; • reduction of greenhouse gases; • new markets for the mining industry; • support for economic growth, • and – yes – even an answer to the stranglehold that foreign oil holds over America.

Tenaska’s Business Development Group, in its weekly staff meetings, calls on the combined skills of representatives from its Engineering & Operations, Finance, and other experts to develop large-scale, coal-fueled power projects that capture carbon dioxide.

“We at Tenaska have been building advanced technology power plants for 22 years and today we are applying our know-how to bring about these benefits in development of new generating plants,” he said. Two “clean coal” projects are on Tenaska’s drawing boards – the Taylorville Energy Center in Illinois and the Tenaska Trailblazer Energy Center in Texas. Tanner said the projects attest to the company’s confidence - and willingness to make substantial investments - in coal’s future.

1 Carbon Capture Journal: http://www.carboncapturejournal.com/displaynews.php?NewsID=480&PHPSESSID=em21j8maek7779riklqiiuaoh3 2 http://www.sindark.com/2009/05/20/coal-cancellations-in-the-us/ 3 llinois State Geological Survey 40 | COAL TRANSPORTER

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Taylorville Energy Center

Illinois is home to vast coal reserves. An estimated 211 billion in-place tons of bituminous coal lie under its surface, with a total energy value greater than the estimated oil deposits on the Arabian Peninsula.3 However, because of its high sulfur content, the use of Illinois coal has been greatly constrained, with a depressive effect on the state’s mining industry. By providing a way to use the state’s coal in an environmentally acceptable way, Tenaska plans to provide solutions that will serve as models for rebuilding the coal industry, increasing jobs and economic development, and holding down electricity costs to consumers. Tenaska has teamed with the State of Illinois and its progressive legislature to initiate development of the Taylorville Energy Center (TEC) near Taylorville, Illinois. The 730-megawatt (gross) TEC will be an Integrated Gasification Combined-Cycle (IGCC) plant designed to capture and provide for geologic stor-

Sulfur Reprinted with permission from

age of at least 50 percent of its CO2 emissions, making it one of the cleanest coal-fueled power plants in the world. Siemens Energy will provide gasifiers that will convert the high-Btu Illinois coal into clean synthetic gas (syngas), which is then further cleaned and processed into substitute natural gas (SNG or methane). The SNG will power the plant’s turbines to generate electricity and/or be sold into the natural gas marketplace. The captured CO2 will be shipped via pipeline to oil fields along the U.S. Gulf Coast to be used for enhanced oil recovery or permanently stored in nearby saline geologic reservoirs. To encourage development of such environmentally advanced plants, the Illinois General Assembly in 2009 passed the Clean Coal Portfolio Standard Act. This legislation requires electric utilities to enter into long-term, cost-based contracts to purchase up to 5 percent of the electricity they sell from clean coal facilities that capture at least 50 percent of their COAL TRANSPORTER | 41

CO2 emissions. The cost-based approach, designed to protect consumers, was proposed by the state’s Attorney General Lisa Madigan and developed jointly with the Citizens Utility Board. Because power from the TEC is intended to be generated around the clock, it would consistently replace power from older, less efficient, higher emitting generators and provide significant system-wide reductions in CO2 as well as regulated pollutants composed of SO2, NOx and particulate matter. Tenaska contracted with Burns & McDonnell and Kiewit Energy Co. to conduct a Front End Engineering and Design (FEED) study to determine final cost estimates for presentation to the Illinois Legislature in the spring of 2010. Plans call for construction to begin in late 2010, once the Legislature reviews the cost analysis to ensure ratepayers are protected. The TEC also has been selected by U.S. Department of Energy (DOE) to proceed into the term sheet negotiation phase under its Loan Guarantee Program. The amount of the guarantee will be up to $2.579 billion, depending on final project costs and capital structure.

Tenaska Trailblazer Energy Center

Texas is a Sun Belt state where summer temperatures routinely exceed 100 degrees, with a commensurate need for around-theclock air conditioning. A challenge confronting energy planners is the state’s reliance on natural gas generation. Gas accounts for 65 percent of installed capacity and produces 43 percent of its electricity.4 Gas also is noted for its price volatility.

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42 | COAL TRANSPORTER

In recent years, state energy experts, alarmed by shrinking generating reserve capacities, encouraged utilities to look to coal as the most economical resource for new power plants. A vocal segment of the public viewed that idea with equal alarm. Opposition using a rallying cry around air quality has contributed to decisions to cancel some proposed coal-fueled plants. Today, however, Tenaska is moving forward with a coalbased solution that will meet the demands for new generation, diverse resources and a clean environment. Tenaska’s unique 765-MW (gross) Tenaska Trailblazer Energy Center would offer reliable baseload electricity while capturing 85 to 90 percent of the CO2 that would otherwise be released into the atmosphere, minimizing all other emissions and – as a bonus – helping to strengthen our nation’s energy security. Trailblazer, in development near Sweetwater in West Texas, will be among the cleanest coal-fueled plants in the

“This is a nation that put man on the moon, invented computers and the internet and developed the iPhone. The technology to make clean energy from coal is just one more small step for mankind.” Ron Tanner

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world and also will contribute to economic development in a region with limited industrial resources. As a conventional, supercritical, pulverized coal plant, the facility will use Southern Powder River Basin coal brought in by BNSF Railway and Union Pacific Railroad from Wyoming. However, it will be equipped with post-combustion capability of capturing 85 to 90 percent of the CO2 produced, plus the most advanced controls available to limit emissions. The CO2 will be shipped via pipeline to the nearby Permian Basin oil fields for use in enhanced oil recovery. Fluor is serving as the engineering, procurement and construction contractor for the next-generation plant. The Texas legislature also gave a boost to advanced clean coal technology during its 2009 session by providing tax incentives to the first three projects that capture at least 70 percent of their CO2 emissions.

Enhanced Oil Recovery

The Taylorville and Trailblazer projects are different in design and technology, but have one thing in common – enhanced oil recovery (EOR). EOR represents an application of a coal-based technology that can actually increase domestic oil production and help promote national energy security. 5

American Coal Council

44 | COAL TRANSPORTER

The United States imports almost 60 percent of the oil it uses, in some cases from nations hostile to the country, making America vulnerable to supply disruptions and cost increases. Much of the nation’s oil reserves are “stranded,” meaning oil remaining in existing and future oil fields cannot be recovered by conventional methods. DOE says enhanced oil recovery is the largest undeveloped oil resource in the nation, estimating the process can produce at least 87 billion additional barrels –

“Our nation needs energy to support a growing economy – one that will provide good jobs and maintain the standards of living that make us the envy of much of the world. Clearly, we cannot and will not abandon our most abundant and economical resource.” Ron Tanner

enough to reduce oil imports to levels that do not threaten national security. EOR has been used successfully to recover stranded oil for more than 30 years. The CO2 from the Trailblazer project alone would increase Permian Basin oil production by more than 10 million barrels a year.

Tenaska Believes in the Future of Coal

The United States is estimated to have more coal reserves than any other country, almost as much as Russia and China combined and enough to last 230 years.5 According to the American Coal Council, more than 120,000 people work to produce coal in 27 states, at almost 1,400 mines. Coal is used in almost every state to generate electricity or energy or power industrial processes. The U.S. Energy Information Administration predicts that, despite CO2 and climate concerns, coal will continue to provide up

PeabodyEnergy.com CoalCanDoThat.com

to 47 percent of our electricity by 2030. Tanner said the facts dictate an ongoing need for coal. “Our nation needs energy to support a growing economy – one that will provide good jobs and maintain the standards of living that make us the envy of much of the world,” he said. “Clearly, we cannot and will not abandon our most abundant and economical resource.” Tenaska, he said, believes the technologies to convert coal into a more sustainable energy source exist today, and further refinement over time will make such advanced technologies even more efficient and effective. “This is a nation that put man on the moon, invented computers and the internet and developed the iPhone. The technology to make clean energy from coal is just one more small step for mankind,” Tanner said. “At Tenaska, we plan to be part of this process by being one of the nation’s innovators of clean coal technology.” s

St. Louis-based Peabody Energy (NYSE:BTU) is the world’s largest private-sector coal company with a record that’s rock solid. Our coal products fuel 10 percent of all U.S. electricity generation and 2 percent of worldwide electricity. We have earned more than 30 awards for safety, financial and environmental performance in the past year. And we are a global leader in clean coal solutions, advancing the next generation of low-carbon, clean coal projects in North America, Asia and Australia. Together, the people of Peabody are proud to fuel the future of energy, and we are pleased to support the National Coal Transportation Association.

COAL TRANSPORTER | 45

Coal Industry Needs Regulatory Certainty By Dr. Gregory P. Kunkel, Ph.D | Vice President of Environmental Affairs | Tenaska Since Tenaskaâ&#x20AC;&#x2122;s formation in 1987 as a developer of generating plants, our company has grown into one of the largest independent power producers in the U.S. Plus, we have diversified beyond power generation into natural gas and power marketing, biofuels and renewable energy.

Dr. Gregory P. Kunkel

Today, Tenaska is also developing sustainable coal-fueled power projects.

A few years ago, high and volatile natural gas prices, combined with oversupply of natural gas generation facilities, encouraged us to consider the growing needs for baseload power facilities fueled by coal. At the same time, we recognized that new federal, regional and state laws and regulations to control emissions of greenhouse gases from power facilities were very likely during the 50-year life of these facilities. Therefore, a question before us was how to reduce greenhouse gas emissions in the design of projects today. Given that new energy projects with carbon capture and storage (CCS) cost as much as $3 billion to $4 billion, we ultimately decided to tackle the climate issue directly through emission control technologies.

46 | COAL TRANSPORTER

To accomplish this, we needed to assure ourselves that carbon capture technologies are ready for a utility-scale project; a secure home is available for captured carbon dioxide (CO2); and the economics and long-term financing arrangements for such projects can work. We have made progress in each of these areas. As described in the accompanying article, Tenaskaâ&#x20AC;&#x2122;s proposed Trailblazer Energy Center in Texas and Taylorville Energy Center in Illinois will feature two differing CCS technologies â&#x20AC;&#x201C; post combustion capture in Texas and pre-combustion capture in Illinois. By demonstrating the technical and economic feasibility of coal-based power generation with CCS technologies, these projects provide models that can be replicated in support of the domestic energy strategy of the United States. To succeed, such projects need the support of enlightened federal and state government policies. In the past, Congress has employed a number of effective policies to help overcome barriers to entry and encourage new energy technologies. The House has passed the American Climate and Energy Security Act, and the issue is now before the Senate. Perhaps the most important thing Congress can do to facilitate the development of Trailblazer, Taylorville and similar CCS projects is to provide regulatory certainty. No developer can operate effectively while having to speculate on regulatory outcomes, especially outcomes so fundamental to the success of the enterprise. Use of coal to generate electricity is in the economic best interests of our country, and technologies are available today to allow it to be done in an environmentally responsible manner. s

America’s pioneering spirit lives on. Tenaska, one of the country’s largest independent power producers, is going beyond traditional power generation processes to produce clean energy. Under development are two pioneering, coal-fueled projects utilizing commercial scale, proven technologies designed to capture and store carbon dioxide. Both will be among the first of their kinds in the world, serving as outstanding examples of Tenaska’s continued focus on innovation and a can-do spirit. www.tenaska.com Learn more about Taylorville Energy Center and Tenaska Trailblazer Energy Pioneering the Power Center at www.cleancoalillinois.com and www.tenaskatrailblazer.com. of Tomorrow.

NCTA COMMITTEE

UPDATES

NCTA Committee work is at the heart of the Association. The committees provide valuable information and education to members, foster best practices, improve communications among the parties, and keep members up-to-date on new rulings and technologies. This is where members get payback many times over for their annual membership fees.

Western Logistics & Planning The Western Logistics & Planning Committee’s first meeting of 2010 was held on January 20th in Denver, Colorado. Following updates by the Union Pacific and the BNSF, the carriers reviewed upgrades to their respective internet based nomination input data systems. While the immediate month enjoys nearly full participation, only about a third of those placing nominations input data two and three months out. Development of new input screens and the capability of uploading data from existing spreadsheets to avoid duplication of efforts are important changes on the horizon for 2010. The meeting’s special guest speaker was Tim Carter, Manager of Gas Supply for Xcel Energy, who covered the current state of gas supply, highlighting recent shale gas plays, and the corresponding demand for gas by various customer classes. He wrapped up with a discussion of the challenges presented to managing gas supply as a backup to wind and solar renewable energy sources which are both intermittent and unpredictable. Presentations from this meeting including the ARS segment results are available on the NCTA website.

Thanks to Cloud Peak Energy for sponsoring lunch for the WL&P meeting in Denver. Key issues for the Western Logistics and Planning Committee this year include dust mitigation, the above mention enhancements to the NCTA Coal Forecasting process, and the restoration of monthly train loading statistics for the joint line. The next meeting of the Western Logistics and Planning Committee will be in July 2010. For input and ideas for this meeting, please contact Chairman Bob Sarvela (Midwest Energy) or ViceChairman Kathy Brown (Arch Coal). s

48 | COAL TRANSPORTER

The UP has plans for system enhancements.

Operations and Maintenance The Operations and Maintenance Committee remains active year around looking out for the interests of NCTA member companies through their expertise on operating rules and regulations and detection of car maintenance concerns and costs. The committee recently conducted a survey and determined that NCTA members own or operate approximately 86,000 privately held railcars. The number is indicative of the depth of the operating experience and maintenance data that members can bring to the table with regulators and carriers. The committee is also busy planning its annual private car owner roundtable and general conference scheduled for June 14-16, 2010 at the Coeur d’Alene Resort in beautiful Coeur d’Alene, Idaho (see pages 38-39 for details). Coeur d’Alene is only 40 miles from Spokane International Airport and is easily accessible by the I-90 freeway. Following the conference, attendees can stay and play golf at the resort course with its renowned 14th hole, the world’s only movable par 3 floating island green. Current issues the Operations and Maintenance Committee are actively involved in include: • Bearing Set Outs • Umler Issues • Wheels • Replacements • AAR Rule 41 and 44 • Flanges • AAR WABL Committee Input • Side Sill Cracking If you have input into any of these issues or want to become more involved in the committee, please contact Chairman Art Lewis (American Electric Power) or Vice-Chairman John Casto (FirstEnergy Solutions). s

EL&P attendees get caught up over dinner.

Eastern Logistics & Planning The Eastern L & P committee met on October 22, 2009 just outside Jacksonville, Florida at the Ponte Vedra Inn and Club. The agenda included a presentation from CSX’s Chris Jenkins, VP Coal & Auto entitled “Demand Volatility for Coal” on strategic business issues that face both CSX & the coal industry. In addition, Terah Burdette of Arch Coal provided a presentation on legislative issues surrounding mountaintop mining. Bud Para of Jacksonville Electric

Authority provided a very informative update on the status of potential Cap & Trade legislation that is being considered in Congress. As always, the meeting contained operational updates from both Norfolk Southern & CSX railroads. Lunch was hosted by Genesee & Wyoming Inc./Rail Link. Chairman Scott Clayton (Southern Company) and Vice-Chairman Jan Figgins (AEP) anticipate the next Eastern L&P meeting will be held in Charles-

Slover Loftus

LLP

ton, South Carolina around the middle of May, 2010. The effort to increase participation in the Eastern Logistics & Planning Committee has been successful. The NCTA is pleased to have Jim Walter Resources as a new member. The committee welcomes feedback from participants on the content, format and location of meetings in order to ensure the Eastern L&P Committee is continuing to provide value and relevant information on coal transportation issues. s

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Infrastructure / West Coast Coal Terminals

Looking West,

Answering the call: exporting western U.S. coal has its hurdles

Westshore Terminals is the premier Pacific Coast coal port. They can handle the largest seaborne bulk cargo carriers in the world. 50 | COAL TRANSPORTER

hough domestic politics, a deep recession and a growing environmental movement are curtailing coal usage here in the United States, most growing economies overseas are moving in the other direction. China and India are leading the way, both embracing coal as an inexpensive fuel source and building new coal fired power plants to provide affordable energy to a growing population. Coal demand also remains strong in Japan, and is growing in South Korea, across Asia and throughout South America. Additionally, China is constructing a series of huge new steel mills, mostly along their eastern coast. Most of these are being outfitted

with modern ports allowing them ready access to imported metallurgical coal, iron ore, and other essential steel-making components. In the aftermath of the Great Recession, China is now the worldâ&#x20AC;&#x2122;s growth engine and, for coal producers, the ripple effects of Chinaâ&#x20AC;&#x2122;s development are changing buying and shipping patterns for every mature or developing coalfield. As South African, Australian and Indonesian producers and ports struggle and increasingly fail to keep up with expanding worldwide demand for thermal and met coal; North American miners are looking for ways to jump into these emerging markets. They are being encouraged by buyers who

Looking East Finding and Developing West Coast Coal Terminals Images and text by Lee Buchsbaum

would like to use U.S. coal as a hedge against their historical suppliers. The greatest challenge today is the lack of available Pacific coast port space. The largest dedicated west coast coal port ever built in the U.S., the former Los Angeles Export Terminal (LAXT), is still being demolished after a brief, decadelong lifespan. Killed by a combination of politics, environmentalism, in-fighting among owners, a lack of investor patience, and a shift in coal buying and shipping patterns, its failure has cast a deep shadow over any similar investments. Today, available options up and down the U.S. Pacific Coast are few and far between. Where they exist, through-put volumes are low,

costs are high, and expansion opportunities limited. Beyond a few million tons, the only significant existing shipping options are out of Canada’s three coal ports. The largest of these, Westshore Terminals, located on an island in Vancouver’s harbor, has nearly completed an expansion project bringing its through-put capacity to nearly 30 million metric tons per year (mmt/y). And though capacity exists there and at the other two facilities, Ridley Terminals Inc, in Prince Rupert and Neptune Bulk Terminals, also in Vancouver, Canadian metallurgical producers either own or dominate these ports. With China’s steel industry ramping up, they’ll be loath to

give up their prime real estate. Though West Coast exports are today only a small fraction of overall U.S. production, they have become an exciting new growth component in a particularly weak domestic thermal and met market. For decades the U.S. and Canada have been swing suppliers of export coal. The task before many of today’s coal sellers is to help change the world’s buying patterns and reverse historical practices by developing consistent, long-term customers who appreciate U.S. suppliers. One of the challenges to operating a large dedicated export facility is that a deep pocketed entity will have to stand behind it if and when the market changes COAL TRANSPORTER | 51

Recently as part of an expansion project designed to increase Westshore’s capacity to 30 million metric tones annually, the terminal brought a fourth stacker reclaimer on-line. and there is little or no coal moving. A likely scenario is that an overseas utility or steel company wanting to lock in coal supplies may choose to build an export facility as part of a larger development strategy. LAXT was built largely for similar purposes and the same drivers could be in place again. Recently both Indian and Chinese companies have been buying mines, reserves and equity stakes in producers worldwide. But even if an entity did step forward and announce that they were going to build a new terminal, it would take several years before any significant coal volumes passed through it.

Lessons Learned From LAXT The Los Angeles Export Terminal, designed to handle upwards of 10 mmt/y, was built with encouragement by the Japanese power industry in its bid to diversify supplies away from Australia, on which it is highly dependent. As it came on line, several western coal producers in Utah and Colorado also viewed the export market as a way to sell incremental amounts of coal allowing them to run their mines at a 52 | COAL TRANSPORTER

higher rate with a better pricing structure than they could get here in the U.S. Eventually, however, the domestic market strengthened and many producers turned away from efforts to grow overseas customers. Also in the mid-1990s, Indonesia started exporting larger volumes of coal. Within a short time, many of the driving forces behind LAXT vanished. Without long-term contracts in place, and with a lack of support, the port closed prematurely. One route today being considered is to create a consortium or Joint Venture that would develop, own and potentially operate a new facility, much in the same way that the Dominion Terminal (DTA) in the port of Hampton Roads, Virginia operates. With a consortium, the capital costs and risks are spread between investors. DTA’s current owners, Alpha Natural Resources, Arch Coal and Peabody Energy, are also three of the major western and PRB producers who would benefit the most from such an outlet. Another relatively new entry into this market is Cloud Peak Energy, recently

spun off from Rio Tinto. One of their mines, Spring Creek, located in Montana, extracts a 9,300 Btu coal that blends well with other products. It is thought to compete favorably with Indonesian product and may be displacing some of it going into Japan, Korea, eastern China, Taiwan, and South America. Also entering the fray is newcomer Signal Peak Energy, which is now shipping bituminous coal from their underground longwall mine in Montana, approximately 1,400 miles to Westshore. Jointly owned jointly by the Boich Cos and FirstEnergy Corp, Signal Peak loaded its first vessel at Westshore on October 31, 2009. But this is no masquerade, “Signal Peak could be a game changer, since its higher quality coal will compete favorably with Australian coal. They are targeting folks willing to pay a premium for security of supply,” said Charlie Monroe, senior vice president for Savage Services Corporation, which operates bulk terminals worldwide, including the former LAXT. Instead of building a brand new facility, one option is to upgrading an existing terminal, ship 5 mmt/y to start

and grow the markets from there. To a large extent, that’s already happening at Westshore. Producers are “using it as a way to get a presence for their coals and introduce their product to potential customers. At some point you might have enough critical mass to build a larger terminal like LAXT,” but for now moving forward incrementally may be the better approach, said Monroe.

Port Levin Richmond, operating where Kaiser Steel once built Liberty and Victory ships by the dozen, welcomes the opportunity to grow and ship more bulk commodities.

Open for Business: Westshore, Neptune, and Ridley Island Without question, Westshore is the largest dry bulk terminal on the west coast. Located on a man-made island jutting into Vancouver’s harbor, over its fortyyear history, Westshore has twice hit a high of 23.5 mmt shipped through it. Mainly used to ship high grade metallurgical coal produced by Teck Resources, recent expansion projects have increased it’s capacity to nearly 30 mmt/y, though in 2009 only 20 mmt passed through the port. Westshore has two berths, one capable of 260,000 DWT and the second of handling 170,000 DWT, easily accommodating the largest cargo ships being used worldwide. Ironically, the recent economic downturn has been good for PRB producers. With steel demand down and overall coal shipments out of Westshore reduced, some U.S. producers can now get some dedicated space. At first PRB coal was a bit of “an irritation” for Westshore, until it provided a little extra income for them. American producers were able to keep moving their cargoes through the terminal, even during the bottom of the market. Throughout 2009, Westshore shipped a record two million tonnes of US coal. “That really helped take the sting out of the general reduction in steelmaking worldwide in the 1st half of the year,” said Denis Horgan, vice president and general manager of Westshore. PRB producers have worked closely with Westshore to get them comfortable with the particularities of their coal, specifically developing anti-spontaneous

combustion strategies. One of the best strategies is for the coal to be stored on the ground for only for a short period of time. This requires near constant contact with the port, BNSF and incoming ships. But there are still uncertainties like bad weather or high winds in Vancouver, berth congestion or other factors that could slow loading. “We’re a long way from the coal fields. The cycle times from mine to rail to port can be as high as 9 days, certainly 7. To fill a ship, you have to be careful how long you hold onto the coal,” said Horgan. In 2008 Westshore handled well over a million tons from the States, and despite the poor market, they doubled that to two million in 2009. And they expect to increase that in 2010, mostly from coal originating from Montana mines that are looking to develop the export market. Signal Peak could ship upwards of 3 mmt or more alone. “It’s their business model

that so far as they produce in excess of the 7.5 mmt needed by First Energy, and they will have the capacity to produce 10-12 mmt/y, they would logically try to ship that through us.” However, led by China’s monstrous appetite, met came back in the second half of the year and space has been getting tight. “We’re also seeing more interest from Japan and Europe than what we saw in early 2009. Significantly, since Westshore was built they haven’t shipped much coal to China. “In 2008 we shipped 560,000 tons to China. By the end of 2009, they’d shipped over 2.9 mmt there, a record for us,” said Horgan. Without the high winds that hampered loading at the end of December, it’s likely they would have topped 3 mmt. Across the harbor, Neptune Terminals has one of their two berths dedicated to coal shipments and almost 50% of the entire facility is owned by Teck Resources.

“We’re a long way from the coal fields. The cycle times from mine to rail to port can be as high as 9 days, certainly 7. To fill a ship, you have to be careful how long you hold onto the coal.” Denis Horgan 54 | COAL TRANSPORTER

Teck, Canada’s largest met coal producer and one of the largest seaborne shippers in the world, has been responsible for between 70-80% of Westshore’s historical throughput as well. Almost 500 miles due north, Prince Rupert was built in 1912 as the western terminus of a predecessor of today’s Canadian National Railway. Ridley Island Terminals, a state-owned or “crown” corporation, shipped just over 2.8 mmt of thermal coal, down 31% from 2008, however, they shipped nearly 650,000 mmt of coking coal—over 110% higher than the previous year, most of it headed to China. While Ridley has tremendous capacity, beyond 12 mmt with a storage space of over 1.2 mmt, its haulage distance from U.S. mines rules it out as a logical terminus—unless a buyer was willing to pay a significant premium.

California Dreaming: Few Options, Fewer Opportunities Despite thousands of miles of coastline and dozens of excellent harbors, there’s little space for coal along America’s west

coast. Only a few ports have the facilities and fewer have the capacity. Located across San Francisco in Richmond, when the Levin-Richmond Terminal first opened in the early 1980s, the small bulk facility handled significant quantities of coal. But over the years, that business has waned. The last time they shipped any coal was in 2007: two 40,000 ton cargos of high quality Utah product hauled in via four UP unit trains. Since then, Levin-Richmond has upgraded their systems, enclosed their conveyors, and purchased more modern equipment. Their average loading rate today is between 8-10,000 tons per day. A far cry from the 45,000 ton per day rate that LAXT used to boast, but enough to get the job done for a growing number of pet-coke, scrap steel and other customers. “Our biggest single limitation is waterdraft, we can’t load a full Panamax,” which has a capacity of between 65,000 and 100,000 mmt and is the most common type of seaborne vessel used to ship thermal coal goes, said Jim Cannon, director of capital projects. “We can load Handymaxes, which run anywhere from

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Westshore Terminals shares space on their island with an increasingly busy container terminal as well. Most of the in-bound cargo are Asian made goods. 35,000 to 60,000 mmt of capacity. Many industrial users can accept these,” said Cannon. While theoretically the facility could be upgraded to handle larger ships, any improvements would take significant capital investments. But beyond financial and market considerations, getting past California’s strict environmental laws would be nearly impossible. Down the coast in Long Beach, the port there does ship limited amounts of coal, but not through a dedicated facility. Most of the facility is used by the Oxbow Group which ships over 2 mmt/y of petcoke from there. All the land, however, is owned by the Port of Long Beach and leased to various entities. Though Oxbow does have one longwall mine in western Colorado, most of the enclosed barns are used for storing petcoke. With limited space, it’s not likely that this port could be used for large-scale coal shipments either.

A Chinook Wind Blows Though options in California are limited, there are some emerging terminal opportunities in Washington State. These range from “brownfield” industrial redevelopment projects to more ambitious—and less timely—“greenfield” possibilities, building where none have built before. Perhaps the best greenfield candidate is in Cherry Point, Washington, on Puget Sound. A deepwater port, it already has a refinery and an aluminum 56 | COAL TRANSPORTER

facility, but because one would be starting from scratch, any project would be expensive, time consuming and would undoubtedly garner environmentalist opposition. Outside of Cherry Point, probably the best options are in Mexico. That leaves a few brownfield options including the Port of Vancouver, Washington, the Port of Gray’s Harbor, Washington, and the port of Longview, Washington. Furthest along and most likely to come on-line relatively soon is a terminal being developed by Chinook Ventures, located adjacent to the port of Longview. The Oliver family, who owns Chinook Ventures, has been steadily redeveloping the former Reynolds aluminum smelter into a multi-commodity facility. They are working on almost a dozen infrastructure projects preparing them to handle slag, cement and pet coke. Coal is already a steady piece of Chinook’s business. “We bring coal in for the adjacent Weyerhaeuser Paper plant and haul it to them every day,” said Barry Oliver, who is leading the family’s efforts to redevelop the facility. “It may be a cliché, but we have adopted a ‘build it and they will come’ attitude, based on careful market research of course, but we know there is a strong demand out there for the kind of services we can provide,” said Oliver. He estimates that once up and running, Chinook will have a capacity of 7-10 mmt/y. “We hope to be about 1/3-1/2 the capacity of Westshore.”

However, due to a tight bend in the Columbia River just west of Longview, it will be challenging to load Capesize or larger vessels at Chinook. While China has a lot of Panamax-only ports, Korean customers would probably look elsewhere. Japan, the largest coal buyer in Asia, does have some Panamax ports, but they generally purchase only bituminous coal. Although many buyers are trying to increase the amounts of coal they can blend, Japan has been mired in a recession and there’s little interest in making the kind of investments necessary to re-tool boilers to accept PRB coal. That does leave emerging South American markets in Chile and elsewhere. “We have one dock that we use to unload Panamaxes and we have already exported some pet coke. We could get into the coal business quickly and are currently permitting several other docks including one that would be a dedicated export dock,” said Oliver. It should be in place in 2010, providing that Chinook receives the necessary permits. “Chinook is real. It could come on-line in a fairly short time. With the other terminals, you’d have to work in and around a lot of other systems and hurdles,” said Monroe. Chinook plans on having most of their improvements complete by 2011. “That’s our target. If called upon, we also could push ahead quickly and handle a few hundred thousands tons. We’ve already handled some trial loads that we hope will yield more sales,” said Oliver. s

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Federal Railroad Administration / Update

New Faces In High Places At DOT Biographies courtesy of the USDOT

STB Chairman Daniel R. Elliott III Chairman Daniel R. Elliott III was sworn in as the fifth chairman of the Surface Transportation Board on Aug. 13, 2009. He was nominated to the Board by President Barack Obama on June 20, 2009 for a four-year term expiring Dec. 31, 2013. He was confirmed by the U.S. Senate on Aug. 7, 2009. Chairman Elliott brings to the Board two decades of experience as an attorney including 16 years litigating in the transportation field. Since coming to the Board, Elliott has moved quickly to bring more openness to the Board. He has begun holding public oral arguments on important cases and is following through on President Obama’s push for government transparency by transforming the Board’s Web site in order

to make it easier for the public to follow Board proceedings. Chairman Elliott has worked closely with Members of Congress and has met with a wide variety of stakeholders, including local elected and community leaders affected by Board decisions. Chairman Elliott is also trying to bring more harmony to the relationship between shippers and railroads by breathing new life into the STB’s dormant arbitration system and bolstering the Board’s informal dispute resolution process. Since 1993, Chairman Elliott served as associate general counsel to the United Transportation Union. At the UTU, he practiced before the Surface Transportation Board, where he was involved in a variety of cases. He also practiced before the National Mediation Board and the National Labor Relations Board. Earlier, Chairman Elliott worked in private practice in Cleveland and Washington, D.C. handling a variety of litigation matters. Chairman Elliott was born in Ann Arbor, Mich., in 1962 and grew up in Cleveland. He graduated from the University of Michigan in 1985 with a degree in political science and earned a law degree from Ohio State College of Law in 1989. s

Railcar Leasing

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FRA Administrator Joseph C. Szabo Nominated March 20, 2009, and confirmed by the United States Senate on April 29, 2009, Joseph C. Szabo is the twelfth Federal Railroad Administration (FRA) Administrator, responsible for overseeing the operations for the eight hundred plus person organization; managing a comprehensive railroad safety assurance program and regulatory initiatives; enforcing railroad safety laws and regulations; developing and implementing national freight and passenger rail policy and financial assistance programs; and overseeing wide-ranging advanced research and development projects in support improved railroad safety. Szabo is a fifth generation railroader who, between 2006 and 2009, was Vice President of the Illinois State Federation of the AFL-CIO. He has served as mayor of Riverdale, Illinois, a member of the South Suburban Mayors Transportation Committee, and Vice Chairman of the Chicago Area Transportation Study’s Executive Committee. In 2002, he chaired the Governor’s Freight Rail Sub-Committee and, in 2005, was assigned by the United Transportation Union International to the FRA’s Railroad Safety Advisory Committee (RSAC), where he participated in the development of rail-safety regulations. Szabo has served on the Executive Council of Chicago Metropolis 2020, focusing on Land Use Planning and Transportation issues and the Board for the Historic Pullman Foundation. He was a member of the Chicagoland Metropolitan Planning Council. He holds a baccalaureate degree in Labor Relations from Governors State University. s

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STATS AT A

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a thousand words

GLANCE 100.0

91.1

90.0 80.0

72.2

70.0 60.0 40.7

40.0

37.3

30.0

37.2

20.0 10.6

Hydroelectric

Other Renewables

Natural Gas/ Combined Cycle

Coal

Sources: U.S. Energy Information Administration, Form EIA-860, “Annual Electric Generator Report;” Form EIA-923, “Power Plant Operations Report.”

Nuclear

0.0

9.2

Petroleum

10.0

Natural Gas/ Other Types

Average Capacity Factor by Energy Source, 2008

50.0

That’s a big number! The Operations and Maintenance Committee recently polled NCTA members to determine the number of coal cars owned and/or operated by their respective companies. A total of 86,000 cars were reported, representing billions of dollars in invested capital. The O&M Committee looks out for the interests of NCTA’s private car owners by focusing on the operating rules and maintenance issues that affect both the cost and availability of member fleets. 60 | COAL TRANSPORTER

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NCTA / Washington Trip NCTA Leaders gather for a day of meetings in Washington DC

Mr. Neff Goes to Washington The Board of Directors Annual Trip to Capitol Hill

62 | COAL TRANSPORTER

he NCTA Board of Directors and members of the Operations and Maintenance Executive Committee made their annual visit to Washington during the first week in November. This is a mutually beneficial event as it allows the NCTA leadership to interact with policy makers and for the policy makers to hear first hand from those who work everyday to get the most out of the existing infrastructure and keep energy prices low. These goals are especially critical in the struggling economy we have today. The visit began with the annual â&#x20AC;&#x153;Big Cheese Luncheonâ&#x20AC;?, attended by an outstanding group of guests (big cheeses, but no bologna) representing a spectrum of work and opinion on the challenges that face the coal and utility industries. Each of the participants gave a short synopsis of concerns, issues, and events of interest. Organizations attending this luncheon included CURE, the National Mining Association, GLG Law, Slover and Loftus, L. E. Peabody, ACCCE, Maxeefish, Thompson Hine, and the American Chemistry Council. Following lunch, the NCTA headed out in three groups to further maximize their time in Washington. One group visited with the National Rural Electric Cooperative Association where Brian Cavey of the legislative group at NRECA addressed several areas of

emphasized that because of the uncertainties associated with compliance with this bill, the large number of cases examined have vastly different outcomes for the future of coal. Next was the annual meeting with Ed Hamberger and his staff at the Association of American Railroads in their new offices just down the street from the Surface Transportation Board. The AAR is always a gracious host even if we don’t agree on every issue. In the long run, the NCTA and the AAR share a common interest in the support for coal as a viable fuel for electricity generation. Following the AAR meeting, the group headed to the opposite side of the National Mall to a meeting with the National Mining Association. The NMA gave their view of pending legislation that affects rail and water transportation for coal. They also provided insight into the EPA’s ongoing actions regarding fly ash disposal in spite of strong opposition from Congress. The final meeting of the day was on Capitol Hill with Senator Mike Enzi’s staff. Senator Enzi (R-WY) was unavailable due to his involvement with health care legislation. With the importance of mining to his constituents, the Senator always wants to be brought up to date on coal and transportation issues from those who actually are involved on a day to day basis.

Mike DeBord and Betsy Monseu at the Smithsonian Castle regulation or legislation of interest to NRECA. A second group headed over to the Surface Transportation Board to visit with Commissioner Charles (Chip) Nottingham. Commissioner Nottingham was featured on the cover of the Coal Transporter two years ago when he was Chairman of the Surface Transportation Board. With the change of Administration, he has remained on the Board as Commissioner. While Chairman, he initiated some changes to the processes at the STB including more subject matter hearings and the formation of RETAC. A third group, mainly Operating and Maintenance Executive Committee members, went to the Federal Railroad Administration (FRA) where they met with staff members to discuss private car owner issues. On Tuesday the group has a two hour session at the Surface Transportation Board, meeting for the first hour with STB staff and then with Commissioner Frank Mulvey. Discussions with staff centered on current rail economics, the latest on the Christensen study, railroad service trends, RETAC, procedures for case management, and thoughts on reauthorization. Later, the meeting with Commissioner Mulvey, well known to NCTA as a conference speaker was more philosophical thus avoiding discussion of any current cases or complaints. Following the meetings at the Surface Transportation Board, there was time for an early lunch in the small cafe inside the historic Smithsonian Castle, located directly across the street from the Department of Energy (DOE). At DOE the group met with the Office of Coal, Nuclear, Electric and Alternate Fuels, currently working on coal transportation studies and the Energy Information Administration. The EIA give a sobering presentation on the economic effect of the Waxman-Markey Bill. They

Board Member Jack Reid with lunch guests Tom Wilcox and Mike Loftus On Wednesday, the Operations and Maintenance Executive Committee members headed back to the Association of American Railroads to meet with Jim Grady and Tom Stahura who coordinate interchange rule processes and committee meetings for AAR. These exchanges are valuable and provide the opportunity for the NCTA to communicate issues of concern to private car owners. After doing this for many years some things can always be expected. First of all, the NCTA sees a large number of people and exchanges information more efficiently than most people that make Washington their home. Speeding up the security process at some of the government offices would make it even better. The trip is always interesting but always exhausting as darkness creeps in during the last meeting of the day. While the meetings are sometimes hopeful and sometimes depressing, if a bit of reality can be injected into the “bubble” then the NCTA is true to its mission and that is always worth it. s COAL TRANSPORTER | 63

NCTA / Scholarship Announcements

2009 Scholarship Recipients The NCTA awarded four At Large Scholarships to children of the employees of NCTA member companies at its annual fall conference. These are the talented and hard-working recipients.

Maggie Moore Missouri University of Science & Technology Mathematics and Economics Growing up as a daughter of a coal trader at Ameren UE, Maggie has always had a fascination with the idea of buying something as inexpensive as coal and turning it into profit. Now that she is older, Maggie has learned more about the business of coal trading and wants to follow in her father’s footsteps and become a coal trader just like her dad. To do this Maggie is pursuing a BS in mathematics and a BA in economics which fits right in with her love of numbers and business. Maggie also wants to obtain a MBA down the road to better prepare her for a career in coal trading. Maggie stays involved in many activities that keep her connected to her other passions in life: music and mission work. Maggie says “math, music and missions are all very dear to my heart and I hope to become better educated and gain important skills in these areas to help other people.” s

Stayci Kay McClure McNeese State University / Electrical Engineering With only 13 credit hours to go, Stayci McClure will realize her goal of completing her Electrical Engineering degree as an Honors student at McNeese State University in only three years. Stayci has been preparing herself for a career in Electrical Engineering since summer of 2007 when she interned at Dow Chemical Co. in Texas and as a cooperative intern for both summers of 2008 and 2009 at American Electric Power where her dad is employed. After completing her BS degree at McNeese State University, Stayci plans to obtain an MBA. Finally, Stayci’s ultimate career goal is to work for AEP in the Station Projects Engineering group in Tulsa, OK. In addition to the ambitious curricular schedule she has set for herself, Stayci still finds time to participate in extra-curricular activates, hang out with her friends and visit her family. s

64 | COAL TRANSPORTER

Kelsey J. Kotur University of Missouri / Industrial & Manufacturing Systems Engineering Kelsey Kotur is an honors student more than half way through her undergraduate BS degree program in Industrial Engineering with plans to complete a MBA and pursue a career in manufacturing or transportation. Kelsey discovered she enjoyed problem solving and the focus on efficiency of manufacturing and transportation systems while employed at Anheuser-Busch, Inc as a cooperative engineering student and as an intern at Procter & Gamble. Kelsey wants to use her engineering degree to design computer systems that control production, manage inventory or quality, move goods or commodities, or develop plans for plant or warehouse locations. “I want to design efficient systems that provide beneficial services at an affordable cost” Kelsey claims. As a daughter of an electrical engineer working for Ameren UE, Kelsey has learned there are many fields of engineering and is particularly interested in a career in Industrial Engineering that combines working with people, technology and problem solving. Kelsey thanks NCTA members for their financial support of her studies. s

Zach Hamilton University of Wyoming / Electrical Engineering Growing up in Gillette, WY as a son of a Powder River Coal Company employee, Zach Hamilton focused his attention on playing baseball and continued playing baseball through his sophomore year at Iowa Western Community College. However after two years of college, Zach chose electrical engineering as his major and realized the challenges he is faced with in this field. Now that he has established his goal of obtaining an electrical engineering degree at the University of Wyoming and is striving to graduate in the top 10 of his class, Zach claims it is the discipline of his years of playing baseball that has helped him focus his efforts on his educational goals. Zach’s ultimate goal of his education is to prepare for a career as an electrical engineer. He is most interested in control systems and is considering working for one of the companies in the Gillette, WY area that repairs draglines and various other heavy equipment for the mines. “Playing baseball in college is hard work”, Zach says, “… it is rare to get a day off and your body and your mind feel the grind….Now I am done with baseball and ready to focus my efforts and discipline more completely on achieving the goals I have set for myself in college”. s

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COAL TRANSPORTER | 65

NCTA / Member Sound-Off

Member Sound-Off The Coal Transporter asked NCTA members to offer their opinions on a current topic in the coal industry.

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. Mark Twain

As an energy professional, you know the ins and outs of energy and the relationship between energy, jobs, and the economy. But how about your neighbors? Today’s Member Sound-Off question is

“Do your neighbors know where their energy comes from?” I attended a Halloween Party at a neighbors house and there were some people I did not know, and one of them, a fellows elderly wife asked me what I did for a living. I told her I sold Rail Road Car Parts. She said, “I’m so sorry to hear that-I don’t know of anyone that takes the train anymore”. I asked her how she thought they got their electric power? She said, “why, I just flip the switch!” I then told her about the 40 plus trains that operate day and night, seven days a week to service the Houston Area with coal to burn in their coal fired plants coming all the way from Wyoming. She was amazed and told me she had no idea! Now she knows! These are the people that want coal banned and wind mills and solar panels to give us all of our power needs.

Most of my neighbors, based on my talks with them, do not know where most of their energy comes from. A few do, one of them works for Union Pacific Railroad. He knows the importance of coal. I have explained it to a few others, but I don’t know how much they might retain. Often while visiting with row mates on airplanes, I tell them what I do and I get a wide variety of responses. I have never talked to anyone sitting by me who was strongly opposed to using coal to generate electricity. Most don’t know much about it and don’t seem to care as long as their electric service is reliable and the price is reasonable.

Larry Myers - Amsted Rail

Steve Sharp Arkansas Electric Cooperative Corporation

This recent correspondence might best answer the question: Wife: It says here that this town receives all of its electricity from wind power. Me: No it doesn’t. Wife: Yes it does! It says so right here. Me: Does the wind blow all the time? Wife: Well, no. Me: Then they don’t receive all their electricity from wind. If my wife doesn’t know where the electricity comes from why would I expect more from my neighbors?

Jared Wicklund - Empire District Electric Company

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Calendar of Events

2010 April 11-14, 2010 Spring General Conference Omni La Mansión del Rio, San Antonio, Texas June 14-16, 2010 Operations and Maintenance Conference The Coeur d’Alene Resort, Coeur d’Alene, Idaho June 18, 2010 Advertising and Editorial Deadline for Issue 2 2010 of the Coal Transporter Magazine. Fall 2010 Presentation of NCTA Scholarship Awards: South Dakota School of Mines & Technology University of Arizona University of Wyoming David L. Laffere Scholarship Three At-Large Scholarships

AmerenEnergy Fuels and Services Company (AFS) provides a full range of fuel-related services to the Ameren group of companies. However, AFS also works with some unaffiliated businesses, assisting with specific fuels and emission related issues. AFS procures over 40 million tons of coal from the Powder River and Illinois Basins for use in the Ameren generation fleet. In addition to procurement, AFS provides transportation services related to negotiating and administration of rail, barge and truck contracts, as well as the management of over 5000 system railcars. Management and marketing of three river terminals on the Mississippi River is another responsibility for AFS. These terminals provide blending and rail to water trans-loading services for both in-house and third party users. Combustion by-product services for beneficial use such as flowable fill projects as well as ash disposal options are additional services provided by the AFS team. AFS provides all procurement of natural gas on both the wholesale and retail level to over 925,000 customers in the Ameren UE, Ameren Energy Generating Company, Ameren CILCO and AmerenIP territories. Market research is an additional function of AFS, providing senior management as well as plant operations with the necessary information required to keep on top of the ever-changing fuel and transportation markets. Renewable energy resources and the development of “green generation projects” is yet another area of responsibility for the AFS group. AFS is “a full service” fuel and energy provider. Visit our web-site at www.ameren.com.

September 13-15, 2010 Thirty-Sixth Annual Business Meeting and General Conference Westin Tabor Center, Denver, Colorado December 20, 2010 Receipt at NCTA office of all re-certification forms for the UMLER Fee Waiver for Calendar Year 2011

2011 April 17-20, 2011 Spring General Conference The Broadmoor, Colorado Springs, Colorado September 12-14, 2011 Thirty-Seventh Annual Business Meeting and General Conference Brown Palace Hotel, Denver, Colorado

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COAL TRANSPORTER | 67

Reflections / Jon Kelly

A Fifty-Year Hitch In the Coal Industry: Jon Kelly Looks Back By Lee Buchsbaum

orn into a coal mining family in western Kentucky, Jon Kelly has been mining or buying coal for over 50 years, ever since he first hauled dirt at Colonial Mine when he was 16, where to keep it legal, he was paid on their farm payroll. Today, after a career almost evenly split between mining operations and mining economics, Kelly is both president of Kelly Engineering, a mine engineering consultation firm and vice president of Amarillo, Texas based TUCO Inc., which is responsible for fuel procurement and logistics for two southwestern US power plants. And Jon claims he’s semi-retired.

Growing Up in Western Kentucky

I knew I’d end up in the coal mines eventually... Jon Kelly

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Jon grew up in Madisonville, western Kentucky. His father was a coal miner and dragline operator for Pittsburg & Midway (P&M). During his career, he eventually became a mine superintendent for the old Colonial Coal Company in western Kentucky, now a part of Alliance Resources. As a young man, Jon went to off to the University of Kentucky in Lexington seeking, at his father’s insistence, a degree in electrical engineering instead of mine engineering. “That was the late 1950s. Railroads were retiring their steam engines and the coal industry was going down the tubes,” he remembered. His father urged him to take electrical engineering because it paid more and was more stable. But college life didn’t quite agree with Jon. “Classes were difficult. Calculus about killed me,” he said. After a frustrating year, he joined the army instead. Jon served in Manheim, Germany in the 18th infantry from 1960 to 1963, during the Berlin crisis and the building of the Berlin wall. “We were activated and sent in,” he remembered. “It was a frightening time. We were very much afraid the world was going to go back to war and President Kennedy made a huge show of force, sending in all 2,000 soldiers of the 18th infantry to support the garrison. I was in encryption, on alert and ready. Thankfully that war never broke out,” he said. Returning from the Army, Jon went back to UK to finish what he started but this time as a Mining Engineer. After graduation, in 1967 Kelly took a position as shift-supervisor for American Cyanamid Corporation in Florida, responsible for production and beneficiation at one of their dragline operations. “I knew I’d end up in the coal mines eventually, so I got a job in phosphates first. I also figured why wait until I retire to enjoy Florida? Why not head there now?” laughed Kelly. When he left Madisonville in January, it was snowing and 20 degrees. When he arrived in Lakeland, Florida it was 80 degrees. There were air conditioners on in

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strip, auger and thin seam underground mining operations. A great company, Reading and Bates got into mining at the wrong time. With prices falling and costs going up, the mining division couldn’t last. Jon left R&B in 1985.

Sometimes Your Best Teacher is Yourself

Jon catches up with Willie Yager at last year’s NCTA Spring Conference in Nashville. the hotel rooms. “But a few months in, I realized that it was always 80 degrees. It drove me crazy not to have a change of seasons. I took it for a couple of years and went back to coal.”

Forget the Office: Hands On Operations Beckon Eager to get his hands dirty in operations, Jon first went to work for the United States Steel Corporation in Lynch, Kentucky, taking a job as their Senior Industrial Engineer. “It was great met coal,” he reminisced” but “when I first started mining, it was all paperwork and resource management, not running a dragline or a dozer which would have been fun.” After a few months running efficiency studies, he’d had enough. Hoping for a job in operations, Jon got a job with the Consolidation Coal Company, later CONSOL, in Beckley, West Virginia. “Over four years, I moved to five states, driving my Ford Torino from West Virginia to Pittsburgh, PA, then Utah, then Denver, and then back to West Virginia.” In Beckley, he was a General Preparation Plant Foreman at their Rowland Division. In Pittsburg, Denver and Price, Utah, Jon held several engineering positions. On his return to West Virginia, he finally got into operations at CONSOL’s McElroy mine near Moundsville, WV as an Assistant Mine Superintendent. “I learned it’s not as much fun as I thought it was going to be.” 70 | COAL TRANSPORTER

Still unsatisfied, he went to work for his old friend, Gene Samples doing underground mine planning and economics for AMAX coal in Indianapolis from 1973 to 1982. He joined the company as their Assistant Director of Project Planning and progressed through the positions of Chief Industrial Engineer, Director of Exploration, and Vice President of Engineering. When he left AMAX, Jon was their Vice President of Materials Management, managing a staff of 140 with a payroll of over $4 million a year. But still, so much of his job was in engineering and feasibility studies and not the operational work he still craved. After a decade with AMAX, Jon got a call from the Tulsa, Oklahoma-based Reading & Bates Coal Company. After a series of interviews, they offered him a position in what he hoped was a pure operations capacity. Eventually becoming R&B’s executive vice president for operations, exploration, and engineering, he was also President of the Belva Coal Company, a subsidiary of R&B. “They were an interesting, off-shore oil drilling company that had built a mining division. With new operations in eastern Kentucky and West Virginia, they needed someone with mining experience,” said Jon. While there, Kelly was in a direct managerial position over their two operating coal divisions with a total of 600 employees. The company produced over 4 million raw tons a year using mountain top mining, contour,

Jon eventually moved on and did independent mine consulting for about 14 years. From there, the Colorado School of Mines in Golden, Colorado offered him the opportunity to teach while working on a Masters in Mineral Economics. He laughs about the experience today. “My degree program was so specific, I had to teach myself one of my required courses. There was no one else to teach it. I’m probably the only person in history who taught himself at Mines and gave himself a grade for it.” After some soul searching and a visit with his program coordinator, Kelly graded himself an A. “He asked me how well I had done. I said A-plus work, but figured later, just an A would suffice. Maybe I shouldn’t be revealing all these details, but I think the statute of limitations have run out on my grading” he joked. Jon founded his own Kelly Engineering in 1985 as a mining engineering consulting firm. Located in Amarillo, Texas, Jon claims his company “provides clients with professional services in mineral exploration, reserve evaluation, mine planning, expert witness testimony, permitting, operations review, feasibility studies, bid evaluations, contract evaluations and project management,” he said. The firm also specializes in cost studies, mine planning (particularly dragline operations) and complete DCF-ROI feasibility studies and evaluations. In addition to Jon, other associates who specialize in geology, land acquisition and evaluation, mining software applications and mine planning are available on an as-needed basis.

“I’m probably the only person in history who taught himself at Mines and gave himself a Jon Kelly grade for it.”

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Back to the Office, Sort of In 1996, Jon was offered a senior executive position with TUCO Inc., an Amarillo-based fuel procurement company. Used to being self-employed, Jon was hesitant about joining TUCO at first. “I didn’t want a job,” he admitted, but with both operational and fuel procurement experience, Jon was a good fit. “But Charlie McNeil, TUCO’s owner, wanted someone to run the company. He told me it was small, there were five people, all we were going to do was buy and sell coal, and there were no office politics. I figured, well, maybe I could do this.” Jon “commuted” for a while from the Denver suburb of Arvada to Amarillo, Texas, eventually moving his family there. He’s been happy ever since. “Buying coal is much easier than mining it, and that’s all we do,” said Jon. TUCO has several long term supply agreement contracts to supply two southwestern power plants. Jon helps over see all logistics involved, from mining to transportation to scheduling. “We have ten trainsets running from the PRB to Texas and back. That’s a lot of moving parts.”

has friendlier people who are more determined to do things the right way than any other industry organization I know. It’s been a pleasure to have been associated with them for so long,” he said.

Applied Economics: The Coal Industry in the Obama Era With a Master’s in Economics, Jon believes that what has helped sustain the United States as a world power for so many years has been four main things: plentiful raw materials and access to

sector now falling under government-led environmental assault. Though long a victim of self-induced booms and busts, “historically, our biggest problems were all supply and demand based. Every time the coal prices got better, miners would come out of the woodwork and over supply the market. If they have a shuttle car, a continuous miner and a reserve, they were in business. Eventually the prices would dip and mines would shut. Eventually, those prices would get better, and then guys would get back into it, supply and demand. It there was a demand, we’d over-produce ourselves out of it.”

Mining Organizations and the NCTA In addition to lending his experience and education to TUCO and his own consulting firm, Jon has been a dedicated contributor to the coal community. He is a past president of the Denver Coal Club and is currently a member of the American Association of Cost Engineers, the American Coal Council, the Mineral Economics Management Society, the Rocky Mountain Coal Mining Institute, the Society for Mining Engineers and the NCTA. The first year Jon started at TUCO, he began attending the NCTA conferences, something he will continue to do as long as his health is good and he is having fun. Though he has belonged to many organizations throughout his multiple decades in the industry, NCTA conferences “are premier. They are great conferences, with good speakers, and Tom always forces us to go to these wonderful places. But the thing I enjoy most are the people at the conference and the fellowship we have together. The NCTA 72 | COAL TRANSPORTER

“...all we were going to do was buy and sell coal, and there were no office politics. I figured, well, maybe I could do this.” Jon Kelly them; access to capital markets; a deep pool of skilled workers; and lots of cheap energy. In the recent past, the US has lost three out of those four advantages. Today commodities are worldwide, buyers can purchase iron ore in Australia and have it shipped to any market. Asia, Korea and Japan have cornered the market on skilled workers. And capital is centered worldwide in places such as London, the Middle East, and China. “All we have left is cheap energy,” he said, “If we give that up what advantage will we retain? That shortsightedness is what scares me,” said Kelly. Analyzing the coal industry’s current situation, Jon sees a fairly fragile

But today, “these small guys can’t come out of the woodwork anymore. They can’t get the financing, the paper work has gotten very expensive and there are no permits to be had. It’s not market driven, its policy driven. And that is much more difficult to overcome and the issues are more scientific and legal than economic. Most of us are out of our leagues.” With the new administration, the threat to the industry is much harder to react against. “I really believe that the environmentalists do not have the best interest in the county in their minds. Most of them have no idea what the world would look like or how it would

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“Fishing is the only thing I do where I can be completely focused on something other than coal, Jon Kelly coal trains, and coal contracts.” operate if they were successful,” he said. The environmentalists’ goal, Jon believes, is to label everything mountain top mining, be it underground or surface. “In West Virginia,” he asked, “if coal goes away, what will take its place? Nothing, and the people of Appalachia will suffer as they deal with increasing unemployment, poverty, and higher costs for electricity. As will we all.” But in the end, even with the industry under siege, Kelly is confident that it will survive. “We can’t do without coal. We’ll mine it because it is so plentiful and inexpensive. We’ll find a way.”

On a Personal Note…. With forty years in the coal industry, Jon has a hard time anticipating retirement

74 | COAL TRANSPORTER

from a community he loves. “Charlie McNeil has been a wonderful man to work for. I told him I was going to retire, and move to our lake house on Lake Barkley in Kentucky. He responded by saying that if I could just do my work out of the house, I could still do my job. So now I’m semi-retired...I don’t know if I’ll ever retire, he won’t let me,” he laughed. Jon and Janet, his wife of 36 years, have two daughters and have been blessed with three grandchildren, all teenage boys between the ages 14 and 17. Like all proud grandfathers, Jon enjoys sharing their achievements. The oldest grandson, who plays trumpet, was just invited to join the Houston Youth Symphony. “Out of 92 other kids, he had two solos,” gushed Jon.

His younger brother is also a musician, and was initially invited by the high school band director to practice tuba with the band even though he wasn’t yet in high school. Their third grandson, who lives in Madisonville, Kentucky, plays basketball and baseball at Central Hopkins High School. “All three are good at school,” Jon boasts, and “really active”. When not holding down the fort working, Jon likes to travel with his wife and he is especially fond of fishing. “Ocean, freshwater, if you can put a line and hook out there, that’s all I need,” he said. “Fishing is the only thing I do where I can be completely focused on something other than coal, coal trains, and coal contracts. For me, fishing is my method of total relaxation,” said Kelly. s

The View from the Caboose

THE VIEW FROM THE CABOOSE

The humo sometime rous s serio , sometim us r es of be amblings st Pete friends and A nn.

By Pete Moss & Ann Thrawsite

Ann: Hey Pete, how are things going? Are you tired of the long cold winter and ready to head down to San Antonio for the NCTA Spring Conference? Pete: You are darn tootin’. I found a new weather website that I like – www.doineedajacket.com. Every time I check the weather here in Denver it tells me “yes” because it is colder than a polar bear’s pajamas. I just checked San Antonio and it simply said “no” and it is still February. Ann: Well, it is winter. It is supposed to be cold in spite of what everyone tries to tell you. Pete: I guess you are right. With all the news coverage a bout global warming, I’ve been convinced that it shouldn’t be cold anymore. And all this talk about the nuanced difference between weather and climate just gives me a headache. I must be getting old. Ann: Yes Pete, you are getting old but I don’t think that is the problem this time around. The media and politicians always try to spin everything these days. After all these years, I’m still trying to figure out the statement “It depends on what the meaning of the word ‘is’ is.” Pete: Yeah, that’s a classic. I tried using that one on my wife a time or two when I came back late from the local watering hole but she would have none of it. Ann: Other than the fact she married you, she can see through the blarney. While generally weather is supposed to be short term and climate long term but the media now just classifies a cold day as a short term weather event and a hot day as evidence of climate change. Pete: In any case, Washington got so much snow this month it actually shut the place down. That means I should be making some money on my Congressional Effect Fund investments. It has a simple investment strategy to be long the market on days when Congress is out of session and be short when Congress is in session. Ann: You are kidding me I hope.

Pete: No, it is a real fund based on the idea that Congress has an uncanny ability to screw things up. NCTA devoted an entire conference to unintended consequences. Mark Twain’s description of Washington as a “stud farm for every jackass in the country” still rings more true today than ever. Ann: Congress’s planning horizon does seem limited to the next election cycle. It is a bit perplexing that they never seem to make the link between energy prices, jobs and the economy. And when their decisions don’t turn out so well, they just call for a congressional investigation. It’s a vicious cycle. Pete: And no failure is too small not to investigate. They even started a probe of the White House dinner crashers. That was a great use of our tax dollars. Ann: The good news is that while they count on the public just going along, the “sheeple” are getting restless. Tea anyone? Pete: Sure, I’ll have some tea with a bit of whisky – hold the tea. Ann: Pete, whatever are we going to do with you? Pete: Send me to San Antonio of course. I really need to warm up some, see all my friends in the coal business, and get the latest scoop on energy markets and transportation. Ann: Good weather, good people and good info - that is quite the trifecta. Maybe that is why the NCTA logo has three sides. Pete: No silly girl. Mr. C. always says the triangle stands for the coal producers, coal transporters, and coal consumers. All three must do their part and stay in balance for the system to work efficiently. Ann: Amen to that. I think I’ll send a box of triangles to Washington! s

Have something to say to Pete? Send comments or questions to pete@nationalcoaltransportation.org

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NCTA Membership List 3M Energy & Advanced Materials Division A. Stucki Company ADA-ES AIG Rail Services, Inc. AKJ Industries Alliance Coal, LLC Alliant Energy Corporate Services Alltranstek LLC Alpha Coal Sales Co., LLC Ameren Energy Fuels and Services American Electric Power American Railcar Industries, Inc Amsted Rail Arch Coal Sales, Inc. Arizona Electric Power Arizona Public Service Arkansas Electric Cooperative Associated Electric Power Cooperative Basin Electric Power Cooperative Benetech, Incorporated Bosch Rexroth Corp., Pneumatics CANAC, Inc. CDG Engineers, Architects, Planners, Inc. CIT Rail City Utilities of Springfield Cleco Cloud Peak Energy CoalTek Sales LLC Colorado Springs Utilities Columbus Steel CONSOL Energy Inc. Constellation Energy Commodities Group Consumers Energy Company CPS Energy

CTLC Dairyland Power Cooperative David J. Joseph Co. Dayton Power & Light Company Detroit Edison DTE Rail Services Duke Energy Dynegy, Inc. Ecofab Australasia EDF Trading Ellcon-National, Inc. The Empire District Electric Co Energy Publishing, LLC Entergy Services, Inc. Exelon Power Team Exponent, Inc. First Union Rail FirstEnergy Florida Power & Light Company FreightCar America GATX GE Rail Global One Transport, Inc. Grand River Dam Authority Great River Energy Greenbrier Rail Services Harbour Contractors Helm Financial Corp. Hill and Associates Holland Idaho Power Company Jim Walter Resources Kansas City Power & Light KCBX Terminals Co. Kiewit Mining Group Inc. Kinder Morgan Terminals, Inc. Kostolich Group Inc. Lower Colorado River Authority Lexair, Inc.

Locomotive Service, Inc. Luminant Energy Macquarie Rail Inc. Maxeefish LLC MEAG Power MidAmerican Energy Company Midland Railway Supply Midwest Generation Midwest Industrial Supply, Inc Millennium Energy LLC Miner Enterprises Inc. Minnesota Power Mitsui Rail Capital, LLC Momar Inc. Muscatine Power and Water Nalco Company National Steel Car Nebraska Public Power District New York Air Brake Newmont Mining Corp Northern Indiana Public Svc Norwest Corporation NRG Energy Inc. OG&E Electric Services Oglethorpe Power Corp. Omaha Public Power District Ontario Power Generation Otter Tail Power Company P&M Coal PacifiCorp Patriot Coal Corporation Pincock Allen & Holt Platte River Power Authority Portland General Electric Powder River Coal Company Precision Roller Bearing Co.,LLC Progress Rail Services, Corp Rail Link Railroad Financial Corporation

RAS Data Services Resource Fuels, LLC Rhino Energy LLC Rio Tinto Colowyo Mine Salt River Project Seminole Electric Cooperative, Inc. Shur-Co Railway Solutions Sierra Pacific Resources Southern Company Generation Standard Steel Strato, Inc. Structural Composites of Indiana SunGard Energy Taggart Global, LLC Tampa Electric Company Tenaska, Inc. Texas Municipal Power Agency The Timken Company Transportation Services, Inc Trinity Rail Tri-State G&T Assoc., Inc. TUCO/NexGen Coal Services Tucson Electric Power Company Tennessee Valley Authority UtahAmerican Energy, Inc Wabtec Corporation Watco Transportation Services, Inc. We Energies Westar Energy Western Farmers Electric Western Fuels Association, Inc. Westmoreland Coal Sales Company Wisconsin Public Service Corporation Xcel Energy Zinkan Enterprises, Inc.

Index to Advertisers AEP/Cook Coal Terminal. . . . . . . . . . . . . . . . 17 Alpha Coal Sales Co, LLC. . . . . . . . . . . . . . . 19 Alliance Coal. . . . . . . . . . . . . . . . . . . . . . . . 53 Ameren. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Amsted Rail. . . . . . . . . . . . . . . . . . . . . . . . . 11 Arch Coal . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Benetech, Inc. . . . . . . . . . . . . . . . . . . . . . . . 29 CANAC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 CDG Engineers . . . . . . . . . . . . . . . . . . . . . . 36 Cloud Peak. . . . . . . . . . . . . . . . . . . . . . . . . 61 Donohue Railroad Equipment, Inc.. . . . . . . . . 32 EcoFab. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 76 | COAL TRANSPORTER

FreightCar America . . . . . . . . . . . . . . . . . . . 71 GKG Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Helm Financial. . . . . . . . . . . . . . . . . . . . . . . 18 Lexair, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . IFC Kiewit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Macquarie Rail. . . . . . . . . . . . . . . . . . . . . . . 58 Maxeefish. . . . . . . . . . . . . . . . . . . . . . . . . . 59 Midwest Industrial. . . . . . . . . . . . . . . . . . . . . 7 Miner Enterprises, Inc.. . . . . . . . . . . . . . . . . 69 Momar MinTech. . . . . . . . . . . . . . . . . . . . OBC Nalco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 NexGen Coal Services, Ltd. . . . . . . . . . . . . . 74

Osmose. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Peabody Energy. . . . . . . . . . . . . . . . . . . . . . 45 Pincock Allen & Holt. . . . . . . . . . . . . . . . . . . 18 Rail Link, Inc. . . . . . . . . . . . . . . . . . . . . . . IBC Railroad Financial Corp. . . . . . . . . . . . . . . . . 73 Slover & Loftus . . . . . . . . . . . . . . . . . . . . . . 49 Taggart Global. . . . . . . . . . . . . . . . . . . . . . . . 3 TBS Shipping. . . . . . . . . . . . . . . . . . . . . . . . 23 Tenaska. . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Western Fuels Association, Inc.. . . . . . . . . . . 65 Westmoreland Coal Company. . . . . . . . . . . . 33

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