michael j. quillen chairman, alpha natural resources
DESCRIPTION
P urpose and promise: Coal’s irreplaceable role in the energy mix. Michael J. Quillen Chairman, Alpha Natural Resources. Eastern Coal Council May 24, 2010. 1. - PowerPoint PPT PresentationTRANSCRIPT
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Michael J. QuillenChairman, Alpha Natural Resources
Eastern Coal CouncilMay 24, 2010
04/20/23NAME OF PRESENTATION 2
Statements in this presentation which are not statements of historical fact are “forward-looking
statements” within the Safe Harbor provision of the Private Securities Litigation Reform Act of
1995. Such statements are not guarantees of future performance. Many factors could cause our
actual results, performance or achievements, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by such forward looking-
statements. These factors are discussed in detail in our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and in our other filings with the SEC. We make forward-looking statements
based on currently available information, and we assume no obligation to update the statements
made today or contained in our Annual Report or other filings due to changes in underlying factors,
new information, future developments, or otherwise, except as required by law.
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10.0 10.0 11.0 11.9
Metallurgical coal Thermal coal
In the 7 years since it was formed, Alpha has grown to become America’s #3 coal supplier 2.3 billion tons of reserves in four major basins combined 2008 revenues: >$4.2 billion more than 60 mines market capitalization ~$4.7 billion the leading U.S. supplier of metallurgical coal to the world’s steel industry
8.1
Alpha Coal Sales (millions of tons)
* Represents midpoint levels of published company guidance on May 5, 2010
Northern AppalachiaNorthern Appalachia
Central AppalachiaCentral AppalachiaIllinois BasinIllinois Basin
Powder River BasinPowder River Basin
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The U.S. Perspective
5SOURCE: U.S. Energy Information Administration
0
1,000
2,000
3,000
4,000
5,000
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
Recessionary PeriodsRecessionary Periods
Net Generation Projected Demand
0
1,000
2,000
3,000
4,000
5,000
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
0
1,000
2,000
3,000
4,000
5,000
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
Just 15% more oil is used in America than at the time of the 1973 energy crisis…but 115% more electricity
U.S. Electricity Net Generation and Projected Demand (kWh in billions)
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Reference High growth Low growth
SOURCE: U.S. Energy Information Administration, 2009 Annual Energy Outlook
Renewables
Nuclear
Natural Gas
Coal
Petroleum
U.S. Electricity Generation by Fuel Type (kWh in billions)
Coal is the predominant fuel for future electricity generation - even in a low-growth scenario
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Reference Scenario
450ppm Scenario
Non-OECD
OECD +
Change in Coal Production, 450ppm CO2 Scenario by 2030 (in millions of tons of coal equivalent)
U.S. remains #2 coal producer after China - even in a world with capped CO2
SOURCE: International Energy Agency
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William Howard Taft was president the last time total U.S. carbon dioxide emissions were as low as specified by the America Power Act (Kerry-Lieberman).
Per capita, a projected 420 million Americans living in 2050 would be held to same overall emissions as 40 million Americans emitted in 1875.
SOURCE: Steven Hayward, American Enterprise Institute
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Kentucky is nation’s3rd largest auto manufacturer
“Kentucky’s industrial development has occurred because we have relatively low electricity rates based on coal-fired generation.” - Gov. Steven L. Beshear
5.8¢/kWh94% coal
Kentucky produces 40%of nation’saluminum
SOURCE: Commonwealth of Kentucky, Office of the Governor
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5.8¢/kWh94% coal
Cape Wind – the nation’s first offshore wind farm – was awarded 15-year purchasing contract in Aprilfrom a utility, by which it will pay 20.7¢ / kWh (including a mandated state subsidy of 6.1¢ / kWh) for half the wind farm’s power. Cost will escalate 3.5% each yearover the life of the contract.
20.7¢/kWh100% wind
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SOURCE: U.S. Energy Information Administration
U.S. Federal Subsidies by Resource – 2007 (by MWh produced)
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“On an average day, the energy output of
(Alliance Coal’s) Cardinal mine is nearly equal,
in raw terms, to the daily output of all the solar
panels and wind turbines in the United States.”
- Robert Bryce, “Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future”
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NIMBY
SOURCE: U.S. Chamber of Commerce
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SOURCE: Black & Veatch, 4th Annual Strategic Directions in the Electric Utility Industry Survey, 02/18/10
Utilities agree on the future of coal when economics are fully considered
Does coalDoes coalhave a have a future?future?
1515
The Global Perspective
16SOURCE: International Energy Administration
Latin America
34 million
Latin America
34 million Sub-SaharanAfrica
587 million
Sub-SaharanAfrica
587 million
China &East Asia
195 million
China &East Asia
195 million
NorthAfrica
1.7 million
NorthAfrica
1.7 million
South Asia614 million
South Asia614 million
Middle East21 million
Middle East21 million
1.5 billion people — 22% of the world’s population — have no access to electricity
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World’s largest populations lag far behind U.S. in per-capita power consumption
U.S.
China
Brazil
Indonesia
Pakistan
India
Per-capita power consumption – world’s most populous nations (in watts)
SOURCE: “Power Hungry: The Myths of ‘Green Energy’ and the Real Fuels of the Future”, Robert Bryce
167 watts per capita
170 watts per capita
233 watts per capita
516 watts per capita
673 watts per capita
3,366 watts per capita
= 100 watts
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New Generation Capacity Under Construction – 2008 (in gigawatts)
SOURCE: Platts World Electric Power Plants Database, December 2008
51719
51112 12
Other
Europe
U.S.
Other
India
China
8 out of 10 new gigawatts of power plant construction underway in 2008 was coal fired
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China 2010E
80% coal-fired80% coal-fired
China 2030E
77% coal-fired77% coal-fired
India 2010E
66% coal-fired66% coal-fired
India 2030E
69% coal-fired69% coal-fired
SOURCE: International Energy Agency
1,966
892544
36990
2015 203020001980 2007
India Electricity Demand – Historic & Projected (in TWh)
China Electricity Demand – Historic & Projected (in TWh)
CAGR5.7%
CAGR
4.5%7,513
4,723
2,717
1,081259
2000 2007 2015 20301980
2020
21SOURCE: American Enterprise Institute
U.S. Energy Consumption per Real Dollar of GDP Total U.S. Energy Consumption
2009 marked an all-time low for amount of energy required to produce a real dollar of GDP
22SOURCE: American Enterprise Institute
U.S. Energy Consumption, GHG Emissions & CO2 Emissions, per Real Dollar of GDP
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1. We mine coal the hard way - with shovels and pick axes
2. We no longer need coal – we have green energy now
3. Mining devastates communities, water and land
4. Mining sustains poverty in Appalachia
5. Miners have no choice but to work in the mines
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