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CONSOL Supports Safeguards For Mine Safety Efforts

Posted on: Monday, 27 February 2006, 03:02 CST

By Harris, Linda

Officials at CONSOL Energy say they already have the kind of safeguards in place that state and federal officials hope to see implemented industrywide in the wake of the Sago and Aracoma Alma mine tragedies in the Mountain State.

Separate incidents claimed the lives of 14 men at the two West Virginia mines in January, prompting Gov. Joe Manchin and the West Virginia congressional delegation to call for stricter safeguards. The lone survivor remains hospitalized.

"We look at what came out of West Virginia (tragedies) as three things," CONSOL Chief Operating Officer Peter Lilly said, "a central communications center, which CONSOL already has, and additional oxygen storage underground, which we already do.

CONSOL also is working to provide tracking devices to miners in its mines.

CONSOL spokesman Tom Hoffman said there's no "silver bullet when it comes to tracking technologies. While CONSOL has tried a number of different devices, they haven't found one so far that can work in every mine every time, he said.

He sees the focus on improved miner safety as an opportunity "to develop a menu of technologies from which companies can ... pick (the ones) best suited to a particular mine environment."

"So far we've found technology that works in some places and then, in other places, won't work very well," he said.

"But, that said, we are very supportive of the initiative the governor took in this regard, and we think that maybe, with this high level of interest, it will create enough of a market opportunity for a company that develops this kind of technology, and we'll see new devices come through."

Lilly's comments came during a teleconference focusing on the company's $87.6 million fourth-quarter 2005 earnings, up from $67.7 million reported for the same three-month period a year earlier. For the year, CONSOL posted earnings of $580.9 million - compared with the $198.6 recorded in all of 2004.

Chief Executive Officer J. Brett Harvey told analysts that 2005 "was a watershed year" for his company. CONSOL's mines performed well, energy prices continued to rise, and the company executed its plan to establish the value of its gas business.

Perhaps more importantly, the market for northern Appalachian coals the high-sulfur coal that, for years, had been eschewed by power plant operators - is in high demand now that power companies are installing the costly scrubbers needed to desulfurize the coal.

The resulting surge in demand prompted American Electric Power Corp. to sign a long-term commitment to buy high-sulfur coals from CONSOL's Shoemaker and McElroy mines in Marshall County. Harvey said the company was able to close the deal because AEP was looking for long-term, reliable supplies of coal to feed its scrubberequipped power plants.

Harvey said he expects to see more high-sulfur coal users opt for the same kind of long-term deal.

The AEP deal validated CONSOL's strategy, Harvey told analysts.

"We are having discussions and negotiations ... with a number of customers for longer-term deals," he said. "I think sophisticated customers clearly recognize demand for higher sulfur coal with all the scrubbers being built will likely exceed the supply."

The deal led CONSOL to announce major capital improvements at the two Northern Panhandle mines during the next five years - the timing of those improvements could be pushed forward if more long-term contracts are inked - as well as the acquisition of two barge lines, allowing CONSOL to more easily ship coal to its customers along the river.

The barge line acquisition "gave us more capacity to optimize value on the river and move coal" to where the markets are, Harvey said.

Copyright State Journal Corporation Feb 03, 2006

Source: State Journal, The

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