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How will this bankruptcy affect the railroads in terms of traffic and profits? Any other opinions welcome. 

Article text as of 4:31 PM 4/13/16: 

Peabody Energy, the world's largest private-sector coal producer, filed for bankruptcy on Wednesday in a U.S. court, citing "unprecedented" industry pressures and a sharp decline in the price of coal.

The company said it will continue to operate while in bankruptcy, while working to reduce debt and improve cash flow.

 

"Peabody has a new management team, outstanding workforce, unmatched asset base and strong underlying operational performance that represent a key driver in the company's future success," CEO Glenn Kellow said in a statement announcing the Chapter 11 filing.

In addition to plummeting coal prices, the company cited weakness in China's economy, overproduction of domestic shale gas and ongoing regulatory challenges as reasons for its declining prospects.

Peabody reported a loss of $2 billion last year. Revenue tumbled 17% to $5.6 billion as the average price and amount of coal that it sold fell. It warned of further declines this year due to reduced use of coal by U.S. utilities, along with lower demand from overseas markets.

Shares of Peabody (BTU) have already plunged more than 75% this year to trade near $2. The company has roughly 7,600 employees.

The coal industry has faced a myriad of problems in recent years, including proposed regulation from the Obama administration to cut greenhouse gas emissions from the nation's coal-burning power plants. The industry refers to those regulations as Obama's "war on coal."

While the new regulations have been put on hold by the Supreme Court, the industry has faced a number of other economic woes, including significantly lower prices for natural gas, which is a competing fuel used by electric utilities, and slowing economic growth in China, a major market for U.S. coal.

Renewable sources of energy are also getting much cheaper, further squeezing demand.

Arch Coal (ACI), which owns the second-largest U.S. coal reserves behind Peabody, filed for bankruptcy in January.

 
 
Last edited by pittsburghrailfan
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I live in Canada, but I think a chapter 11 filing in the U. S. protects a company from creditors while it reorganizes to avoid actual bankruptcy.  A judge usually has to approve the company's plan for restructuring and emergence from this status, once the plan is executed.

I don't think this company could continue to operate if it had actually filed for bankruptcy.

I certainly stand to be corrected.

Yes, this is true, as in a Chapter 11 bankruptcy filing, the debtor continues to function, maintains ownership of all assets, and tries to work out a reorganization plan to pay off creditors.  Chapter 7 bankruptcy is a liquidation. 

Problem with coal is that it is a 20th century fuel in the 21st century.  I wonder if Peabody has other assets other than coal related ones?

Jim

This will defiantly directly affect the railroads.

No trains needed to move coal will mean less train crews, less maintenance on motive power and coal hoppers, this will lead to less maintenance also out on the rail, less train crews, maintenance personal leads to layoff's layoff's lead to people not buying new vehicles houses and other items it goes on and on.

It is truly a trickle down affect.

The big 4 railroads are going to feel the effects of this loss revenue of coal and it's going to hurt their bottom line big time.

Coal isn't a 20th century fuel, that is more natural gas and oil, it is a 19th century fuel that for a lot of reasons stayed around, more than a few of them political, and it basically is an inefficient technology whose mining and delivery system, not to mention how it operates as a fuel, whose time has passed. Converting coal to gas or to gasoline is possible (the gas lamps of the 19th century were lit by coal gas), but that is costly, and also is converting an ancient fuel to one only slightly less ancient. The reality is that coal is being pushed out of the marketplace both by market forces and people not wanting to live with the consequences of burning coal, things like acid rain for example, or the damage done to beautiful areas by coal mining, the slag piles, water pollution and so forth, not to mention what coal mining does to the people who do it. 

There is no doubt significant coal hauling going on, CSX for example has significant revenue from coal, I suspect both BNSF and the Union Pacific have due to shipping coal to the west coast to be shipped to China, potential exposure. Railroads are subject to the market, like anyone else, and there is plenty to ship without coal. I don't think it will destroy the railroads, I don't think it will result in them cutting back on maintainence, rather I think it will result in them modifying their business model to reflect reality, which might mean they drop the number of trains they run, maybe drop routes entirely, but it isn't like coal was to let's say the C and O back in the day, it isn't. 

 

 

 

Ace posted:
Clarence Siman posted:

I don't know what bearing this may have, but, I was on the flooring crew that rehabbed Peabody's floors. They spared absolutely no expense in making that place palatial.

How do you mean, offices or industrial facilities? Just interested.

Have seen a few by accident and heard about many of these corporate headquarters palaces, they are the number one thing that is NEVER pictured in shareholder reports

bigkid posted:

Coal isn't a 20th century fuel, that is more natural gas and oil, it is a 19th century fuel that for a lot of reasons stayed around, more than a few of them political, and it basically is an inefficient technology whose mining and delivery system, not to mention how it operates as a fuel, whose time has passed. Converting coal to gas or to gasoline is possible (the gas lamps of the 19th century were lit by coal gas), but that is costly, and also is converting an ancient fuel to one only slightly less ancient. The reality is that coal is being pushed out of the marketplace both by market forces and people not wanting to live with the consequences of burning coal, things like acid rain for example, or the damage done to beautiful areas by coal mining, the slag piles, water pollution and so forth, not to mention what coal mining does to the people who do it. 

There is no doubt significant coal hauling going on, CSX for example has significant revenue from coal, I suspect both BNSF and the Union Pacific have due to shipping coal to the west coast to be shipped to China, potential exposure. Railroads are subject to the market, like anyone else, and there is plenty to ship without coal. I don't think it will destroy the railroads, I don't think it will result in them cutting back on maintainence, rather I think it will result in them modifying their business model to reflect reality, which might mean they drop the number of trains they run, maybe drop routes entirely, but it isn't like coal was to let's say the C and O back in the day, it isn't. 

 

 

 

I don't know how you figure that coal isn't a 20th century fuel? 

The use of coal was huge in the 1920's, 30's, and 40's.  Still widely used in the 1950's as well.  Use probably didn't really go into decline (at least in the east) until the 1960's.  There was even a brief comeback in the 1970's as the price of oil skyrocketed.

Jim

Keeping the politics of coal out of it, the economy is fragile by any indication you wish to use. 

And it's not like the carloadings of coal is being replaced by some other replacement commodity.   They're not.

NO business model can change that fact.

None of this can be good for the Railroads or their employees. 

Last edited by Rule292

As far as electric power utilities is concerned, they dispatch load by cost for next MW. That is to say, if the cheapest next MW is from a power gwnerator that doesn't burn coal, they do so. When natural gas prices allow for the next MW be cheaper with gas instead of coal, they use gas.

While I was working coal made the cheapest next MW. We base loaded the coal units, and followed the load with other fuel units. If natural gas is cheaper they would base load the gas unit, and follow the load with coal or oil units (providing the once base load units could ramp up and down fast enough to follow load)

Hence less coal would be used.

Also, some burners were added to the coal units to allow about 10% natural gas. This would also contribute to less coal used.

Last edited by TM Terry
riki posted:

burning raw coal is criminal,  you can get gasoline ,,natural  gas etc from coal,  this movement to ban coal is ,,,,,,,,,, they want us on oil,,,,, solar, , Peabody  needs to start refining that coal besides sell it raw,,,,,,,,,,

Really??

 And what criminal code is burning coal in violation of?

Please cite the specific law prohibiting the burning of coal.

I'm waiting, ohh there is NO law prohibiting the burning of coal. There are plenty of regulations regarding the burning of coal, but just because you don't like it, it is NOT CRIMINAL.

Doug

challenger3980 posted:
riki posted:

burning raw coal is criminal,  you can get gasoline ,,natural  gas etc from coal,  this movement to ban coal is ,,,,,,,,,, they want us on oil,,,,, solar, , Peabody  needs to start refining that coal besides sell it raw,,,,,,,,,,

Really??

 And what criminal code is burning coal in violation of?

Please cite the specific law prohibiting the burning of coal.

I'm waiting, ohh there is NO law prohibiting the burning of coal. There are plenty of regulations regarding the burning of coal, but just because you don't like it, it is NOT CRIMINAL.

Doug

Though specifically Riki is incorrect, with what seems to be inevitable is that the carbon footprint of coal, in light of the general acceptance that CO2 is a strong contributor to climate change, is too great to be an acceptably affordable fuel in the relatively near future. 

Coal users are positioning themselves to depend on less coal for power. Unless CO2 gets off the polutant list, it will be phased out fairly soon. 

jd-train posted:
bigkid posted:

Coal isn't a 20th century fuel, that is more natural gas and oil, it is a 19th century fuel that for a lot of reasons stayed around, more than a few of them political, and it basically is an inefficient technology whose mining and delivery system, not to mention how it operates as a fuel, whose time has passed. Converting coal to gas or to gasoline is possible (the gas lamps of the 19th century were lit by coal gas), but that is costly, and also is converting an ancient fuel to one only slightly less ancient. The reality is that coal is being pushed out of the marketplace both by market forces and people not wanting to live with the consequences of burning coal, things like acid rain for example, or the damage done to beautiful areas by coal mining, the slag piles, water pollution and so forth, not to mention what coal mining does to the people who do it. 

There is no doubt significant coal hauling going on, CSX for example has significant revenue from coal, I suspect both BNSF and the Union Pacific have due to shipping coal to the west coast to be shipped to China, potential exposure. Railroads are subject to the market, like anyone else, and there is plenty to ship without coal. I don't think it will destroy the railroads, I don't think it will result in them cutting back on maintainence, rather I think it will result in them modifying their business model to reflect reality, which might mean they drop the number of trains they run, maybe drop routes entirely, but it isn't like coal was to let's say the C and O back in the day, it isn't. 

 

 

 

I don't know how you figure that coal isn't a 20th century fuel? 

The use of coal was huge in the 1920's, 30's, and 40's.  Still widely used in the 1950's as well.  Use probably didn't really go into decline (at least in the east) until the 1960's.  There was even a brief comeback in the 1970's as the price of oil skyrocketed.

Jim

Coal was a 19th century fuel in that it was came to prominence in the 19th century with the industrial revolution, it ran the trains, it powered a lot of manufacturing plants, it also was used in the steel mills. It likewise was used to power the first power plants as well. When I said it was a 19th century fuel, I meant that it was and is inferior to other forms of power, it requires those mining it to risk their lives, as a fuel source no matter how much they tried it is dirty, and it puts out a lot more CO2 and CO emissions then burning other fuels. In some ways, it is much like railroads switching over from steam engines to diesels, the steam engine was inherently a 19th century technology, whereas the internal combustion engine was the 20th (and on a diesel, combined with the electric traction motor, that was born around the turn of the 20th century).

It wasn't that coal wasn't heavily used, it has been, it still generates a lot of power, but in the 20th century coal has been in decline since oil and gasoline and later natural gas went on the rise. It had momentum, in large part because the power companies and the companies that used coal in manufacturing, like the steel industry, were going to get every cent out of their plants. Politically, big coal and their allies had a lot of clout, and rules and regulations allow coal to be used well after it should have been regulated, and before someone tell me how coal isn't that bad, take a look at China, their infamous pollution is mostly due to burning coal (not to mention that London's famous fog was not entirely natural, it was basically a perpetual fog of coal smoke). Lakes and rivers were dying off because of acid rain from sulfur, and the human cost from the pollution they put out is huge (and nicely dispersed from original source, those 500 foot tall smokestacks simply dispersed the pollution down the road several states over, talk about crapping on your neighbors). 

There have been all kinds of attempts to push coal, we had the government spending literally billions on researching "clean coal", that basically ended up being a massive pr campaign with nothing to show for it, in the 1970's it was pushed as a way for the US to be energy independent, but in the end it turned out not to be practical (yes, you can make gas and gasoline out of coal, but it is very, very inefficient and costly compared to natural gas). Plus, the human cost in mining it is a big issue as well. Coal had a kind of rebirth when China industrialized, but even they realize they can't go on using it, they are choking themselves. 

Fossil fuels themselves are in some ways dinosaurs, while natural gas is a lot cleaner than coal (and also in power plants is a lot more economically viable in the long run, gas fired power plants have longer lives and require less maintenance) , and modern gasoline engines burn a 1000 times cleaner than they once did, it is still technologically obsolete, and eventually it too will be replaced, either by biologically generated gas and oil products, rather than burning stuff laid down millions of years ago that is not ecologically balanced, or by other kinds of energy sources, it is the nature of change, and coal is at the bottom of that heap. Romaticizing coal is like romanticizing 19th century railroading, both were needed advancements for their time, but there was little romantic about it.

 

 

 

 

challenger3980 posted:
riki posted:

burning raw coal is criminal,  you can get gasoline ,,natural  gas etc from coal,  this movement to ban coal is ,,,,,,,,,, they want us on oil,,,,, solar, , Peabody  needs to start refining that coal besides sell it raw,,,,,,,,,,

Really??

 And what criminal code is burning coal in violation of?

Please cite the specific law prohibiting the burning of coal.

I'm waiting, ohh there is NO law prohibiting the burning of coal. There are plenty of regulations regarding the burning of coal, but just because you don't like it, it is NOT CRIMINAL.

Doug

I think that the poster was using the word criminal in the sense of common usage, which translates to 'it should be a crime'. It is used in a funny way, like saying "that cake is so good it should be criminal" or in a more serious note, saying "the way that that person treats their family is criminal", it isn't a literal claim. 

 

bigkid posted:
challenger3980 posted:
riki posted:

burning raw coal is criminal,  you can get gasoline ,,natural  gas etc from coal,  this movement to ban coal is ,,,,,,,,,, they want us on oil,,,,, solar, , Peabody  needs to start refining that coal besides sell it raw,,,,,,,,,,

Really??

 And what criminal code is burning coal in violation of?

Please cite the specific law prohibiting the burning of coal.

I'm waiting, ohh there is NO law prohibiting the burning of coal. There are plenty of regulations regarding the burning of coal, but just because you don't like it, it is NOT CRIMINAL.

Doug

I think that the poster was using the word criminal in the sense of common usage, which translates to 'it should be a crime'. It is used in a funny way, like saying "that cake is so good it should be criminal" or in a more serious note, saying "the way that that person treats their family is criminal", it isn't a literal claim. 

 

Gee, it wasn't a literal claim, yeah I understood that. I also understand that some people get very emotional about the use of coal, nuclear power, abortion(Please read the first sentence in my Signature Line) and politics, among other things.

Bottom line, like it or not, we still NEED to use some coal. If EVERY power plant was suddenly able to switch to natural gas overnight, what do you think would happen? the supply for natural gas would not keep up with the demand for it, then the price would go way up, including for the average home owner (or renter) who heats and cooks with natural gas. If natural gas was the solution to all the problems, it would have happened already.

  I'm no scientist, and this is just my personal OPINION, but I believe that Global Warming is over blown. I wont say that man has NO impact on his environment, but I also feel that man has been given too much blame for "Global Warming". Climate change has been, and will continue to be a naturally occurring phenomenon. The Earth has been through Ice Ages, and warming cycles, before man was around, and definitely before the "Industrial Revolution".

  I do not advocate reckless abuse of natural resources, or pollutive practices, but our society not only expects, but demands, the modern conveniences that electricity provides, and for the time being coal is a necessary component in the production of electricity. Coal's role in power production may be declining, but at this point completely eliminating it is not a practical option.

Personal Feelings, Emotions and Opinions don't change the fact that we still NEED Coal.

Doug

Last edited by challenger3980

This thread appears to be labeling coal, the "dirty fuel". In the past: yes it was. 

Today's technology (used in the USA, granted due to environment regulations) allows coal to be burnt with only two products of combustion to be released into the atmosphere: H2O and CO2. (No carbon monoxide CO, today's power plant coal boilers are extremely efficient. CO has more BTU released when it is further oxidized to CO2)

The back end of the boilers capture the polutants before they reach the stack. The big concern is that recently CO2 has recently been added to the polutant list. Of the hydro-carbon fuels, coal has the greatest carbon to hydrogen ratio. 

The only thing dirty about coal, today (in the USA) is its carbon footprint. When burnt it releases large amounts of CO2.

Last edited by TM Terry
Dominic Mazoch posted:

<snip>.....Electric and locomotics like the FL9 and DM30 have made this law mute.

 

The law is never "mute". When have you known a politician, a lawyer or a jurist to keep his mouth shut?

The word you're looking for is moot.

Of course the statue [sic] of limitations may have already run out on that.

Unicorn farts will soon power our every need, including the trains that will have nothing to transport because we'll produce and manufacture nothing.

Eventually we will be able to climb inside our iPads and iPhones and derive all our sustenance via a USB cable.

What little else we need will be provided free of charge by an all knowing, benevolent bureaucracy.

Be sure to wipe your hard drive daily.

There are a lot of changes in the commodity flow of coal, especially with the downturn in both the Chinese economy and the level of their coal imports; no real come-back as yet. (If ever) I've seen an article or two that said CSX coal transport was down by almost a third. 

Due to lack of demand, the ships that carry coal (and iron ore) to China have been way below their operating expenses for a long time before the Peabody announcement. Natural gas and probably Peabody's investments in what didn't turn out to be a growing Chinese coal demand will shrink them drastically. Coal will be dead until it again becomes a crisis fuel to fall back on; unless, of course, my Mr. Fusion home reactor is delivered.

I realize this is a US bankruptcy, but here's a little of the ripple effect: http://www.smh.com.au/business...20160414-go6cbq.html

Last edited by Firewood
riki posted:

burning raw coal is criminal,  you can get gasoline ,,natural  gas etc from coal,  this movement to ban coal is ,,,,,,,,,, they want us on oil,,,,, solar, , Peabody  needs to start refining that coal besides sell it raw,,,,,,,,,,

The bottom line is we could be selling it elsewhere....solar is a mirage .....killing birds flying over the panels....they want us back in the stone ages! No, electric for m Lionel's.

Off topic: solar power typically has a capacity factor of 25%. During the day it reaches at or near peak load. When the sun is down, you guessed it, it don't make no watts. And you are correct again, when you need lights the most, solar gives you not a single watt. In the winter, right at the time load is in peak demand, the sun has just set.

Good evening, here in the states the demand for electricity is way down due to the fact we do not have the manufacturing base like we had in the 40's thru the 60's.

Can you imagine how many tons of coal was burn't in Pittsburgh at the steel mills in a 24 hour period !!!!!

We have become more efficient with electricity using LED's bulbs instead of a Mercury Vapor and the standard flood light.

Household and Industrial Appliances have become for efficient. All these items drop the demand for electricity which means less coal is needed.

Solar and Wind although may look great on the surface will never be the answer when it comes to powering the grid here in the States. Again these items are not cheap to maintain either and come with some dire environmental impact also.

Many coal suppliers have been running on exporting coal to other countries but that has come to a screeching halt.

I deal with several coal companies in Australia and they always say the Australian economy is always 3 year behind the US.

It is coming true and the Australians are having trouble finding places to export their coal also.

All the hype about the natural gas was just that  hype, Several power plants that have switched over to natural gas are finding that this new fuel comes with it's own set of headaches and the truth be known it is not any cleaner because they are burning more cubic feet of gas to create the same Btu's that they did with 1 ton of coal.

A power plant in Clearfield County PA has switched from coal to natural gas and had a test fire in their first unit and found they could not keep the line pressure up to continue burning the natural gas.

Oh well back to the drawing board for this project.

Coal and coal producers are going to have to figure out a way of reinventing themselves so they look better to the environmentalist  that are constantly beating them down.

It is going to be a long hard road I'm afraid.

Around these parts sidings are jammed with tank cars that are out of service due to the downturn in the oil business.

Regardless of the cause, a downturn in coal traffic can't be good for the railroads. 

Anyone have access to reasonably accurate overall carloading statistics from 4/2008 to compare with 4/2016?  (please spare me, I could try and google for them). 

 

Coal  will remain part of the power production scene for awhile yet, there aren't any solve all the problems alternatives yet.

Natural gas, simply isn't available in sufficient volume to completely eliminate coal.

Solar, isn't a 24 hour a day source, and unless you are in a market like Phoenix, AZ, solar isn't producing when it is most needed.

Wind, is not reliable enough to be a primary producer, the environmentalist hate it because it kills birds, not to mention it is EXPENSIVE

Here in the Pacific North West, Hydro is KING, yet again the environmentalists HATE it because it kills Fish. Not only have they done everything possible to block any new Hydro-Power, they are trying to get existing dams removed, SUCCESSFULLY on some smaller dams.

We don't even need to discuss the protests any time a new NUCLEAR plant is mentioned.

Geo-Thermal, just isn't an option in very many places.

Again, I don't advocate reckless abuse of natural resources, or pollutive practices, but there just aren't any alternatives, that SOMEBODY doesn't object to. Now if somebody could finally develop a perpetual motion machine, and hook it up to a power station, it would be GREAT. Unfortunately perpetual motion machines, and Unicorn Farts just are not practical options yet, and every other option has it's own problems and opponents. Coal may be declining in importance in the energy field, but it is not going to be eliminated any time soon.

Personal Feelings, Emotions and Opinions, don't change the FACT that we STILL NEED COAL,

Doug

 

 

challenger3980 posted:

 

Wind, is not reliable enough to be a primary producer, the environmentalist hate it because it kills birds, not to mention it is EXPENSIVE

Here in the Pacific North West, Hydro is KING, yet again the environmentalists HATE it because it kills Fish. Not only have they done everything possible to block any new Hydro-Power, they are trying to get existing dams removed, SUCCESSFULLY on some smaller dams.

Odd.  Environmentalists wanted us to go to RENEWABLES.  Now RENEWABLES are bad?  Like the paper to plastic to paper bag switch.    Maybe in some cases the worse enemy to the environment are the environmentalists!

Doug

 

 

 

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